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Green terminology

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Green marketing and green pricing are concepts evolved from the same idea-that an added-value product should be sold at a premium-but in practice they represent different approaches to renewables marketing. Green pricing is a term referring to optional programs offered by utilities, in which customers can pay a premium for clean electricity. In the regulated market it set the scene for green marketing of renewables in states with deregulated markets.

As many as 40 green pricing programs have been launched or announced by some 80 or 90 different utilities, some of which are members of co-operatives who share the same program. The first green pricing program was in 1993, says green electricity consultant Ed Holt. The utilities offering green power at a premium price do so for a variety of reasons: mainly they are responding to customers' environmental concerns, but some want experience with the technology, while some, with deregulation on the horizon, are preparing to sell competitively in a retail market.

Green pricing programs have grown dramatically in number. Two years ago, there were an estimated 12 utilities offering 15 programs (Windpower Monthly, February 1997). Now there are more than three dozen. Nonetheless they have only led to 45-50 MW of renewables, most of it wind, says Holt. Most recently, Colorado's first green pricing plant, the 5 MW Ponnequin wind farm, started providing power to green consumers, including the governor's mansion.

But as with green marketing (main story), the response from consumers is slower-or just lower-than had been anticipated. Although the idea has been around for six years, on average only about 1.2% of customers nationally are choosing to pay extra for clean electricity, says Holt. For years, market research had suggested that the proportion of customers choosing green power could quickly climb to anything from 20% to 50%, a rate of penetration that now seems unrealistic.

Even so, yet another report, this time by Resource Data International of Colorado and released in December, suggests that more than 40% of customers say they will pay more for electricity that protects the environment. What consumers say they will buy, while responding to a green pricing survey, has proven to be very different, however, from the real world, says Holt, who has studied the complex factors involved.

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