Amanda Mortlock, VP of 3Degrees’ Utility Partnerships, discusses the key components of climate strategies for gas utilities, including voluntary renewable natural gas (RNG) programs.
Electric utilities face significant pressures as well as many exciting opportunities — decarbonization, transportation electrification, continuing digital transformation, changing customer preferences, increasing disintermediation (just to name a few). Every day, utility teams work hard to solve these challenges, as well as capitalize on the opportunities that they present. But many utilities fail to realize there is an underutilized tool in their toolbox that could be very effective in these efforts: voluntary green power programs.
What’s the true value of voluntary green power programs?
Having worked closely with utilities for over a decade, I can say with confidence that fully optimized green power programs provide a huge opportunity for utilities. When designed and implemented well, these programs offer numerous benefits.
Green power programs enable utilities to partner with their customers to achieve utility or regional carbon reduction targets.
New revenue potential
These programs also provide the opportunity to achieve incremental revenue, whether from assets supported by the voluntary market or a regulatory-approved mark-up. While challenging to make happen, this is feasible and some utilities are already realizing these revenue gains.
Green tariffs have become absolutely essential in attracting most significant new corporate load.
As documented by J.D. Power research, when customers participate in a green power program – or are even just aware of it – customer satisfaction scores jump.
New sales opportunities
When most utilities envision the utility-of-the-future, they picture selling more than just electrons to customers. Green power programs allow utilities to start to build that muscle, and can even fund entire sales channels that can eventually be leveraged to support the sales of additional products.
Green power programs provide the perfect opportunity for utilities to embrace a comprehensive digital sales and marketing strategy (most are just scratching the surface right now). With a low barrier to entry, highly targeted reach, and a great storytelling platform, a full digital strategy can help utilities explore new ground when it comes to connecting with customers where they are.
While it may not be possible to realize every one of these benefits, a well-designed suite of programs should be able to deliver on most of them collectively. Even a legacy program can be optimized to deliver increasing value.
Moving from the “Why?” to the “How?”
Frequently, utilities create individual green power programs that are reactive — designed to address a particular threat or to serve a specific client — which can make it difficult to scale the programs to reach their full potential. And without scale, most of the benefits listed above simply aren’t meaningful or even possible.
Instead, utilities need to start with a proactive program design where an entire suite of green power programs is designed as part of a clear, intentional piece of the organization’s broader strategy. Critical factors in program design include:
Green power programs are only successful if customers enroll. It’s essential to invest time in researching how your customers across different segments feel about critical elements of the program.
Renewables strategy and pricing
Based on this research, you’ll have a better sense of how your program needs to balance cost with impact. Customers want to have an impact with their purchase, but there is still a ceiling on the premium customers are willing to pay.
Working with environmental and rate-payer advocates early on in the program design process will help you understand what they value and, later, make it easier to secure their support. And engaging internal stakeholders is also critical to program success — if they understand the value the program delivers, they will be more likely to champion it throughout the organization.
Financial and strategic value
Utilities need to be intentional about the value they want a suite of green power programs to deliver. For example, if program profit is critical, this needs to be built into the program rates at the beginning.
Green power programs are unlike other utility programs that often have fixed, regulatory mandated marketing budgets. In this case, the budget grows as the program grows — which is appropriate for a premium, subscription-based product. One of the most common mistakes utilities make is under-funding their marketing efforts in early years. Without investment, they can’t scale the program and ultimately deliver any of the benefits listed above in a meaningful way.
Green power programs sit at the intersection of decarbonization and customer satisfaction and thus provide a unique opportunity to utilities. By maximizing the value of these programs, utilities, their customers, and the climate all win.
How Green Power Program participants can help accelerate the journey
Society has until 2030 to slash carbon emissions by 45% to avoid the worst effects of climate change, according to the recent UN IPCC report. Fortunately, the single largest source of emissions in the U.S., the transportation sector, may already have the answer: electric vehicles (EVs).
Yet today, more than a decade after the first contemporary battery-only EV (BEV) was delivered, less than 0.5% of the world’s 1.2 billion vehicles are EVs. And while EV sales in the U.S. are forecasted to overtake sales of gas-burning vehicles around 2035, they will represent only 42% of total vehicles on the road in 2040. To hit IPCC goals, we must accelerate EV adoption.
What’s slowing us down? One significant challenge is “the awareness gap” in knowledge of EVs on the market: in one study by Strategic Vision, for example, 54% of consumers were not able to name even one EV model. In addition to lack of awareness, there are also consumer concerns around charging and “range anxiety”.
Utilities are recognizing the business value of EVs
While most utilities recognize that they are key players in the transition to EVs and are increasingly active in supporting them, the majority are still early in the journey. According to SEPA, 74% are just getting started with simple initiatives such as providing EV information that can help close the awareness gap and purchasing EVs for their fleets. Only 23% are directly encouraging the purchase and use of EVs through tactics like deploying charging infrastructure and rate incentives, which together speak to consumers’ concerns.
A vigorous EV program can be a huge win for utilities. By accelerating the pace of EV adoption, they stand to gain financially by growing demand for energy and related services, and by improving operational flexibility as EVs become a grid resource.
Another important benefit: EVs can help utilities improve customer satisfaction by saving their customers money through reduced rates, and helping them navigate the barriers to EV purchasing.
So if utilities have ample motivation to help accelerate EV adoption, what’s their next step? At 3Degrees, we have worked closely with utilities nationwide for over a decade and had a hypothesis that they have a built-in audience for marketing EVs: participants in Green Power Programs (GPPs). These customers have already shown that they are willing to make investments to support sustainability. To test this theory, 3Degrees studied GPP participants from 10 U.S. utilities and compared them to EV owners – and proved our hypothesis.
Many similarities between EV owners and GPP participants
Our research found that GPP participants and EV owners are very similar across a number of factors.
- Higher rates of income and net worth – both groups tracked above national averages, though the net worth of EV owners averaged 133% higher than GPP participants.
- Higher levels of education – both EV owners and GPP participants have higher than average college completion rates, though a notably larger percentage of EV owners (65%) are college grads versus GPP participants (49%).
- Higher levels of home ownership, home value, and home equity
- Higher levels of environmental consciousness
- Higher propensity to spend across lifestyle categories, like gardening, healthy living, books, and luxury retail items
Based on these findings, we then looked for evidence that our hypothesis is playing out in the market and worked with one of 3Degrees’ utility partners to examine its residential GPP participants and EV owners in that service area.
The correlation held up: EV owners were 79% more likely than non-EV owners to be enrolled in that utility’s green power program.
As part of our research, we also compared the demographics of hybrid owners and GPP participants, since hybrids (like EVs) are often purchased on the basis of their lower carbon emissions. Not surprisingly, hybrid owner characteristics lined up well with GPP participants and, in some cases, even better than EV owners.
In addition to the demographic similarities, GPP participants are also strong targets for EV marketing for another important reason – the best target for any utility program is a customer who already participates in a utility program. They likely read what you send them, they’re engaged with their energy use, and they like trying new programs.
Utilities and GPP participants can be climate heroes, together
By growing their green power programs and effectively marketing EVs to those participants, utilities can play a significant role in accelerating EV adoption. In the process, both utilities and their customers have the opportunity to become true climate heroes.
Clean Energy Aggregation to Support Apex Clean Energy’s White Mesa Wind Project in Crockett County, TX
Apple, eBay, Samsung and Sprint today announced a joint agreement to purchase power from a new wind farm owned and developed by Apex Clean Energy. The transaction—spearheaded by Apple, the largest purchaser in the innovative small load energy aggregation—totals approximately 75 megawatts of clean energy, enough to power the equivalent of 20,000 homes.
Shared energy purchases like this allow companies to pool their energy demands and collectively support the addition of large-scale renewable energy projects to the grid. Apple brought together other technology leaders dedicated to responsible business practices – eBay, Samsung and Sprint – in the aggregation agreement, which will enable all participants to access cost-effective low-carbon renewable energy from the new project. 3Degrees facilitated the agreement.
The full 500-MW White Mesa Wind project is expected to come online in 2021 in Crockett County, TX.
“We’re proud to be powering all of Apple’s operations around the world with 100 percent renewable energy and driving the private sector to support the clean energy transition,” said Lisa Jackson, Apple’s Vice President of Environment, Policy and Social Initiatives. “Businesses of all sizes and of varying energy needs can help bring new, renewable energy online. This collaborative agreement in Texas is a model we hope others will replicate.”
“At eBay, we prioritize operating in the most environmentally and socially sustainable way,” said Wendy Jones, SVP Global Operations, eBay. “This collaboration is not only an important step in advancing our commitment to reaching 100 percent renewable energy by 2025, but it also offers an inclusive approach to collaborate with other companies and lead the way toward a clean energy future.”
“Samsung Austin Semiconductor understands the responsibility of businesses to work together to support environmental sustainability and increase the share of renewable energy in our local markets,” said Gil Heyun Choi, president of Samsung Austin Semiconductor. “We see this agreement as a landmark effort for cutting-edge semiconductor technologies and a demonstration of green manufacturing brought to scale.”
“This project marks another step toward reaching our corporate goal of reducing Sprint’s carbon footprint,” said Chas Peterson, Vice President of Procurement for Sprint. “We are also greening our supply chain by partnering with some of our key suppliers on this innovative shared energy purchase.”
“Enabling corporate aggregation for renewable power purchasing is a key focus of Apex’s and an essential way of engaging more corporate customers in clean energy procurement,” said Mark Goodwin, president and CEO of Apex Clean Energy. “The Apex platform is designed to develop utility-scale wind and solar projects that deliver optimized performance paired with the flexibility that aggregated offtakers need to make these deals feasible. White Mesa Wind is a prime example of the future of corporate clean energy transactions: aggregated power purchasing tailored to each offtaker’s needs.”
“REBA members continue to drive innovation in clean energy procurement,” said Miranda Ballentine, CEO, Renewable Energy Buyer’s Alliance. “By bringing together the buying power of four leading brands, Apple, eBay, Sprint and Samsung, with the professional support of 3Degrees, energy buyers are proving that through the right partnerships these innovative renewable energy projects can come to fruition.”
About Samsung Austin Semiconductor, LLC
Samsung Austin Semiconductor is one of the most advanced semiconductor manufacturing facilities in the world with more than 3,000 employees and 2.45 million square feet of floor space. Samsung Austin Semiconductor has broad semiconductor process technology offerings serving customers in various application areas including mobile, consumer, networking/high performance computing, Internet of Things, RF and automotive. Since 1996, Samsung Austin Semiconductor has invested approximately $17 billion in its Austin, TX campus, making it one of the largest direct foreign investments in United States history. Samsung Austin Semiconductor is a US-based subsidiary of Samsung Electronics Co., Ltd. The Austin facility is one of the few semiconductor plants the company has outside South Korea. Visit www.samsung.com/us/sas.
Sprint (NYSE: S) is a communications services company that creates more and better ways to connect its customers to the things they care about most. Sprint served 54.3 million connections as of June 30, 2019 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; leading no-contract brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Today, Sprint’s legacy of innovation and service continues with an increased investment to dramatically improve coverage, reliability, and speed across its nationwide network and commitment to launching a 5G mobile network in the U.S. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
eBay Inc. (NASDAQ: EBAY) is a global commerce leader including the Marketplace, StubHub and Classifieds platforms. Collectively, we connect millions of buyers and sellers around the world, empowering people and creating opportunity for all. Founded in 1995 in San Jose, Calif., eBay is one of the world’s largest and most vibrant marketplaces for discovering great value and unique selection. In 2018, eBay enabled $95 billion of gross merchandise volume. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.
About Apex Clean Energy
Apex Clean Energy develops, constructs, and operates utility-scale wind and solar power facilities across North America. Our mission-driven team of more than 200 renewable energy experts uses a data-focused approach and an unrivaled portfolio of projects to create solutions for the world’s most innovative and forward-thinking customers. For more information on how Apex is leading the transition to a clean energy future, visit apexcleanenergy.com or follow us on Facebook, Twitter, and LinkedIn.