The Grassroots are Greener:
A Community-Based Approach to Marketing Green Power
Executive Summary
Following a series of mostly unsuccessful legal battles in the mid-1990s to win a regulatory mandate requiring Public Service Company of Colorado (PSCo) to invest in wind energy, the Land and Water Fund of the Rockies (LAW Fund) decided to work with PSCo to aggregate demand for wind power in the context of a green pricing program. Under this new program, customers could voluntarily pay more on their electric bill to purchase some or all of their electricity from a new wind power project to be developed by PSCo. The LAW Fund developed a Grassroots Campaign to educate customers about the environmental impacts of their energy choices and to encourage them to purchase wind power.
The cornerstone of the community-based marketing approach used by the LAW Fund is a partnership in which a nonprofit environmental or clean energy advocacy group lends credibility to the product and the marketing message and uses grassroots organizing techniques to reach a broader set of potential customers cost-effectively. A for-profit supplier provides a boost by using more traditional marketing channels such as paid advertisements, direct mail, and bill inserts.
Additional relationships can be built with key governmental, nonprofit, and private entities. Governmental entities at the local, state, and federal level can choose to purchase green power and help generate media coverage. They can also provide staff time, funding, and their own outreach networks to support the marketing campaign. Businesses and nonprofit institutions can buy green power directly and educate their employees about the implications of their energy choices. The hallmark of the grassroots approach to marketing green power is broad-based, community-wide involvement in the promotion and purchase of clean energy resources.
By May 1999, more than 11,000 residences, 200 businesses, and a dozen municipalities in Colorado had signed contracts to pay a combined premium in excess of $1 million to purchase almost 20 megawatts (MW) of wind power. And five other Colorado utilities were also offering green choices to their wholesale and retail customers. By the end of 1999, an additional 5 MW of demand will likely be aggregated, bringing the green pricing total to 25 MW.
This suggests that a significant number of commercial entities are willing to pay a premium to purchase renewable energy — roughly a fifth of the total demand has come from nonresidential customers. Roughly one in six small businesses contacted is willing to pay a premium of 2.5¢ per kilowatt-hour to purchase, on average, 15% of their total energy from wind power.
In addition to the direct wind subscriptions, the education and customer response resulting from the PSCo/LAW Fund green marketing partnership was a significant factor in creating a separate 25 MW regulatory commitment. By the end of 1999, the green pricing path and the marketing partnership between the utilities and the environmental community will have resulted in roughly five times as much wind power coming on-line as was being advocated in 1996 regulatory proceedings. The windfarms developed to serve this demand represent a $50-million investment and will reduce greenhouse gas emissions by 3-4 million tons over their lives.
These results should be viewed in light of the operating dynamic in Colorado: the lack of resolve at the state level to mandate renewable energy. The best outcome for advocates would have been regulatory mandates for renewable energy. Failing that, partnering with the utilities in their green pricing programs enhanced the regulatory outcome in the most recent integrated resource planning process and led to further renewable energy commitments. The lessons learned in Colorado include the following:
The Message is Unique
The Grassroots Campaign has the credibility to position the purchase of renewable energy as a community ethic, the cornerstone of any plan for sustainable development. In this context, purchasing renewable energy, like recycling, taps into a spirit of community goodwill, volunteerism, and local participation in the state's energy future.
Participation is Diverse
The willingness of business customers to participate seems to hold true in a diverse range of geographic (urban, suburban, and mountain communities), ideological (conservative and liberal communities), and economic settings.
Outside Funding is Needed
A successful community-based marketing effort requires outside funding. Although the utility supported various efforts by the environmental community to raise outside monies, no funding came directly from PSCo. The environmental community believed that this was important in order to preserve its credibility.
The Utility/Advocacy Group Partnership is Delicate
Situating a grassroots marketing campaign in an advocacy group can be awkward. Often the groups with the most credibility and the greatest organizing experience have been in adversarial policy debates with a utility in either administrative or legislative contexts. Utilities worry that if the groups they are working with on green power attack them on other issues, the controversy will affect green power sales. And when entering into marketing partnerships with utilities, advocates worry that their most valuable asset — credibility — might be compromised.
Training is Needed to Expand the Grassroots Campaign
The Colorado case study was conducted by people with significant experience in the electric industry as well as a personal commitment to and passion for promoting renewable resources. As the Grassroots Campaign is expanded to other communities and settings, new leaders must be found, funded, and trained. The Grassroots Campaign has succeeded in increasing utility investments in renewable resources. The LAW Fund is now working with groups throughout Colorado to expand this community-based marketing approach. In addition, the group is working with others around the country, particularly in competitive markets, to develop an economically self-sustaining market model of the Grassroots Campaign. The hope is that stakeholders in other regulated states, where renewable energy development is stalled, will emulate the Colorado model — and that stakeholders in restructured states will consider the possibilities. The promise of community-based marketing, funded by the operation of competitive markets, is the creation of an "army" of public-spirited individuals educating customers about the environmental and economic impacts of their energy choices.
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