by Vicky Uhland
Longmont, Colorado-based Renewable Choice is the only private business in the Rocky Mountain region that sells wind energy, going up against public utilities such as Xcel Energy. Renewable Choice’s path is particularly challenging because it’s based in a state where utilities are regulated.
“It’s not like Pennsylvania or Texas, where the market’s deregulated and the competition thrives,” says Kathy Belyew, spokesperson for the American Wind Energy Association (AWEA). “In regulated states like Colorado, people don’t know the wind energy market exists. People aren’t used to choosing their utility providers.”
Nevertheless, Colorado ranks 10th among all states in the amount of wind energy consumed, at 61.2 MW (as of early 2003), according to AWEA. The state has two wind farms and another in the works. The wind farms contract exclusively with Xcel’s Windsource division. Renewable Choice gets its energy from Foot Creek wind farm near Arlington, WY., Indian Mesa in Pecos County, TX. and Waverly Wind in Waverly, Iowa.
Unlike Xcel, which sells win energy generated from its wind farms directly to customers, Renewable Choice is a wind energy marketer. It buys green tags or green certificates from wind farms and then sells the certificates to its clients. One certificate equals 1000 kW of wind energy. Other U.S. green tag marketers include Native Energy (Burlinton, VT)., Community Energy (Wayne, PA.), Bonneville Environmental Foundation (Portland, OR) and Sterling Planet (Atlanta, GA).
Even though the number of customers using Xcel’s Windsource energy dwarfs those that have signed on for Renewable Choice’s American Wind product, the company is holding its own and is profitable, says Quayle Hodek, president. The company has about 5000 residential and 80 business customers. At the end of 2002, Xcel Windsource had about 25,000 residential and 400 business customers in Colorado.
Renewable Choice scored a coup earlier this year when, together with the Bonneville Environmental Foundation, it landed White Wave soy products, based in Boulder, as a customer. White Wave agreed to a three-year commitment to buy 20 million kW of wind energy hours per year. It’s the largest U.S. corporation to be powered solely by wind energy.
How Renewable Choice Got Started
When 25-year old Hodek moved to Colorado three years ago, his goal was not to play David to Xcel’s Goliath. He and two of his friends from Chapel Hill, NC. already founded one business: Zoom Culture, a media company for young people. They moved to the Boulder-Longmont area with the idea of starting another business, not knowing exactly what kind of business.
Then Hodek heard about Windsource and saw an opportunity. He did some research and found that 98-99% of Coloradans don’t use wind power, but that about 30% would be willing to try it. Windsource was launched in April 1998 and has grown 30% a year, according to Steve Roalstad, an Xcel spokesperson. Still, less than 2% of Xcel’s 1.3 million customers have signed up for Windsource. “There’s a huge, unfilled demand,” Hodek says, who liked the idea of a private enterprise selling renewable energy. “I realized that someone other than the utility company, which is an oil and gas company, should be selling wind energy.”
Backed by $350,000 from investors, Hodel and his friends – Kris Lotlikar and Shea Gunther – started Renewable Choice in September 2001. The company has 12 other employees.
Marketing Door-To-Door
AWEA’s Belyew says that one reason why there are so few wind marketers in the U.S. is because selling it is difficult.”To get people interested, there has to be a pretty strong force,” he explains. “A company has to market a lot, and has to market to a customer who is willing to pay a premium to get this industry on its feet.”
Hodek says wind energy costs about 2.5 cents more per kilowatt in the U.S. than electricity generated by coal or natural gas. He admits that explaining to customers how wind energy is generated, why they should buy it and why they should pay extra to use it, is difficult. “Our biggest challenge is customer education, so we use a one-on-one approach,” he says. “A lot of companies rely on sending out mass-market mailers, but we look at ourselves as almost ground troops getting out the word about wind power. We rolled out an extensive grassroots education and marketing campaign.” The personalized approach pays off, he adds, with 30-35% of residential customers contacted signing up for American Wind.
Renewable Choice relies on old-fashioned, door-to-door sales. It has nine commission-only salespeople who work in metro Denver, Boulder and Rhode Island. The sales force, made up mostly of college students, targets residences; the in-house staff goes after business clients. “We’ve been excited to see a great response from educational institutions” such as Duke University and the University of Denver Law School, which signed up this year.
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http://www.renewablechoice.com
FROM In Business, a SustainableBusiness.com Content Partner
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