[DJC]
[Environmental Outlook]
August 20, 1998

An energy revolution in your back yard

By LYNN AUCH and MARK STEN
Light Green Co.

There is a lot of talk about moving to clean energy for the sake of the world's environment. Some scientists predict that the challenges of climatic disruption and global warming can only be met with increased electric conservation and investment in renewable energy resources. A clean energy opportunity may be on our doorstep.

Wind turbine farm

Market reserach suggests consumers would pay more for power provided by renewable sources such as that produced on this wind turbine farm in northern California.
Photo by Josh Baldi


By now, most people have probably heard that the electric industry in the United States is being restructured. As we have seen in the airline and the long distance communications industries, sweeping changes may alter the electric industry in the Pacific Northwest, giving consumers the option of selecting their electric service provider or at least their energy source.

Market research indicates that consumers, particularly in the Pacific Northwest, are interested in suppliers who offer electricity generated from environmentally sustainable resources such as small hydro, wind, geothermal, solar and biomass.

Consumers said they would be willing to pay a premium for renewable energy and environmentally beneficial products. This is an exciting business opportunity for existing utilities. Offering renewable energy demonstrates environmental stewardship, provides new revenue opportunities and increases customer loyalty and satisfaction. A win-win for business and society.

For example, in California where the electric market is open to competition, half of the customers that have changed their energy provider claim to have switched to a "renewable" energy provider.

The situation here

According to on consumer research, consumers in the Pacific Northwest are unaware of the true sources of their electricity. When they learn that 32 percent of the region's power comes from coal and only 3 percent comes from renewable resources, they are clearly taken by surprise.

Geothermal power plants

Geothermal power plants are in poweration at the Geysers in California.


Because utilities are not required to disclose their sources of power (unlike other industries which have strict disclosure information), only the most environmentally concerned consumers have penetrated this veil to find out the facts.

Next year, legislators in the Pacific Northwest will have an opportunity to debate the merits of deregulation and develop a foundation for the future of renewable energy in the Pacific Northwest.

While there have been attempts to market renewable resources in other geographic regions of the U.S. (e.g. approximately 15 to 20 utility "green pricing" programs exist in a regulated context), there have been mixed results. For the most part, utilities have failed to tap into the potential demand for renewable energy due in large part to lackluster marketing programs.

For example, utilities confuse consumers with too many choices so that potential customers are too overwhelmed to switch. Most often they fail to get the message out because they rely on bill inserts as the sole communications tool, which most consumers don't read and discard.

Solar panels

Some utilities are experiementing with large-scale solar installations, such as this Pacific Gas & Electric demonstraiton project in California.


Some utilities charge over-zealous price premiums or try to force consumers to sign long term contracts which scares potential buyers. Most importantly, they continue to violate the first principle of marketing which says that renewable energy must be target marketed with a simple value proposition that is easy to understand and is communicated over and over again.

These failed attempts by utilities to sell renewable energy have caused mounting concern by local utilities and commissioners about the lack of customer demand to make renewable energy a viable option in the Pacific Northwest.

What's missing?

What do Northwest consumers know about renewable energy?

Recently, the authors conducted six consumer focus groups on the topic of renewable energy. The following are sample results from the research conducted in Washington and Oregon during April and July 1998.

  • About half of the consumers who were tested believe that it is important to have a say in where their energy comes from. Offering renewable energy through open access would be a way to empower consumers who want to make environmentally responsible choices.

  • All consumers tested were surprised when they found out that a significant portion of the energy in the Pacific Northwest was generated from coal and other sources other than hydropower or renewable energy.

  • When making decisions about energy options, consumers consider three key pieces of information: price, energy source and environmental effects.

  • Between 25 and 52 percent of consumer households are very interested in the prospect of renewable resources as an energy option. Some consumers are even willing to pay 5 percent to 20 percent more on their existing energy bill to support renewable energy.

  • Consumers understand the contributions that renewables would make to the overall environment, but they are unclear as to what they would be buying and how that would affect environmental quality at the local level.

  • Consumers want to have the option to enter and leave a renewable energy program without penalties and have the option to choose various levels of "renewable energy" at graduated prices.

  • Consumers believe the news media to be a highly trusted source of information on the issue of electric industry deregulation, the environment, and renewable energy, and would like to learn more.

  • To know if renewable energy is a vibrant market for the long-term in the Pacific Northwest, legislators and public opinion leaders need to understand the exact level of consumer demand, the type of renewable energy preferred (small hydro, wind, biomass, etc.), the correct price and the potential growth rate for the future.

    Next, legislators must decide how and when deregulation is going to occur. Will they allow open access and give consumers the ability to empower themselves and select their energy provider? Or will legislators decide that consumers are uneducated about energy issues and that their energy options can only be determined by their existing utility which will mandate what "they deem" is in the best interest of the consumer?

    Right now there are pilot programs and open access models in places such as Colorado, Texas, California, Pennsylvania, Nevada, Connecticut and North Carolina. Eventually these marketers may turn their efforts toward the Pacific Northwest where it is believed that consumers value the use of environmentally renewable resources for electric power generation.

    Pacific Northwest consumers may be ripe for switching to national brand name marketers, if given the chance, unless their existing utility has preempted the market by successfully marketing and communicating a credible renewable energy product.

    Sooner, rather than later, the global market for clean energy will skyrocket. For the Pacific Northwest, this could create additional jobs and tremendous economic growth. If the Pacific Northwest becomes the leader in a clean energy movement, the prospects are brighter than ever.


    Lynn Auch and Mark Sten are partners in Light Green Co., Bellevue, a marketing strategy company specializing in environmental issues. Eugene Rosolie also contributed to this article. He is with the environmental non-profit organization Northwest Environmental Advocates in Portland

    Copyright © 1998 Seattle Daily Journal of Commerce.