Green Pricing Programs Spur Growth of Renewable Energy Technologies

source: press release 2001.9.25 NREL

A new study by the U.S. Department of Energy's (DOE) National Renewable Energy Laboratory (NREL)
identifies key factors for ensuring the success of "green pricing" programs
and ranks programs nationwide for their relative effectiveness.

Currently offered by more than 85 utilities in 29 states, green pricing gives
consumers an option to help support additional electrical production from
renewable resources such as solar and wind.

The study found that the design and marketing of the "green power" product
is a critical element of success. Other key factors include whether the
program creates "personal value" for customers and the extent to which a
utility partners with the community and other outside groups to publicize the
program.

"Green pricing has given utilities and their customers a powerful new tool to
foster environmentally friendly energy production," said NREL Energy
Analyst Blair Swezey, who co-wrote the study with NREL Energy Analyst
Lori Bird. "Our work here lays out the ways these programs connect best
with their customers, and shows which are achieving the most in terms of
adding new renewable power to the grid."

Ranked by the amount of new energy produced, the green pricing program
of the Los Angeles Department of Water and Power (LADWP) was found to
be first in the nation, followed by Austin (Texas) Energy and Public Service
Company of Colorado.

Ranked by customer participation rates, the top four are Moorhead (Minn.)
Public Service, LADWP, Holy Cross Energy (Colo.), and Madison (Wisc.)
Gas and Electric. (See attached tables for additional rankings).

The study cited several ways utilities have provided "personal value" to
green pricing customers. Those benefits include tax deductibility of the extra
charges, personal recognition in program newsletters and advertisements,
instilling civic and community pride and price protection from fuel price
increases.

Pricing should be tied directly to the investment promised for new projects,
the study found. "Customers want to know that the dollars they are
contributing result in additional and meaningful renewable energy
development," it concluded.

To date, 282 megawatts of renewable energy capacity has been installed
or is planned as a result of green pricing programs - enough to meet all the
power needs of 110,000 homes.

Successful implementation of a green pricing program not only demands
continuing marketing efforts to build awareness, but also requires ease of
participation and, longer term, a commitment to expanding the program to
meet customer demand.

Marketing efforts highlighted by the study include the "Green LA" community
event sponsorships underwritten by the LADWP and Public Service
Company of Colorado's cooperative ads and initiatives with a Denver
television station.

While residential customers generally are the focus, a green pricing
program's ability to attract business customers could determine its ultimate
impact. Some programs have drawn as much as half of their support from
businesses; overall, the study found that about a quarter of the total power
sold through green power programs is to non-residential customers.

The study also suggests that by carefully analyzing the motivations and
preferences of potential participants, utilities can target specific green
pricing programs to appeal to wide segments of their customer base.

According to Swezey, the importance of green pricing for providing
consumers with environmentally beneficial choices in electricity is
increasing as a result of market issues that have slowed the drive for full
utility deregulation in some states. The NREL study provides utilities and
other interested parties with a list of "best practices" to achieve success
gleaned from detailed knowledge of green pricing experience to date.

The full report, including "Top Ten Lists" of utilities, is available in PDF
Format (PDF 1.81 MB) The study was conducted by NREL's Energy Analysis Office and funded by
DOE's Office of Power Technologies.

NREL is a national laboratory managed by Midwest Research Institute,
Battelle and Bechtel. In addition to its work in energy analysis, the lab is a
leading center for research into solar wind energy, plant- and waste-derived
fuels and chemicals, energy-efficient buildings, advanced vehicle design,
geothermal energy and hydrogen fuel cells.