Plugging green power

Except for OPEC and a handful of oil companies, nobody really likes high energy prices. They crimp household budgets and fuel inflation. But last year's runup in fuel prices boasts of at least one silver lining: Renewable energy or "green power" is looking better all the time.

In fact, some Texas utilities say one form of green power - the wind turbine - is now cheaper to install and run than conventional energy plants. With help from energy producers, users, and regulators, earth-friendly power could go mainstream in the United States within a decade.

While many consumers eagerly anticipate that day - and a few are helping to push it forward by paying a bit more each month to support renewable-energy programs - the next big move is likely to come from business.

A growing number of firms - from small stores to huge corporations - are jumping on the renewable-energy bandwagon. If that spirit spreads, they could jump-start the green-power market and pave the way for lower prices and wider adoption among consumers of all types.

"There's no question [that] if businesses get involved in a big way in creating demand for green power, we could see quite a lot of product development and price reductions," says Blair Swezey, principal policy adviser for the National Renewable Energy Laboratory, a federal research lab in Golden, Colo. "It can have a very large impact, and I think it already has."

This fall in Austin, Texas, for example, the municipally owned electric utility signed up so many customers to its wind- and landfill-gas energy program it's looking to buy more green power. One Internet company alone bought 60 percent of the available megawatts.

In Pleasanton, Calif., a public-private partnership is building an industrial park powered by what it calls the largest commercial rooftop solar-power project in the Americas.

In 1998, Toyota blazed a trail by lining up enough renewable energy to power a dozen of its offices in southern California. As in most green-power programs, Toyota didn't receive the power directly. The premium it pays supports the building and running of renewable-energy plants.

"Our whole idea is supporting the [green power] industry the best way we can," says Jim Cooke, national field facilities operations manager at Toyota Motor Sales USA.

Now, 10 large companies - including DuPont, General Motors, IBM, and Johnson & Johnson - have banded together to extend the idea. Their Green Power Market Development group is looking for ways to buy 1,000 megawatts of renewable energy. Such a boost would dwarf green-power buys the private sector has made so far.

"We're trying to kick-start the market by coming together as large companies," says Mick Gilbert, senior corporate environmental engineer for Pitney Bowes, one of the group's 10 members. All by itself, the group represents some 7 percent of the nation's industrial energy use. The companies hope to keep any premium - which green-power customers typically pay - to an absolute minimum.

When homeowners pay an extra 5 percent on their utility bill to support green power, "it's not that big a deal," Mr. Gilbert says. "But when you're buying [$6 million to $7 million] worth of electricity, or several hundred million dollars, 5 percent is a huge amount of money."

So far, the group is optimistic. "I don't think we're far off," says Jennifer Finlay, director of business engagement at World Resources Institute (WRI). The Washington-based nonprofit along with San Francisco-based Business for Social Responsibility organized the industrial initiative. "Within the next six months, there will be a variety of different arrangements."

The group's optimism stems from two factors. First, the price gap between conventional and renewable energy has narrowed. For example, the price of natural gas has more than doubled in the past year while the cost of wind energy has dropped 90 percent in the past two decades. Factor in state and federal subsidies for renewable energy and suddenly wind is the low-cost solution in some high-wind locations.

"It's less costly than running the existing technology," says Tom Foreman, manager of customer and energy services for Lower Colorado River Authority, a state conservation and reclamation district that sells wholesale energy to public utilities in central Texas. The Austin-based group plans to add or buy an extra 50 megawatts of wind energy next year.

Nationally, wind energy is growing so quickly that in a few years many predict the US will overtake Germany as the world's leading wind-energy producer. By 2020, some 5 percent of the nation's electricity could come from wind turbines, says Randall Swisher, executive director of the American Wind Energy Association in Washington.

The second reason for optimism about renewables stems from companies' new way of energy accounting. In the old days, businesses looked almost exclusively at price. Now, firms weigh reliability (in light of power outages in California) and future environmental cleanup costs. By adding renewable energy to their mix of power sources, they reduce the possibility of brownouts and future government penalties. As a bonus, companies dampen energy price spikes as well. "You suddenly may have a little more flexibility in the price you pay for power," says Ms. Finlay of WRI.

Yet challenges remain. Where states have deregulated energy markets, renewable energy has flourished. But in California, which has led the charge toward freer energy markets, growing concerns about the availability of power have cast a cloud on deregulation nationwide.

"I don't think California is going to stop deregulation. [But] it's going to slow deregulation," says Mark Crowdis, president of Think Energy Inc., a renewable-energy consulting firm in Kensington, Md. "There's evidence that other states are stepping back already."

Another uncertainty: future subsidies. Many utilities are scrambling to bring wind plants online before the federal wind-production tax credit expires at the end of this year. Supporters are optimistic Congress will renew it. If it doesn't, future wind projects will suffer.

Finally, OPEC and world markets will play a big role in the future of green power. If conventional energy prices slump again, renewable alternatives will lose their luster.

"The conditions are ripe for renewable energy," says Mr. Swezey of the National Renewable Energy Laboratory. "We've barely touched the tip of the iceberg of what the market could be. But a lot depends on where electricity markets go in the future, how competition develops across the US, and where national policy takes us."

(c) Copyright 2001. The Christian Science Publishing Society