16 Mar How to Make Money Going Green
By Jack Doueck | Advanced Energy Capital
On March 1st, 2017 at the Energy Marketing Conference in Houston, Texas, seven panelists discussed “Going
Green” as I moderated. Lanson Jones from Beyond Power, Tammi Stroud from Clearview Energy, Gabe Philips from GP Energy Management, Chip Wood from Green E, Sam Telleen from Green Mountain Energy, Bob Stibolt from Life Energy and Dirk Nowak from SDI Consulting all spoke honestly about their experience – both challenges and successes – with green/clean energy and energy efficiency.
The audience consisted of retail energy providers from every de-regulated state. They represented small, mid-size as well as large retailers. Hundreds of attendees participated in this panel.
We polled the audience and asked everyone in the room four questions: First: “Do you currently sell a green/clean energy product, an energy efficiency bundle or rooftop solar?” 72% said “Yes.” 13% of the audience replied that they are not, yet, but they are planning to. Only 15% answered “No.”
We asked a similar question to an EMC audience in 2004 and only a small fraction of the room replied that they were launching a green product. To be sure, this has been one of the most vibrant areas of growth in the retail energy industry. As competition heats up, retailers are looking to differentiate both their brands as well as their product offerings. Today, there are a number of REPs who offer “green only” products. What is most interesting is that this can and does include ‘green natural gas’ (with carbon offsets).
The second question we asked was: “Are green/clean energy products less profitable, more profitable, or about the same as other retail energy products?” 51% said green product offerings were more profitable. 39% said they were “about the same”, and only 11% of the audience said they were less profitable. There are lots of rumors about retailers “greenwashing” – where they buy RECs (renewable energy credits) in the market for a fraction of a cent, and increase the price of green energy by 2 or 3 cents. This may be a way to convert low-margin business to high-margin business.
“How true do you think this statement is: ‘The future of retail energy will be combining Energy Efficiency/renewables with commodity.’?” This was the third audience poll. A whopping 61% said “Definitely true.” 31% said “Possibly true.” And only 8% said the sentence was false. There are few players in the industry who don’t think the future is all about bundling energy efficiency and/or renewables with the sale of commodity. In fact, most REPs said that customers who bought green products had longer retention. So the combination of higher margin and higher customer retention puts this over the top.
The final question we asked the audience was: “How important is it to your organization to bundle green products and services with commodity?” 35% said it was “extremely important.” 42% said it was important, and only 23% said it was not important. The panelists all agreed that this is one of the most important goals of their businesses. They also felt that combining energy efficiency with green energy enabled the environmentally conscious consumer who may be willing (if not happy) to pay more, suddenly benefit from a long term reduction in energy consumption and thus actually save money and go green.
The panelists spoke about the best demographics for the sale of green energy. Everyone agreed that this appeals to the millennials and it is most popular in coastal states. However, by combining green and energy efficiency, any customer becomes a candidate. Tammi Stroud spoke about how the company helps customers make long-term lifestyle changes with regard to living green. Gabe Phillips spoke about entering the Virginia market and how to bundle solar with the sale of commodity. Chip Wood explained the process Green E goes through to certify over 300 products for retailers. Sam Telleen talked about Green Mountain’s focused mission and how a green energy offering can win against low price competition. Bob Stibolt discussed the different “grades of greenness” and how they break down. He also spoke about some of the developing technologies that are coming to market that will help in this regard. Everyone discussed how to profitably and successfully attract residential and C&I customers with a green product offer.
Post-conference surveys said the panel was well-received, informative, educational, practical and entertaining. Everyone seemed to be having a lot of fun sharing their experiences. The audience was engaged and participatory. Overall, EMC delivered on providing solid content. Conclusion: Going Green, especially combined with an energy efficiency play, can help with brand recognition, customer satisfaction, customer retention, as well as life-time customer value and margin.
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