Twenty-six businesses in Traverse City, Michigan pay their local utility 1.58 cents per kWh more on their regular electricity bills to buy power generated by a 600 kW wind turbine. These businesses have committed to purchase all of their electricity from this clean power source for ten years. The typical participant pays an additional $20 per month (the range excluding outliers is $4 to $55 per month), an 18 percent premium.

Because other green pricing programs have few business customers, Steve Smiley and I interviewed 24 of the Traverse City participants to learn who they are and why they signed up. Through this research project, sponsored by the Renewable Energy Policy Project, we gained insights that can help utilities or other power suppliers design green pricing programs or green power products that will appeal to businesses.

The findings show that the participants are all small businesses-not surprising, since Traverse City is a relatively small city. Overwhelmingly, these businesses said that they signed up for the wind rate for environmental reasons. Other reasons include energy resource diversification and business leadership. Most decisions to participate reflect the owner's personal philosophy rather than an interest in gaining a business advantage, although many of the retail businesses expressed interest in receiving recognition for their participation.
Not all businesses buy their power according to price; some are willing to pay more for green energy.

We conclude that some business customers see value in purchasing power from renewable energy. Businesses should not be dismissed as unlikely to participate in green pricing programs: our research shows that businesses do not buy based on price alone, and some are willing to pay more for green power.

Second, because these business customers-individually and as a class-use more energy than residential customers, even relatively few participants can have a large impact on renewables development. This fact justifies a special marketing effort by utilities to these customers.

Finally, tapping into consumer preference for clean power could greatly benefit the renewable energy industry. As competition intensifies, product and marketing innovation will create more appeal. This will lead to accelerating purchases of renewables and lower production costs, making renewable energy even more competitive.

Many of the factors contributing to Traverse City's success can be found or created in other places. These factors include supplier credibility, customer awareness of energy issues, community-focused marketing and environmental concern. To broaden the appeal of green power programs from small businesses to larger customers, utilities and electricity suppliers will need to develop a range of green power products that appeal to different market segments.

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