By JANINE FINNELL and EDIEANN FEIGLES
This article was prepared for the CHARGE Energy Branding conference in Reykjavik, Iceland. It was posted on the Engerati website and is being reposted here with the permission of the authors and Engerati.
Here is Janine Finnell, who was interviewed by Adedamola Adeleke of Engerati in Reykjavik.
Some utilities are utilizing green energy “branding” strategies to interactively engage with customers and meet the growing demand for clean power; one U.S. utility even raises the bar with a vision of 100% renewable energy.
Today, one can hardly go a week without hearing or reading about Climate Change, the Paris Agreement, technology breakthroughs, wind, solar and hydro projects, the need for battery storage, our reliance on fossil fuels or the global push to reduce carbon emissions.
The enthusiasm for renewable energy and low carbon sources is growing in the U.S. A March 2016 Gallup Poll found that 73% of Americans say they prefer “alternative energy,” rather than coal, gas, and oil production, as the solution to the nation’s energy problems. This marks the highest percentage of Americans prioritizing alternative sources since Gallup first asked the question in 2011. Additionally, Americans’ concern about climate change reached an eight-year high in 2016.
This concern is backed up by recommendations from the International Energy Agency (IEA), a renowned and respected organization. In its Energy Technology Perspectives reports, IEA emphasizes the need to decarbonize electricity supply “…as one of the key components of an energy system deployment pathway and an emissions trajectory consistent with at least a 50% chance of limiting the average global temperature increase to 2°C.” The good news is that according to the IEA’s World Energy Outlook 2015, renewables are projected to account for more than half of new electricity output between now and 2040.
Around the globe, a number of countries and utilities are seeing opportunities where green power can increasingly provide a strategic competitive market advantage. For example, Iceland has a high penetration of renewable energy and is a market where being green may provide a competitive advantage. Iceland generates 100% of its electricity with renewables: 75% from large hydro, and 25% from geothermal. Equally significant, Iceland provides 87% of its demand for hot water and heat with geothermal energy. Iceland has even contemplated an unprecedented $2 billion project for a 700 mile sub-sea cable to Scotland that would carry five TWh of Iceland’s renewable electricity to Britain’s energy market.
At a recent Edison Electric Institute Executive Utility Summit attended by one of the authors in Washington DC, the CEO of HydroQuebec touted the green advantages of its hydropower resources in a world increasingly concerned about climate change. In the U.S., Seattle City Light promotes itself as a proud supplier of green power through its hydro generation of electricity.
In terms of green utilities around the world, the Energy Intelligence Group performs an annual survey that ranks the world’s top 100 green utilities. In addition to renewable energy generation sources, their listing also includes low and no carbon resources such as nuclear energy and natural gas. A number of these utilities are based in the United States. The top ten utility green power programs in the U.S. according to the Department of Energy are listed here. These utilities offer programs to interested consumers for a slightly higher premium in order to invest in cleaner power generation.
Marketing, Social Media, and Green Energy
“Engagement is a rather big thing in marketing. The most meaningful engagement means that the companies actually try to have a conversation with their customers.”
Fridrik Larsen, CEO, LarsEn Energy Branding company
Increasingly, many energy utilities and companies are recognizing green energy as a competitive marketing advantage. How they communicate with their consumers is changing, too. They have a story to tell, a philosophy behind their brand and business, and are embracing their customers’ wants and needs and sharing this ideal with them.
Historically, utilities have operated in a rather one dimensional, one-way communication much like the flow of power they produce. Marketing, or information, comes from the utility to the captive consumer. “Here is our company. Here is our program. Here is our pricing.”
What has changed? Several factors have converged to change the way utilities engage with consumers. One factor, a number of utilities and green energy companies are developing a more interactive, engaged communication with their customers. Use of social media like Twitter, Facebook, and YouTube is mainstream.
For example, MidAmerican Energy in Des Moines, Iowa (a Berkshire Hathaway utility) uses their YouTube page to share virtual wind farm tours and the construction of a concrete wind turbine. One of their videos titled “From the Ground Up: Building our Energy Future, One Turbine at a Time” has had more than 1.6 million views in the past year alone.
Another factor that is changing utility engagement is the emergence of a community of green energy conscious customers. Portland General Electric in Oregon (number one in the DOE list of utilities with green power programs mentioned earlier) uses this type of community approach creating synergy between the energy company and their residential and commercial customers.
The use of tangible benefits along with the intangible benefits is flourishing. For example, a business becomes a green energy partner in a utility’s green energy program. In turn, the green energy partner offers special coupons to the individual customers who are enrolled in the green energy program. Through a variety of mobile apps and online program sites, subscribers can access special deals just for them to shop with like-minded companies. This type of marketing enhances the concept that an individual is part of a greater community and a more significant movement in achieving loftier goals: a greener, healthier planet.
Consumers play a role in greening the power landscape
Evidence clearly supports that sustainable/renewable energy production is on the rise. In fact, green energy has undergone a rebranding in and of itself. Gone are the days when green energy was an idealistic saving grace for the future; a movement supported by environmentalists, tree huggers and hippies. Today, green energy is mainstream. It is embraced across generations, ethnicities, socioeconomic divides and political lines.
The challenge for the consumer is how to get involved? And by showing interest in clean energy, can we also help to accelerate the greening of the U.S. power system? As a part of our research for this article, we searched as consumers to learn about the green pricing programs offered by our local power companies. For one of us, the local utility company was listed as one of the aforementioned top utilities with green pricing programs. But finding information on a utility’s website regarding their green power programs was easier said than done.
It made us ask, in this day and age when climate change, the Paris Agreement and sustainable energy are such hot topics, why is it so hard for the average consumer to find information about green power programs with their local utility? Does the local utility see green power programs as an integral part of their brand and growth? Consumer demand for green energy will only continue to rise and that pressure will affect utilities and their future.
One early adaptor of green power programs is Sacramento Municipal Utility District (SMUD), a municipal utility that has been blazing the trail for nearly 20 years with their Greenergy program; one of the nation’s first voluntary green energy programs. They have proven themselves to be a flagship of a green utility with more than 69,000 residential customers and 2,000 commercial customers participating. Their Greenergy customers have, according to their website, built three wind turbine projects at the SMUD Solano Wind Farm and rebuilt the Slab Creek Dam on the Upper American River to provide hydropower.
Utilities, Brand Identity, and Green Power
One must remember that American utilities have established corporate brand identities. They have been forged, honed, and fine-tuned over decades of being in business based on core principles including local, reliable, community, customer loyalty, name recognition, and good corporate citizenship.
They have developed a long-standing reputation of being reliable, especially when natural disasters strike, such as hurricanes, tornadoes, and earthquakes. They have been the reliable partner deploying their crews to the worst hit areas: a welcome sight to those in need offering not only restoration of electricity, light and comfort, but a symbol of hope. That kind of identity does not come overnight and should not be lost.
Analytics enable utilities to identify the trends they can capitalize on including demand response, distributed generation and energy efficiency. New technologies and tech-savvy customers offer a host of opportunities for utilities to keep on pace with their customers’ wants and needs.
For utilities, green programs are just one of their many services, not a brand identifier or strategic marketing objective. While many utilities have achieved a certain amount of success and growth in the green pricing arena, it is not their core focus or identity. Much of the growth of green pricing programs can be attributed to state mandates.
Moving forward, some anticipate that utilities will begin to focus more externally vs. internally by placing more emphasis on what is relative to the consumer. For example, Martin Stadler, Director of Branding Consulting, EdenSpekermann, utilities need to shift “…from self-centered, thinking about technology and providing energy into what is really relevant to the customer”. As more of their customers demand cleaner energy and more regions provide more choices for the consumer, large utilities may find they need to make a paradigm shift in their business model. The question remains will the demand for more options to purchase green energy encourage utilities to make a move to incorporating green energy as a part of their identity?
The entire idea of branding is for me about having relevance in people’s daily lives. It is as important for energy brands just as any other sector.
Martin Stadler, Director of Brand Consulting, EdenSpekermann
What is Green Energy Branding?
The LarsEn Energy Branding company specializes in “energy branding”; a component they believe is increasingly important in the electricity industry as many countries shift from a regulated market to a deregulated, consumer choice driven market. The branding of electricity can help to provide a competitive advantage in an increasingly competitive global economy. One of these branding strategic advantages is green energy where greater interest and awareness in the use of clean energy resources can help to provide these suppliers with a strategic, competitive advantage as well as reduced price volatility.
Competitive Market Shifts and Demand
Around the globe and in the US, competitive markets are gaining ground as countries and states deregulate their utility markets. In a study prepared by Christensen Associates Energy Consulting titled Retail Choice in Electricity: What We Have Learned in 20 Years, ‘“Retail choice” refers to customers’ ability to choose the entity that provides them with electrical energy through the traditional power network. Australia, Korea, New Zealand, Turkey, and eight of the twenty-seven member states of the European Union (EU) appear to have real retail choice options. Fourteen U.S. states and the District of Columbia presently have retail choice, and eight states have suspended or rescinded retail choice. Because many states allow limited retail choice, however, the dividing line among states is somewhat ambiguous.’ A map of electricity restructuring by state in the US is available here.
While the early adaptors of the green energy movement were individuals and small, socially responsible business customers demanding more energy options, today’s consumers at large coupled with commercial clients seeking to meet internal green energy goals, as well as cooperatives and municipal utilities are joining the movement cutting ties with fossil-fuel heavy generation suppliers and moving to renewable energy suppliers. This type of customer demand on utilities for both green energy and the availability of options changes the market landscape and opens wide the potential competitive marketplace for green energy.
This demand shift is paving the way for green energy companies to thrive and grow in competitive markets. Capitalizing on consumer demand for green energy, they are offering products and services, using green energy as a branding tool, that meet the demands of their customers.
A Case Study of What is Possible— Raising the Bar for Utilities
A few regulated utilities are making great strides toward embracing green energy. One such utility is MidAmerican Energy. MidAmerican Energy is a regulated utility embracing the green energy shift in the power market and fully embracing green energy in their brand identity.
MidAmerican Energy is one of the greenest regulated utilities in the US. With their vision of becoming 100% renewable, they are proving that green energy development can happen while simultaneously keeping their customer rates among the lowest in the nation. Their current project Wind XI will enable MidAmerican Energy to produce enough renewable energy to meet 85% of their annual retail demand.
As a utility, MidAmerican Energy listened to their customers. They wanted renewable energy! More importantly, MidAmerican responded. MidAmerican Energy now operates or has under construction wind farms in 23 counties across the state of Iowa without asking for an increase in customer rates.
MidAmerican Energy’s commitment to renewable energy has created positive effects in the towns, cities, and counties in which their turbines are operating. Wind generation manufacturers and major data centers are flocking to the area, attracting corporations like Google, Facebook and Microsoft who are committed to climate change initiatives and carbon reduction in their supply chains.
Going back to the question posed by this article (Are We Seeing The Greening of American Utilities?), it is safe to say utilities have made significant investments in renewable energy, and they will continue to do so moving forward. Ten years from now we can anticipate seeing a far different energy landscape and we may even see renewable energy as the leading source of new generation.
As this article has shown, there is a movement toward a competitive market for the energy industry and it is being spurred on by the demand for green energy. As the green energy market continues to grow, utilities may find themselves re-aligning their brand identities and how they portray themselves to the public. Utilities and other energy companies may benefit from greater consumer engagement.
At the same time, by their very nature, utility brand identities take long periods of time to change. Will other utilities take the approach that MidAmerican Energy has in terms of embracing the future of green energy both in their business strategy and their brand identity? That may really come down to upper management and how they view the changing landscape of the energy industry.
The authors would like to recognize the contributions of Barbara Englehart and Travis High with the Leaders in Energy core team in reviewing this article.
Janine Finnell is the Founder and Clean Energy Ambassador for Leaders in Energy, an organization based in the Washington DC area which provides educational, professional networking, and advisory services. She has been an invited speaker and moderator at numerous conferences, forums, and workshops throughout the United States focusing on energy, electric utility, and sustainable development topics. Ms. Finnell serves on the Board for the Association of Energy Engineer’s Council for Women in Energy and Environmental Leadership. She has an MS from the University of Wisconsin-Madison in Agricultural and Applied Economics and pursued post graduate studies in energy and environmental management at George Washington University.
EdieAnn Feigles is the Director of Business Development for Leaders in Energy. She is an accomplished business development professional pursuing a wide range of projects in both the public and private arena. Ms. Feigles is currently working with an international consultancy focused on assisting emerging markets develop sustainable energy practices through outreach and education, Sustainable Development Goals (SDGs), and sustainable energy project development. Ms. Feigles has a BS in Business Administration from Delaware Valley University.