There are no green electrons, nor can we change the supply sources at will, but we can purchase green power to varying degrees, by incorporating Renewable Energy Credits (RECs) into our electricity mix, or by generating your own clean electricity. The point of the exercise is that for consumers Green Power is a way of voting with your dollars, and signaling a preference for clean energy technologies. In short: RECs are a financial mechanism to support clean power, and credits are awarded to producers of clean renewable energy, and by buying those certificates, the consumer can stimulate development of such resources. RECs can be built into the rates by your provider or purchased independently. In the links section there are a whole range of information sources on Green Power and RECs.
If you look at the Corporate Top 50 Green Power purchasers, you see that Intel buys 88% Green Power, with a mix of on-site generation and recs from Sterling Planet and others. Starbucks buys 52% Green Power, Whole Foods 100%, and Lockheed Martin 15% , Wal-Mart 8%, etc. So it is pretty much a matter of how much you want to do in this area as a matter of corporate policy.
What it means for your rates. 100% Green Power typically adds some 2 cents per kwH to your rates. The typical household uses an average of 900 kwH/mo, so on average to "go green" should cost you ca $18/mo on your rates if you happen to be such an "average" household.
With my own household, I was with one supplier for a few years, and with the benefit of hindsight, I paid ranging from 0.5 cents to 4.00 cents per kwH extra for my 100% Green Power, so over time it averaged out ca 2%. Green power is a conscious choice to make a difference. Green power is about empowerment, about choice, about making a difference. It is a lifestyle choice, not an energy purchasing decision, and that is why most ESCOs fail in the mission of marketing Green Power.
Tuesday, December 6, 2011
Friday, December 2, 2011
On the Marketing of Green Power
The power industry by and large has failed to understand the potential of Green Power. Years ago, when I was attempting to design a Green Power marketing program for an ESCO (Accent Energy), I was arguing with the founders of that company that Green Power was different, and ultimately would require a separate company to market it.
Essentially, my analysis of the situation was that the mindset of the power industry was about price competition, and Green Power broke the mold, because to the power people it was power for 2 cents more, and that made no sense to them. Seen in that light the market place for Green Power was limited to some fringe cases, and was not worth worrying about. The power people therefore were incapable of understanding it, and I pointed out to them that selling Green Power rather meant promoting empowerment, and energy independence, not selling power.
Power is a negative, and people feel dis-empowered, because they have to pay that bill anyway, never mind whose name is on the bill. Moreover, they don't understand de-regulation, and it is somewhere between hard and impossible to verify the various claims, and many ESCOs have proven to be somewhat less than ethical in their dealings.
One of the major features of differentiation in the power market place has been often misunderstood and sold the wrong way: fixed rates. People think they are buying fixed rates in the illusion that they're going to beat the market, which is not so. Now, if you are responsible for a budget, and you'd like to fix one element of your cost, and you can rationalize that the cost is historically reasonable, well... perhaps you should consider the fixed price option. If you think you're going to beat the energy market, you probably should buy a lottery ticket instead. And, you are paying extra for the pleasure of having fixed rates.
All in all the ESCOs don't know what to do with themselves to differentiate their product. And in the direct sales model this inevitably leads to reps who will tell any lies necessary to get the deal, and in spite of codes of ethics that try to rein in the abuses, the results are a joke. In the last few months I've had more reps from power companies at my door than I can shake a stick at and almost all of them lie, although they've now been trained to not say they represent ConEdison, for then they could get fired. But they all violate the spirit of the law. From my time in the industry it was always clear that the system is rife with abuse, and that invariably the reps who lie the most make the most money. It is time to break the mold...
Fundamentally the justifications for de-regulated energy markets are not valid. Price competition is no solution to the nations energy problems. Instead it roots us in the illusion that we can beat the system, when in reality we can't. Here in NYC it is particularly evident. The real issue is transportation, for the T&D portion of your bill is 65%, and going up ahead of inflation as far as the eye can see. The real answer therefore is renewable energy generation at the building level, for these are investments that gain in value over time and therefore are conducive to appreciating real estate values. Their value goes up with every energy price hike, and with every rate increase for ConEdison.
Economically also, the utilities will have a long term economic interest in encouraging growing diversification of markets, because it is a proven fact that the overall system often becomes more reliable when the grid serves as a backup, as we have seen in energy intensive buildings like data centers, where reliability counts. Today's renewable technology is enabling this model for large groups of buildings, and it is part of the solution on a lot of levels. By the same token economic competitiveness, public safety and national security all gain from greater energy independence.
Especially in the urban environment the economics of energy are now solidly favoring the local production model in a growing number of cases. From the standpoint of economic modeling with T&D at 65% of the bill, and energy at only 35% of the bill, a 10% better energy rate is a 3.5% difference in the bill, and the arguments of de-regulation soon become laughable. Energy efficiency, demand management, and renewable production are where it's at because they gain on the T&D problem. As long as the incentive systems are done right, it should end up with both better utilization of the grid, and with greater energy diversification.
Thus, if we take the average household consumption of 900 kwH, at typical rates in NYC, of ca. 25 cents/kwH, of $225, a savings of 3.5% is ca $7.88 per month, or about 3 subway fares at current rates. Thus besides generating campaign contributions for the politicians that voted for it, financially it is not very meaningful. However if Green Power is an innovation that rides the back of de-regulation, it may be worth it after all. Watch the ratings of the largest corporate users of Green Power here:
http://www.epa.gov/greenpower/toplists/top50.htm
Essentially, my analysis of the situation was that the mindset of the power industry was about price competition, and Green Power broke the mold, because to the power people it was power for 2 cents more, and that made no sense to them. Seen in that light the market place for Green Power was limited to some fringe cases, and was not worth worrying about. The power people therefore were incapable of understanding it, and I pointed out to them that selling Green Power rather meant promoting empowerment, and energy independence, not selling power.
Power is a negative, and people feel dis-empowered, because they have to pay that bill anyway, never mind whose name is on the bill. Moreover, they don't understand de-regulation, and it is somewhere between hard and impossible to verify the various claims, and many ESCOs have proven to be somewhat less than ethical in their dealings.
One of the major features of differentiation in the power market place has been often misunderstood and sold the wrong way: fixed rates. People think they are buying fixed rates in the illusion that they're going to beat the market, which is not so. Now, if you are responsible for a budget, and you'd like to fix one element of your cost, and you can rationalize that the cost is historically reasonable, well... perhaps you should consider the fixed price option. If you think you're going to beat the energy market, you probably should buy a lottery ticket instead. And, you are paying extra for the pleasure of having fixed rates.
All in all the ESCOs don't know what to do with themselves to differentiate their product. And in the direct sales model this inevitably leads to reps who will tell any lies necessary to get the deal, and in spite of codes of ethics that try to rein in the abuses, the results are a joke. In the last few months I've had more reps from power companies at my door than I can shake a stick at and almost all of them lie, although they've now been trained to not say they represent ConEdison, for then they could get fired. But they all violate the spirit of the law. From my time in the industry it was always clear that the system is rife with abuse, and that invariably the reps who lie the most make the most money. It is time to break the mold...
Fundamentally the justifications for de-regulated energy markets are not valid. Price competition is no solution to the nations energy problems. Instead it roots us in the illusion that we can beat the system, when in reality we can't. Here in NYC it is particularly evident. The real issue is transportation, for the T&D portion of your bill is 65%, and going up ahead of inflation as far as the eye can see. The real answer therefore is renewable energy generation at the building level, for these are investments that gain in value over time and therefore are conducive to appreciating real estate values. Their value goes up with every energy price hike, and with every rate increase for ConEdison.
Economically also, the utilities will have a long term economic interest in encouraging growing diversification of markets, because it is a proven fact that the overall system often becomes more reliable when the grid serves as a backup, as we have seen in energy intensive buildings like data centers, where reliability counts. Today's renewable technology is enabling this model for large groups of buildings, and it is part of the solution on a lot of levels. By the same token economic competitiveness, public safety and national security all gain from greater energy independence.
Especially in the urban environment the economics of energy are now solidly favoring the local production model in a growing number of cases. From the standpoint of economic modeling with T&D at 65% of the bill, and energy at only 35% of the bill, a 10% better energy rate is a 3.5% difference in the bill, and the arguments of de-regulation soon become laughable. Energy efficiency, demand management, and renewable production are where it's at because they gain on the T&D problem. As long as the incentive systems are done right, it should end up with both better utilization of the grid, and with greater energy diversification.
Thus, if we take the average household consumption of 900 kwH, at typical rates in NYC, of ca. 25 cents/kwH, of $225, a savings of 3.5% is ca $7.88 per month, or about 3 subway fares at current rates. Thus besides generating campaign contributions for the politicians that voted for it, financially it is not very meaningful. However if Green Power is an innovation that rides the back of de-regulation, it may be worth it after all. Watch the ratings of the largest corporate users of Green Power here:
http://www.epa.gov/greenpower/toplists/top50.htm
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