A green cure for paralysis

It is tempting for the wind lobby to dismiss green pricing as yet another of America's consumer fads. Even worse, to believe its only achievement is to give consumers the impression that wind is an expensive option. Such cynicism is uncalled for. In the absence of a level market, green pricing is currently the only option in the US for getting wind turbines installed. What is important to realise in these early days is that the significance of green pricing and green marketing lies not in their ability to generate major wind projects, but in their potential for creating political good will.

A year ago, when also on the eve of the American Wind Energy Association's annual conference, this column was mainly preoccupied with the likely impact of the bankruptcy of the wind industry's biggest company. Kenetech's demise has since been revealed as America's tenth largest company crash of 1996. But even in those dark days of gloom there was talk of a new beginning, a new grass roots approach to wind development in the US. Tentative discussion of the shape of future markets included whispers of "wind turbine clusters" and, significantly, "green pricing."

The significance lies in the emergence this year in the United States of a veritable plethora of green pricing schemes offering electric utility customers the choice to buy clean power at a premium price (pages 30-36). What is more, "green marketing" has arrived hand-in-hand with "green pricing." The advantages of marketing products wearing green labels has struck home in the electricity business. Facing a future where international commitment to cutting C02 emissions could well push up the price of fossil fuels through taxes, utilities are beginning to see the advantages of hedging their environmental risk. December's Earth Summit in Kyoto is expected to see the United States commit to C02 reduction for the first time.

By joining the dash to go green, America's utilities are perhaps choosing not to follow the example set by their counterparts in Australia. Here, with a government offering little environmental leadership (it is even quibbling over the concept of C02 targets), market liberalisation has sent electric utilities on a short-sighted price cutting spree to attract customers (Windpower Monthly, May 1997). In a world where energy prices are already so low there is no incentive to invest in cleaner technologies, greater foolishness is hard to imagine. How much more sensible, not to say attractive, green marketing seems, where investment in renewable energy is willingly paid for by customers. Promoted in the right way, wind plants become a value added commodity to a utility, not only gaining it new customers, but also their long term loyalty.

So far, so good. But where does all this commendable vision leave wind energy in the US? Disappointed is the short answer, though not necessarily the correct one. To date, the largest wind project to have resulted from green pricing -- or green marketing -- is to be no bigger than 20 MW, at most. Of the score or so of green pricing schemes now launched, only six include wind -- and minimal amounts at that. Even more depressing, far fewer people sign on to green pricing schemes than polls indicate. One scenario suggests that in the unlikely event that all US citizens were given the option to buy green power, no more than 2000 MW of wind capacity would result over five years.

Faced with these facts, the temptation is to dismiss green pricing as yet another of America's consumer fads: here today, gone tomorrow, with nobody the wiser. Or even worse, to believe its only achievement is to give consumers the impression that wind is an expensive option. Such cynicism is uncalled for. In the absence of a level market, green pricing is currently the only option in the US (or in Australia) for getting wind turbines installed. Moreover, utilities and consumers alike need time to get used to the concept. There is every reason to believe that green power schemes will attract increasing numbers of participants. Nobody yet knows the full potential and estimates vary enormously. Zond's Ken Karas puts the potential in California alone at 2000 MW.

What is important to realise in these early days is that the significance of green pricing and green marketing lies not in their ability to generate major wind projects, but in their potential for creating political good will. Around the world the most important single factor for successful wind markets has been government leadership. But the fossil fuel lobby's dire warnings of economic Armageddon have so far paralysed most governments from encouraging renewables and disadvantaging the conventionals. Actions speak louder than words, though. The fact that thousands of citizens are voting for green power with their pocket books should act as a shot of adrenaline to paralysed national leaders, giving them the willpower to follow their instincts. Al Gore's are undoubtedly geared towards renewable energy -- and he is not alone out there.

As the renewable with the best green credentials closest to the market, wind stands to benefit most from green energy schemes. Thus the wind lobby should act to fully publicise the pros and cons of this free market mechanism. Consumer confidence is a vital issue. National standards for what constitutes green power in a supply mix must be implemented to rule out all chance of utility fraud. Customers participating in green pricing schemes should also be compensated for their willingness to pay more for an ultimately cheaper product. By promising them green contracts guaranteed against price rises, a utility reduces the risk of a customer dropping out of the scheme, while the customer is shielded from being unfairly hit by possible C02 taxes, or even the "stranded" costs of unwise investments of the past.

First and foremost, however, the wind business must make it clear that green marketing is not a panacea for global energy pollution. Far more fundamental policy changes are needed, such as carbon taxes. Meantime, though, it should be argued that green pricing is a useful instrument in a transitional market for teaching utilities and consumers that renewables are for real. Furthermore, if marketed seriously and with rigour, green marketing could facilitate enough wind plant construction for the industry to build its long called for and much needed "critical mass." Not even fossil fuel could stop it then.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Windpower Monthly Events


Latest Jobs