Purchasing Clean Energy without Getting Burned

Environmentally conscious consumers know that they can “vote with their wallet” by purchasing green goods and services, and by supporting socially conscious businesses. What many don’t know, unfortunately, is how to best choose their options. This is especially true in the clean energy space where a company’s marketing efforts, and the confusion of the marketplace may cause them to make unwise choices.

Presently, there are four ways that are most common for buying clean energy. You can install a solar system on your roof or property, purchase green electricity, purchase Renewable Energy Certificates (RECs), or invest in energy efficiency upgrades (“negawatts”).  Each option comes with its own benefits and costs.  I’ll start by looking at purchasing green electricity.

There are a few pitfalls to avoid when deciding to buy green electricity from a retail electricity supplier. I’ve highlighted a few right here:

Certification and Verification

When you switch to green electricity for your home or business, nothing material will change for you and there’s no physical evidence of your purchase such as a piece of equipment. Sure, you have a contract that promises you green electricity, but that is not enough assurance for many people. One good way to know that you are actually getting the green power you are paying for is by making sure you buy green power that is certified and verified by Green-e. The folks who run Green-e require suppliers to demonstrate that the green energy they are selling matches the green energy they are buying. This is done through a third party audit. I know of no other certification and verification processes that meet the high standards set by Green-e , though they may exist.

Teaser Rates

I heard one clean energy company executive on the radio telling the audience that switching to wind power from them would cost $8-$12 a month. That sounds reasonable until you dig a little deeper and learn that they are offering a three month “teaser” rate. The affordable teaser rate of 9.7 cents/kwh or so expires after three months, at which point the consumer is subject to incredible price spikes through a variable rate. What might those spikes look like? The company’s fixed price deal, which tells you the kind of rate they think they need to make off their customers over the course of a year, ranges from  12-13.5 cents/kwh. That’s the difference between paying $8-$12 a month or $40-$50 a month. When you put it in annual terms, you really get the picture. With the higher rates, you could be facing an electricity bill that is as much as $600 more than you would otherwise pay. That’s for an average home. If you are a bit wealthier than average and have a larger home, chances are your annual bill could hit close to $1,000.

Avoid “teaser” rates at all cost. Despite the pleasant-sounding rationale you may hear from the energy company, it will end up being a bad deal for most of you. Why? Because as an executive at one of these companies told me, they really offer the teaser rate for one reason – they know that 80% of their customers will forget to keep checking their energy rate after three months. That’s right. They have it down to a science. They know that you will sign up thinking that after the teaser is over you’ll just switch elsewhere, but that 80% of you never do.

Dig Deeper

Another aspect of disingenuous marketing you may see is a company that purports to be the little guy fighting the rest of the “big greedy” energy world. Like all deception, there’s probably a grain of truth to it. But do consumers know the fat profit margin these guys are getting for the energy they are selling you? In order to understand this, you have to understand the main components that make up the cost of green energy. Back to that 13.5 cent wind power example. In this case, the green part of that power, the part of that rate that actually goes to the wind farm is likely around 1.5 cents.  Yup, that means you are paying 12 cents/kwh for brown power, which is the exact same power your utility offers at rates as low as 8.5 cents/kwh.  So why such a huge discrepancy? Two words – Profit Margin. The company probably makes in the range of 50%-%70 margin on the product they sell you. I say probably because I’m making an educated guess based on market conditions. I have not seen their books. There are other smaller factors as well, such as cost of capital, but I believe margin makes up the largest chunk of the difference.

Don’t get me wrong, I’m all for profit and the competitive free market. What I think is morally and ethically unjust is sticking your customers with exorbitant rates in order to feed the profit margin needs of your investors all under the guise of being progressive. A company is either a consumer friendly, 100% honest and transparent company that offers the most competitive rates it possibly can or it isn’t. I think in order to be the former, a clean energy company has to choose steady organic growth over VC -backed hyper growth. This means they should not try to make exorbitant profits on the backs of their customers.

Another example of a questionable marketing practice is a company that sells green power among a suite of products, but then works to prevent clean energy laws from passing at the state or federal level. Their green power products are probably legitimate, I’m not questioning that. But if your intention is to “vote with your wallet,” than you may be voting for the wrong candidate. A portion of the dollars you spend with them goes to lobby against the very thing you are trying to promote.

Conclusion

The thing all of these practices have in common is their reliance on uneducated and/or overstretched consumers. It takes a little homework and a little more time to find out the truth behind these marketing efforts. Or it takes the ability to say “no” to certain products that you know are designed to take advantage of your lack of attention (ie. variable rate or “teasers”). Even in this case, I don’t want to paint too broad a stroke here. There are some variable products that are tied to the variability of the utility standard rates. Those are fine because they are actually market responsive, and you know the premium you are paying every month. But this last point just serves to prove once again how much a consumer needs to be educated before venturing into the clean energy field by purchasing green power from a retail electricity supplier.

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Authentic Marketing Through Community Engagement Part Three

 This is part three of a three part series. Please visit deepergreenblog.wordpress.com to access the first two parts. 

There are many example of great CLM campaigns.

One personal example is the Green Neighborhood Challenge (GNEC) I created and directed at Clean Currents.  GNEC was fairly simple early on, evolving over time as we learned how to perfect this particular form of CLM. We found the deep green, environmentally focused activist and worked with them to sign up their community to GNEC. The fact that the pitch for the campaign came from a community volunteer was huge. The premise of the campaign was that for every clean energy enrollment we got, we would donate money to a green project the group was working on. In the campaign execution, we would provide material and speakers to talk about the threat of climate change. We also would send out an eNewsletter highlighting positive actions of GNECs and providing additional educational information. The GNEC leaders had open access to our staff and were brought into the office on a few occasions for food and drinks. If they ever had any problems, I would personally get involved. We created unique presentations for GNECs to use, such as a fun wind power “demonstration” for elementary school students. In one of our later iterations, we had a summer picnic where the entire company came and we recognized the efforts of the best GNEC leaders, with everybody in the company personally thanking them. GNEC cemented Clean Currents firmly in the communities where we operated it. The credibility of the campaign rested on the brand’s credibility as a company that was environmentally and socially conscious, plus we didn’t pay the GNEC leaders anything. The donations never financially benefited the volunteer leaders, but rather went directly to the community project.

Another campaign that looks like CLM is the SweetGreen Passport program. In this initiative, SweetGreen (a restaurant chain focusing on healthy and local salads) partners with health and fitness providers that are local to their restaurants. These partners provide free classes (yoga, dance, etc.) that are exclusive to SweetGreen Passport participants. When the classes happen, participants often share the experience via social media. In addition, and perhaps the part that really makes this “community,” is the connections people make with each other at these events based on their shared interest in health and wellness (or anything else!).

CLM is a leading edge marketing strategy that is still evolving, but fits a powerful need in our society – the need to belong to something. By creating a community where likeminded people can come together and feel “at home,” CLM is addressing this need directly. At the end of the day, you will not only have new customers, brand ambassadors, and high morale among your staff, but you’ll be using your organization to make society a little bit of a better place.

Authentic Marketing through Community Engagement Part Two

Clean Currents Cycling Team

Part Two of a three part series on Community Level Marketing (CLM)

Click here for Part One

Community Level Marketing (CLM) may require a shift in the mindset of your organization. Frankly, CLM may not result in immediate sales or a short-term favorable ROI. Rather, it represents a long-term commitment from your organization to the community it is targeting or serving. Think of it as a three step process starting with CLM, then moving to more traditional outbound marketing, followed by direct sales. CLM doesn’t have to be costly, but it does require a commitment of staff time and organizational support, especially at the upper management level. The community will see leadership’s involvement as further evidence that this is not just some sales or marketing ploy, but rather a real part of the organization’s brand identity. Of course, having leadership’s support is also vital to keep other stakeholders patient while the campaign gradually materializes.

The four spokes of the wheel of CLM are:

  • Education
  • Credibility
  • Action
  • Reward

Here’s a brief description of each spoke as I see them:

  • Education

When you engage in CLM, a big part of the value proposition you as an organization bring to the table are the resources and expertise you have. Your community leaders will likely rely on you to provide them a “tool kit” to use for outreach. A good CLM plan should have a simple, easy-to-use set of materials, including templates, talking points, background information, and other collateral. The material you provide should not be overtly trying to sell your product, though should brand the material, for sure.  Also, your community leader may volunteer for the campaign because s/he has a related cause s/he wants to push. As long as there is open communication and the cause aligns with your campaign, this can be a big benefit to your organization. The expertise you provide can go beyond the outreach materials. Your organization may have staff that can speak to certain issues important to the community leader, or you may have access to other experts that the community leader cannot reach. The bottom line with education is that it forms the foundation of your pitch to the community leaders because it’s your biggest value add.

  • Credibility

Your CLM efforts will be for naught if your brand doesn’t have credibility. This credibility comes in two forms. First, the obvious thing is that you need credibility in the space where you are operating the CLM campaign. Don’t over reach by branching into areas that don’t make sense. That’s not to say you can’t address a broader category than your possibly narrow organizational focus. For example, a company like Clean Currents, which fought climate change by selling clean energy, could have credibility in other environmental areas such as recycling or energy conservation. Maintaining credibility also means being true to the immediate purpose of the CLM campaign. The campaign rationale has to have a purpose that creates positive results for the community.  The campaign cannot be a sales-by-other-means approach. If you want a sales campaign, try something else.

  • Action

This may seem self-apparent, but a good CLM campaign should incorporate an action component for the members of the community. It is not simply an educational or awareness campaign.  The thing that separates CLM from other kinds of marketing is the action the campaign inspires. The action can be an actual physical project in the community, such as building a community garden or it can be a digital action, such as a social media campaign. It depends on what community you are targeting. Action can also involve advocating for an issue or legislation related to that issue. The point is that the action is the center around which the entire CLM campaign revolves. It’s the glue that holds it together.

  • Reward

The CLM campaign needs to have a reward component at the end and/or as an incentive for actions people take in the midst of it. These rewards serve as a both an individual and a group incentive. It’s important to note that the incentives do not need to be financial, as many may think. Rather, incentives that are a better fit with CLM are ones that carry social capital. The star performers and community leaders should see visible benefits if the campaign goes well. The community should see group benefits as well. Examples of good benefits are public recognition, access to exclusive information, or a meeting with your CEO or Board members.

Stay tuned for Part Three next week for specific examples of CLM in action.

Running on Junk?

Runners should be at the forefront of healthy eating and a commitment to a healthy planet. After all, running is all about improving your body’s health, and eating and breathing obviously have a big impact on that. So you can picture my shock when I participated in my first 10K race as part of the Marine Corps Marathon the other day and saw the vendors/sponsors at both the fitness expo before the race and the finish-line celebration after the race. There was barely a smidgen of anything resembling eco-friendly products or services, while there was a plentiful amount of junk food offered.

“Protein” is apparently the buzz word in good eating for athletes. Nearly every product I saw advertised high protein content. That’s all well and good, but the other ingredients in many of these products included refined sugars, high-fructose corn syrup, chemicals, milk (?!), artificial ingredients, and some things I could not even pronounce. I was expecting a corn-a-copia of vegan health bars, great unsweetened, dairy free drinks, organic protein boosters, and smoothies with loads of dark green leafy vegetables and fruit. There was none of that, with the exception of Clif Bar. You can get protein from good sources.  I eat a health bar almost daily called “Ever Bar,” which comes packed with 11 grams of protein and a simple list of healthy ingredients, all of which I can pronounce.

There were no environmental groups, or clean air groups present. At Clean Currents, we ran a campaign called “Energize Responsibly” targeted to runners and other outdoor athletes. The idea was that these folks care a great deal about clean air and parks because they are outside exercising all the time. It was a big hit when we ran it as the audience really seemed to understand the message. Yet, at this event, there was not a single table talking about clean air and water, or the need for more open space and parks. The only advocacy group I saw was, believe it or not, the Beef Council. They were passing out beef jerky (“protein”) and literature extolling the sustainability of beef. That wasn’t exactly what I had in mind when I was thinking some “sustainability” groups should be at this event.

When I finished the race, thankfully the marines gave me a bottle of water and a banana. Good start. But the next marine give-away was a bottle of something that I believe is called a protein shake. It’s a bottled drink with like 18 grams of protein. I almost drank some until I read the label and it looked like a shopping list for a chemistry lab. To top it all off, the drink was milk based. I’m not a nutritionist, but I’m pretty sure drinking milk after a big run is a huge no-no.

There are so many great, earth-friendly, body-friendly products for runners and other athletes to consume before or after exercising. Our friends in the natural food industry should be providing these alternatives to runners, so the junk food guys don’t own the field all to themselves. A running event is one of the best places to help people make the connection between food that has a low impact on the planet and a high positive impact on health. As for the environmental groups, they can’t be a no-show in this world and expect to grow their community. Runners may not think they’re environmentalists, but their choice of exercise forces them to be in the green camp.  After all, dirty air and junky food are to runners what gusty winds and alcohol are to a high-wire act.

Some samples of junk food for runners.

Some samples of junk food for runners.