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Risking a Green-Power Outage

Will eco-power survive the next five years?

Fortnightly Magazine - October 2005

to earn to sell green power at a profit. If the market price of green power is below the strike price, the customer would pay the difference to the vendor. If the price of power exceeds the negotiated strike price, then the customer would obtain a rebate. This product structure could result in a credit to the customer if renewable energy costs are below the costs of the wholesale market.

4. Marketing Methods

Working in green power markets the past eight years, we have spoken with executives at dozens of utilities that have created green-power programs. Almost all believe that their market is unique and that their internal sales and marketing teams know how to sell the product.

Concurrently, we have witnessed countless dollars wasted in marketing methods that have failed over and over again. Facing mistakes takes courage, but will provide valuable lessons that can eliminate errors in the future and increase sales. At the same time, a review of some of the best and worst practices of other utility programs would be valuable as well. Contacting even a handful of both successful and failing utilities and asking them what is going right or wrong would be of immense value.

5. Sales Team

The sale of renewable energy is the selling of a vision, backed up by a product that offers some financial value (even if this is in the future) or other reward to customers. This is very different from offering a new demand-side management option or a new undifferentiated rate. Therefore, the sales team has to share that vision and effectively communicate it. Too often, we have found passionless sales representatives with a lack of knowledge about renewable energy. Utilities either should invest in educating sales team members and honestly evaluate their abilities to sell the product, or they should use outsourced talent.

6. Indirect Sales

If you dream of selling renewable energy by putting a kiosk with fliers in a mall, think again. The nature of the product is complicated for everyone from residential consumers to energy managers at Fortune 500 companies (of which we have spoken to hundreds). Consumers need to be educated about green power products and their benefits, and they also have to be convinced to make the change. They have questions about cost, product structure, how the electricity gets to one's building if it is generated far away, and how renewable energy is accounted for by the utility. Some kind of discussion is necessary to close a sale, especially with large energy users. This cannot be accomplished through indirect sales methods.

Any suggestion that there is no market for a new product that is not selling well usually is false. Markets take time to build. This has been done for organic foods, bottled water, and recycled materials, to name but a few. These markets succeeded because consumers came to the conclusion that certain products and practices involving health and the environment could be replaced by cost-effective alternatives that produced better results.

Green power is no different. It can be profitable for utilities, but it