Green Power Marketing Drives Renewable Energy Expansion
The mayor and members of the City Council of Santa Clara, California, knew they and the Silicon Valley Power (SVP) utility got it right when their program offering electricity from renewable resources attracted the area's high-profile companies such as Yahoo!, Cisco Systems and Agilent Technologies.
The 2006 Green Power Supplier Award for the program boosted their confidence even more. It was one of the six awards given by the Department of Energy (DOE), the Environmental Protection Agency (EPA) and the Center for Resource Solutions, a nonprofit group that certifies and verifies green power program.
Yet the mayor and city, rather than resting on their laurels, issued a challenge to spur even more residents and businesses to join the rapidly growing Santa Clara Green Power program established in 2004. The city-owned SVP joined in by offering a volume discount for large purchases.
In 2007, when the sales soared by 50 percent over 2006 and customer participation jumped well above the national average, the program again won the Green Power Supplier Award. SVP customers have an option to choose 100 percent clean renewable power.
Like similar programs across the country, the Santa Clara program purchases renewable energy certificates (RECs) from renewable projects to allow business and residential customers to rely on renewables for part or all of their electricity needs.
RECs, also known as green tags, represent the environmental benefits of the power produced from renewable energy projects and can be traded. Green power programs charge a slightly higher price for electricity to support the development of renewable energy projects.
"Santa Clara is a bit unique, more environmentally conscious and educated than average America," Adam Capage, director of utility partnerships at the firm 3Degrees, told USINFO. 3Degrees, also a winner of the 2007 Green Power Supplier Award, designed and marketed the Santa Clara program.
The number of utilities that offer green power programs and related sales has increased in recent years across the United States in response to the growing awareness and concern among customers about climate change.
"Green power marketing has enormous potential to expand domestic markets for clean, abundant and affordable renewable energy technologies by fostering greater availability throughout the country," said Alexander Karsner, Department of Energy assistant secretary for energy efficiency and renewable energy, at the award ceremony in October.
Driven by state and federal policies as well as voluntary purchase programs such as green power, U.S. renewable power sales from utilities totaled 12 million megawatt hours in 2006, a three-fold increase from 2003, according the National Renewable Energy Laboratory (NREL).
SCP is one of more than 750 investor-owned, municipal and cooperative utilities that offer green power programs to more than half U.S. electricity customers.
But most Americans have yet to be persuaded to join those programs. In 2006, the average participation rate, while climbing steadily, reached only 1.8 percent, despite the declining average price premium charged for green power, according to NREL.
Michael Eckhart, president of the American Council on Renewable Energy (ACORE), said that the rate is impressive. The green power market is still in its infancy, he told USINFO, and it will take time for the green power products such as RECs to be understood, accepted and sought. What makes reaching this point more challenging, Eckhart said, is that the cost of green power is known but the intangible benefits are not easy for customers to appreciate.
"In the face of this, it is astonishing that more than a million Americans have chosen to buy green power with no direct benefits coming back to them," he said.
Larry Owens, a customer service manager at SVP, shares this view. Utilities not only must educate the public but also ensure product credibility and gain the trust of customers to make their green power programs successful, he told USINFO.
"What works best are partnerships among key 'stakeholders,'" Capage of 3Degrees said.
Research confirms his view. The utilities that rely on third-party companies' for marketing green power programs have higher participation and sales rates, according to a 2006 NREL report.