The Grassroots are Greener:
A Community-Based Approach to Marketing Green Power
Part VII: Lessons Learned: The Good, The Bad, And The Ugly
On balance, the benefits associated with the community-based grassroots campaign in Colorado greatly outweighed the problems. For the LAW Fund, the bottom line is that the amount of renewable resources acquired through green marketing far exceeded the amount likely to have been obtained through the regulatory process. The challenge will be to find ways for advocates to support green marketing that will be economically sustaining in a competitive market.
Resource Acquisition: The Grassroots Campaign and utility efforts will likely result in 25 MW of new wind capacity coming on-line in Colorado by the end of 1999. Just as important, the education and customer response resulting from the utility/advocate green marketing partnership was a significant factor in creating an additional 25 MW regulatory commitment. By the end of 1999, the green marketing path will likely be responsible for roughly five times more wind power coming on-line as could have been obtained from the regulatory proceedings in 1996 under the best possible scenario. This is a real achievement. Furthermore, this market-based approach should be more insulated from political shifts in the state.
Diversity of Participation: Before the Colorado community- based marketing began in 1997, most utility green pricing programs had focused on residential customers, believing that commercial customers would be less willing to pay more for a clean energy product. The Colorado experience strongly suggests that a significant number of large and small commercial customers are willing to pay a premium to acquire renewable energy. One out of every six small businesses approached in the Grassroots Campaign paid a premium of 2.5¢/kWh to purchase, on average, 15% of its energy from wind. This willingness of commercial 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.
A Unique Message: Grassroots marketing allows green power to be sold in a different context. A Grassroots Campaign can position the purchase of renewable energy as a community ethic, the cornerstone of any plan for sustainable development. Buying electricity from renewable sources then becomes a value shift similar to recycling, where the idea was encouraged by community organizations and is now institutionalized in most parts of the country.29 In this context, purchasing renewable energy taps into a spirit of community goodwill, volunteerism, and local participation in the state's energy future. Households and businesses feel empowered by behaving in an environmentally responsible way. Marketing green power as an ethical action also may ensure that most customers continue to purchase their electricity from clean sources over the long term.
Transferability: The Grassroots Campaign should be transferable to other places, technologies, and market structures. For example, wind has been successfully marketed in different geographical settings in Colorado. The LAW Fund is preparing to transfer the lessons learned in Colorado to Utah and New Mexico, where similar green pricing programs will be offered to customers. Grassroots marketing techniques should also be applicable for other renewable resource technologies. In Arizona, the LAW Fund and several local groups are in the planning stages of marketing a solar product. Initial analysis suggests that the same techniques and approaches piloted in Colorado for wind power are likely to work for solar power in Arizona.
The most exciting opportunity associated with the Colorado work is transferring it to a retail competition environment. The challenge is to create a self-sustaining pilot in which the costs of grassroots, community-based green marketing are supported by the market. If this were possible, outside funding eventually would not be needed and the Grassroots Campaign could be expanded from a handful of people. At this time, the LAW Fund believes there is no obvious reason why community-based marketing could not be applied in competitive markets such as the ones emerging in Pennsylvania, New Jersey, and elsewhere.
Funding: A successful community-based marketing effort may require significant outside funding. In Colorado, a mix of federal, state, and foundation money was used to pilot the approach. 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. However, the funding issue is central because most groups cannot afford to engage in grassroots education, outreach, and marketing activities without outside support.
The Utility/Advocacy Group Partnership: 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 engaged in adversarial policy debates with a utility in either administrative or legislative contexts. As a result, there may be institutional tension as marketing activities expand or if the environmental group needs to engage in additional adversarial proceedings. Utilities are well aware of the tenuous nature of an ongoing relationship with the environmental community. They are concerned that if a separate adversarial issue arises outside of the context of the green pricing program, the opposition by advocates might adversely affect their green products. Conversely, however, the working relationship developed through the marketing partnership in Colorado has helped to facilitate agreement on other contentious environmental issues. There is also the potential that by working with utilities, environmental groups will harm their credibility as effective advocates. Indeed, a number of customers and industry stakeholders initially assumed that the LAW Fund was being paid for its work by PSCo, and considerable effort has gone into assuring the public and others of the LAW Fund's financial independence from the utility.
Public Credit for Grassroots Efforts: The Colorado experience suggests that for-profit green power suppliers and political leaders may be cautious about publicly acknowledging their involvement with nonprofit environmental groups. This likely reflects the desire to be acknowledged for acting on their own as well as the adversarial history of the advocate/utility relationship. For example, Governor Romer shared the dais at his press conference on wind power with civic, business, and governmental leaders but not with environmental groups. And, although PSCo listed the names of environmental groups on the letterhead for its direct mail piece, the company continues to make little reference to the Grassroots Campaign in its communications materials. Likewise, Channel 9 only focuses on the efforts of the utility in its "wind cam" coverage of the site and tends to ignore the role of the Grassroots Campaign.
Training Other Groups: 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 campaign expands to other communities and settings, new leaders must be found, funded, and trained. The economics of this training function have not been fully assessed.
Branding the Incumbent as a Green Supplier: One reason that regulated utilities are interested in marketing clean energy products is to establish their reputation as a green provider. Through marketing partnerships, environmental or clean energy groups can facilitate this process in a significant way and potentially cause adverse competitive impacts. In essence, the environmental community may be helping to brand the incumbent utility in a regulated market, with the result that when competition does come, it will be more difficult for new green power suppliers to attract a critical mass of customers. On balance, the LAW Fund believes that the benefits being achieved today from working with utilities on this program in Colorado — in terms of resources acquired, pollution emissions reduced, and increased community awareness of energy choices — outweigh the anticompetitive issues. There is no denying, however, that adverse competitive impacts are a real concern.
Divisions in the Environmental Community: Some environmentalists and consumer organizations have been vocal in their criticism of green pricing programs and the support of these programs by environmental groups. Public Citizen, a Washington-based watchdog group, believes that it is misguided to sign people up to buy green power before motivating them to become active in support of renewable energy policies. The group considers the time spent by clean energy advocates working with regulated utilities to be time lost advocating for public policy support for renewable energy at the state and federal level — time lost mobilizing citizens in support of strong clean energy policies.30
The LAW Fund and other clean energy advocates see support for green marketing and public policies as reciprocating rather than opposing efforts. The choice of buying clean power allows people to take near-term effective action in their communities and intertwines green consumerism with green citizenship.31 Given that a competitive electric market appears to be some distance in the future, the grassroots marketing effort has led to new renewable energy generation in Colorado where policy approaches have failed. In any event, the divisions in the environmental and renewable energy advocacy communities engendered by green marketing have been real and acrimonious, and pose a challenge to green marketing efforts.
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