green@work : Magazine : Back Issues : Jan/Feb 2000 : Green Power to the People

Green Power to the People

High profile corporations in California, Pennsylvania
and Colorado are switching to green power, a sign that the private sector can help serve as role models to grow a renewable energy industry that is critical to any strategy to combat the threat of global climate change.

by Peter Asmus

It was assumed by many free market advocates that a mad rush to purchase the cheapest power possible would occur when competing companies descended upon California on April Fools Day 1998 to entice state citizens to switch electricity supplies. The restructuring of California’s electricity market was, after all, driven by large businesses seeking to reduce electricity rates that were double that of the national average. After years of debate, the California Legislature in 1996 approved legislation that was more than 100 pages long to open up the state’s $23 billion electricity market to competition and more than 500 companies signaled their intention to pluck customers away from incumbent monopoly providers.

A funny thing happened, however. During the first year of open competition, only one percent of the eligible California customer base switched to any alternative supplier in a state long known for its forward-thinking individuals. Nevertheless, one of the big surprises to emerge from buying trends since California’s market was deregulated was that over three-quarters of the residential customers in California who switched chose to buy from “green” power sources. Even more amazing is a growing list of high profile corporations in California—as well as Pennsylvania and Colorado—that also are switching to green power, a sign that the private sector can help serve as role models to help grow a renewable energy industry that is critical to any strategy to combat the threat of global climate change.

The nation’s consumers had been served by electric utility monopolies for close to a century. So far, however, some 20 states have approved plans to open up their electricity markets to competition. This trend toward deregulation is offering all consumers, including private companies, the opportunity to align environmental values with power supply decisions. Offering choice to customers should ultimately clean-up an industry that is the largest source of air pollution in the nation and the world. And in states that have yet to open up their markets to competing retail sellers, some 40 utilities have launched, or are in the process of developing, programs where customers can volunteer to pay a premium to buy from new renewable resources.

Polls consistently show that the vast majority of consumers—if given a choice—would prefer that their power be generated from “green” renewable resources instead of fossil and nuclear power plants. Yet California has proven that the consumers most concerned about global warming and sustainable development are often the very same individuals most leery of the virtues of deregulation and private enterprise being able to deliver superior power products. Sure, the Environmental Defense Fund and Union of Concerned Scientists buy green power for their respective Oakland and Berkeley offices, but many card-carrying members of these and other environmental organizations have yet to switch.

And that’s why private corporations have emerged as major players in building demand for cleaner energy sources in California and elsewhere. A case in point is Kinko’s, the national photocopying and print services firm, which last November switched all of its 75 stores in California, and another 15 in Pennsylvania, to cleaner “green” sources of electricity. “We have an environmental vision statement that explicitly states that we will use energy-efficient technologies and renewable energy sources,” commented Larry Rogero, Kinko’s environmental manager. “If we begin thinking about the next generation of workers here—if we think about the long-term—there is no choice but to choose energy efficiency and alternative energy sources.”

It was Rogero’s idea to test the California market over one and a half years ago. The initial choice of the company was dropped after negotiations failed to lead to a deal. Then Kinko’s found out about a state program that offered rebates to California consumers who purchased from in-state renewable energy sources. It then signed up with GreenMountain.com of Burlington, VT, for a 100 percent renewable energy product comprised of a California mix of geothermal, biomass, small low impact hydro and solar resources. Part of the arrangement allows GreenMountain.com to market to Kinko’s 6,600 captive customer base with gift certificates for Blockbuster videos, Starbuck’s coffee and Ben & Jerry’s ice cream. “Ideally, we would want to reach out to our customers, but first we want to see how our employees respond,” said Rogero.

Kinko’s is far from alone and represents the wave of the future. The first major California corporation to switch all of its facilities to a renewable energy source was Ventura-based Patagonia, Inc., an outdoor clothing company well-known for its commitment to the environment. Last July, Patagonia became the first commercial customer to purchase all of its electricity from a new wind farm near Palm Springs. The power consumed at Patagonia’s 14 facilities can be easily supplied by one large 750 kW wind turbine.

The process of choosing a clean power product was far from easy, according to Jill Zilligen, Patagonia’s director of environmental programs. Patagonia set a very high standard; the company preferred a 100 percent new renewable source located in California as close as possible to the firm’s Ventura County headquarters. The new EWC wind farm, a three-hour drive away, was the only offer that met all of Patagonia’s preferred green product criteria. Patagonia “wanted to show how committed we were to the environment” by choosing the greenest of the green products.

“Corporations are important to building the green power market, from a volume and educational standpoint,” said Zilligen. She does not see the wind power purchase providing any near-term sales advantage or other immediate competitive edge to Patagonia. “We will have a long-term competitive edge because we will have reduced our use of non-renewable sources and will be as efficient as we can. Part of our justification for paying the premium for wind power was that it would provide a new incentive to be more efficient. We may not entirely offset the wind power premium, but we hope to come close.”

Research conducted by the Electric Power Research Institute has revealed that many commercial customers are interested in purchasing renewable energy—even if it costs more. This is particularly the case if such buys are integrated into the company’s overall marketing plan, as is the case with Toyota Motor Sales (TMS). The auto company announced on Earth Day 1998 that it would acquire electricity from a mix of renewable sources for four headquarters in southern California representing 12 megawatts (MW) or the equivalent of approximately 15,000 households. The price tag: $1 million annual price premium.

The long-term plan of the company is to power all of its manufacturing facilities with electricity generated from renewable energy. According to Jim Cooke, national manager of real estate and energy affairs for Toyota’s non-manufacturing facilities, this is a strategic marketing investment. “The reason we made this decision is that we know our customers are smart. We are selling a number of advanced technologies—including hybrid gas/electric vehicles—and we wanted to set an example for our competition and challenge them to step up and take responsibility.”

Other California corporations that have switched to green power include Birkenstock (one of the top woman-owned businesses), Fetzer Winery (which specializes in organic wine), Time Warner, MCI/WorldCom, Los Angeles Dodgers, Robinson-May Depart-ment Stores, Real Goods and Lucky Dungarees.

The story of Fetzer is particularly interesting. The largest grower of organic wine grapes, the winery has won awards for its waste reduction and recycling programs and has already reduced its electricity bills through innovative energy efficiency practices. For example, the company’s administration building in Hopland, located in Mendocino County, is constructed of rammed earth, which keeps it cool without the use of any air conditioning. Not only did Fetzer install a photovoltaic array on this building, but it is purchasing the remainder of all of its electricity needs—which can reach 1 MW during the peak of fall harvest—from clean renewable resources. Wines produced in 1999 were the first “green power” harvest.

Hopland is also home to the first commercial utility-scale solar power plant to be built in California in direct response to consumer demands for clean power. The 125 kW array of photovoltaic (PV) panels will be owned and operated by GPU Solar/Astropower and located at the Real Goods Solar Living Center, a 12-acre demonstration site that highlights new cutting technologies designed to foster a more sustainable lifestyle. The power generated by the PV panels, which convert sunlight directly into electricity, will be marketed by GreenMountain.com to consumers wishing to purchase a portion of their power from solar and other renewable sources of electricity.

This solar plant is one of the first bulk solar projects to be developed since California’s power market was restructured in April of last year. In addition to consuming solar energy at the site, Real Goods purchases Green Mountain’s “Wind For the Future2.0” product, which relies upon new wind turbines to supply a quarter of the electricity. The rest of the blend comes from other renewable sources such as geothermal steam. The Solar Living Center and its corporate offices in Santa Rosa and its retail store in Berkeley all rely upon Green Mountain’s “Wind For The Future2.0” product.

Some of the biggest corporate green power success stories come from Colorado. Unlike California, Colorado has not yet restructured its electricity market. Public Service Co. of Colorado (PSCo), a utility monopoly, sells electricity from new wind turbines through its “Windsource” program. Under a corporate “champions” offer, each company buys 25,000 kilowatt hour blocks—roughly 15 percent of the output of one wind turbine—for a contract period of three years at a cost of $25,000 annually.

These high profile investments reaped relatively inexpensive public relations benefits. One of the concerns of the Land and Water Fund, a non-profit working closely with PSCo was the ability of corporate “champions” to “greenwash,” the process whereby a well-known company shifts focus away from its environmentally questionable activities by making relatively small wind power purchase. Ironically, some companies, such as Coors, are also worried about placing too much emphasis on their participation in Windsource because of a potential backlash from environmentalists who would perceive the wind power purchase as part of a deliberate greenwashing strategy. (Coors refused to be interviewed for this reason.) Roche Colorado, formerly Syntex Chemical, is one of the largest sources of air pollution in Boulder County. The company was initially cool to the idea of becoming a Windsource “champion” because it believed there was no amount of wind power they could buy that would offset its negative image within the community. Never- theless, the firm did ultimately become a “champion” as one way to improve its environmental image.

The single largest private wind power consumer in the U.S. also comes from Colorado and justified its investment in a new wind turbine based on real environmental gains: the dramatic reductions in CO2 realized by switching from coal to wind power. The New Belgium Brewing Co. of Fort Collins, CO, announced in late February 1999 that it will go well beyond any other Windsource “champion” by purchasing 1.8 million kWs of wind power per year from a single 660 kW wind turbine to be erected near Medicine Bow, WY, in late 1999. The brewer made a 10-year commitment to pay an annual premium of $500,000 per year, which will add 20 to 30 cents to the cost of each barrel of beer produced at New Belgium.

“Beer breweries produce a tremendous amount of CO2 as a natural byproduct of the fermentation process required to make beer,” said Greg Owsley, marketing director for the company. “The industry is now looking at ways to capture and reuse the CO2. In the middle of our evaluation process, we heard about Windsource. Since we purchase most of our electricity from coal plants, we realized we could replace all of the CO2 with a wind power purchase. It was an easy sell,” said Owsley. He noted that all 70 employees voted unanimously for the company to purchase wind power despite the fact that this decision diminished the size of employee bonuses, which are paid out based on the brewery’s costs per beer barrel.

New Belgium staff discovered that the amount of CO2 that was emitted into the atmosphere from the coal burned to generate electricity for the beer plant was four times that which was attributed to brewery operations. With the wind power purchase, New Belgium has netted over six times the reduction in CO2 emissions it would have realized with traditional recovery technology. The amount of clean power produced by a single wind turbine reduces the amount of coal burned to generate electricity for the brewery by more than 908 tons per year, eliminating more than four million pounds of CO2 from entering the atmosphere every year.

New Belgium hopes to incorporate the wind power purchase into its marketing plans. For example, the brewer periodically produces paper coasters that can serve as postcards. It released one such coaster/postcard that featured beer bottles for wind turbine towers and announced that New Belgium is the first wind powered brewery in the U.S. The company also is considering a special release beer that would build upon the wind power theme.

One of the key obstacles to the success of green power in deregulated markets such as California and Pennsylvania is assuring consumers, both large and small, that their dollars are, indeed, flowing to renewable power plants. The San Francisco-based Center for Resource Solutions (CRS) developed a Green-e verification program modeled after the recycling logo on paper products to insure that when consumers elect to purchase power marketed as “green,” they know the product and the company meet certain minimum content standards and abide by good business practices. “By choosing products with the Green-e logo, Californians will purchase at least four times more renewable energy than the generic mix they would otherwise buy,” said CRS executive director Jan Hamrin. CRS hopes to makes the Green-e program national in scope.

The other obstacle is ignorance. Most consumers have never given much thought to where their electricity comes from. Since we never had a choice about power supply, what did it matter? Today, growing numbers of corporations are beginning to see the light. Since each company consumes so much more power than individual residents, their green power switches are critical to help build demand for the cutting edge clean technologies of tomorrow.

Peter Asmus is author of the
forthcoming Reaping the Wind by Island Press. His previous books include In Search of Environmental Excellence (Simon & Schuster, 1990) and Reinventing Electric Utilities (Island Press, 1997.)