Palo Alto Green Program: A Green Power Road Map For Cities

Posted on December 5th, 2011 by
   

Andrea Hart, Palo Alto’s Green Program Manager, discusses how their green power initiatives have evolved over the last decade.

Full Transcript:

Ben lack: What was the genesis of the Palo Alto Green program?
Andrea Hart: I’ll just give you a quick history. Our first Green Power Program began in 2000. It was called Future Green. I wasn’t involved in the planning and development and roll-out of that but I’m assuming it was agreed by City Council. We are governed by City Council and the Utilities Advisory Commission. We started off with Future Green; it looked a little different than today’s program. It had a 25%, 50% and a 100% option for residents to go in on. We had a small marketing budget and we actually had it partnered with a separate marketing firm to roll the program out and it wasn’t met with too much success. After about 3 years, we canned the program and we started fresh, that program is now called PaloAltoGreen which is what the program is still called. We kind of updated our outlook and refreshed the program to make sure it was a little more successful. We have full support from City Council. We go out on a contract and we work with an outside company. I’m sure you’re familiar with 3Degrees, who help market the program. The first few years we actually bought our RECs, the INNOVA energy credit, through 3Degrees. Now we, as a city, actually go out on our own under RSP to get the RECs, but we still continue with 3Degress doing all the marketing. Basically, what the city does is we have approval from City Council to go out to contract under a certain amount to do that, but that’s the support we get from City Council. To answer the question to why we do it, there’s a lot of, I guess, answers that could come under that and City Council’s elected board from the community and Palo Alto is extremely interested in green technology and renewables and being eco-conscious and sustainable. I think that’s reflected in a lot of our programs. We run a lot of sustainability programs from our waste management company to other efficiency programs which cover gas, electric and water efficiencies in a home. That’s just an example of how I think Palo Alto is pushing, the customers are pushing for sustainability options. That kind of falls under wanting a 100% option. I think that’s also reflected in our high participation rate. We have over a 21% participation rate. Actually, on the residential side its 23% participation rate. The people really want a 100% renewable option. So, besides wanting the demand, I think that City Council understands that in order to make our constituents and the community happy, we needed to have that. They were happy in supporting and giving us permission to go ahead and run the program.
Ben Lack: What was the reasoning behind only offering one plan instead of three?
Andrea Hart: I wasn’t here in 2003 so I can’t quite give you the full details. How I understood it, it was confusing to customers. Customers didn’t quite understand why they needed the 3 options and to streamline the program we offered just 1 option and that was 100% role-in and that seemed to solve the problem. We got people enrolling, there were a lot of questions to ask, they seem straightforward, they gave little room for people to be confused.
Ben Lack: What are the demographics are of the city itself? How many people live there? What’s the income level of the folks that live in the city?
Andrea Hart: There’s just under 26,000 customers that live here. It’s a pretty small town. We do have a really large commercial industry. I can’t give you the number of commercial businesses that we have here but it’s pretty large and it’s ranging anywhere from small tech start-ups to huge companies like HP, SAP, Facebook was here but they recently moved. Pretty large based on a commercial side. Just over 74% of our community has a Bachelor’s degree or higher, it seems pretty high and to put it in comparison, the average in California is actually just over 26%. So, a lot of our community is really educated. The Median Haspel Increment is 90,000; the normal in California is 47,000, so it’s significantly higher income here. We also have the Stanford campus, it’s a little bit like a college town. But, Stanford’s pretty much separate and we do have a lot of the professors and students living in Palo Alto.
Ben Lack: Purchasing power through 100% renewable energy is going to be more expensive than other options. How much more expensive is it and how are companies able to justify the increase in the price?
Andrea Hart: For commercial customers to ease the financial burden to make it more economical is we also offer a block system. That’s only for large customers. We don’t do that for residential and small commercial. A block system means for $15 they can purchase a megawatt and we offer, in a sense, of what kind of percentage they want to go in of their usage. So, what I mean by that, does a large company want to go in at 20%, 30%, 50%. Typically our large commercial customers won’t go in at 100% because it’s such an outlandishly large financial burden put on them. So, we offer the block system. We kind of based it on the EPA’s Green Power Partner and we offer that saying, hey, if you don’t already have a goal set by your corporate sustainability office, saying 25% of it has to be 100% renewable, we offer, and our guideline is, EPA Green Power Partner so they can go in and be a partner. I think that 35% might have been pushed up to 50%. We’ll do that as a starting point and work from there with commercial customer and see if they want to increase or decrease that number.We’re happy to enrol at any percent, we are just happy to have them. We offer a couple more benefits for commercial customers. We offer a couple large posters for their lobbies, so their employees know and visitors know they’re enrolled. We’ll do events at their corporate sustainability days, we’ll even do a lecture for their employees. Companies that support renewable energies have a higher company morale. I fully like to encourage companies to do that and will offer more marketing promotion for them.In addition, separate to these companies looking to just join PaloAltoGreen based on their corporate sustainability goals, or just internal goals, by joining PaloAltoGreen at 50% level for commercial, I think it’s the LEED Certification, I think its credit 6 and you can actually get that credit by joining PaloAltoGreen for minimum of 2 years at 50%. So, after that, I will offer all the needed documentation to the lead creditors and auditors for the commercial sector. It’s kind of a one-stop shop; they can come to us, let us know they want to enrol, we’ll enrol them, we’ll do all the marketing and also provide the needed documentation for the LEED certification on the commercial side.
Ben Lack: What’s the growth rate for businesses participating in the program?
Andrea Hart: We don’t have that information. We haven’t collected it. Of course, when the program first started, it was really high. I would say now its dropped way down, definitely below 1% growth. What we normally have are the enrolled customers looking to increase. That’s the common side of the business that we see.
Ben Lack: What types of steps has your team taken to refine the message to make sure that the business understands the value at the end of the day and ultimately either signs up or increases their participation in the program?
Andrea Hart: We don’t actively market the businesses. It’s really hard. They all have different corporate goals and things like that. It’s really hard to market, so we don’t. We don’t have the power here. But we do, when a customer is interested, we kind of have a slew of things that we offer them as kind of added benefit of joining PaloAltoGreen versus going out separately and purchasing. I touched on them earlier and the first thing is we’ll provide them with all these additional marketing materials free of charge, as a thank you to enrolling. We update a Facebook page and sometimes we’ll touch on them as recently enrolled or they recently updated or hey, check-out, this commercial business because this is what they’re doing, free advertising on our Facebook page. It improves employee morale, we try to stress that. We’ll also work at their Earth Day event, their sustainability event and we’ll offer private sessions to them for coming in and asking questions. Another thing that we offer that, if you were to go out separately and get Green-e certified, kind of a nice stamp, ensures quality assurance and it gives confidence to the customer, knowing we are purchasing true renewable energy and it’s certified.
Ben Lack: What are some common comments or feedback that participants of the program offer you that give you reasons or ideas on how to improve the program even more?
Andrea Hart: I guess the biggest is the price. The price for joining PaloAltoGreen on a commercial site is a little bit more than if they were to go out on their own and get RECs. We can’t change the price but what else can we offer, so we kind of become creative on how we can encourage customers to join on a large commercial side. That being said, we have quite a few, we have over a 140 businesses some extremely large, HP, SAP that are enrolled as an example of businesses that have chosen to join PaloAltoGreen versus going out on their own.
Ben Lack: For a city that’s looking to implement a program that’s similar to yours, what advice would you give them as they put their own program together?
Andrea Hart: The first is to keep it really simple. We found that customers were really unsatisfied with lots of options and to keep it simple. Also, if you can create a pricing scheme, that’s straightforward, simple and it’s not going to change every year. So, we estimated that the first year, few years, we’re going to be in the red and then the industry is hopefully going to flatten out so we won’t be in the red any longer. We created a rate that we knew was going to be consistent overtime, regardless of fluctuation. Some years, you pay more for X than what we’re charging and other years we might not and we found our rate at $15 a megawatt to be kind of that rate number to satisfy what we’re looking for in that sense.The other thing is making sure that you have a clear marketing plan. Unfortunately, marketing is pretty much half the battle when running these programs. We spend 2/3 of our budget on purchasing the energy and 1/3 on marketing. A large part goes into marketing customers, who want to know about the program, they get confused easily, so it’s nice to have a clear structured creative marketing approach in that sense.
Ben Lack: How do you quantify success for the program?
Andrea Hart: Definitely in participation. But, a successful program can mean a lot of things. There are much larger utilities that have a smaller participation rate but are buying 10 times the amount of renewable energy we’re buying, just on numbers. So, a successful program could be a utility purchasing a large amount of renewable energy on behalf of their customers, it could also mean participation rate. I think there’s a lot of ways to define a successful program.
Ben Lack: Is there a lot of emphasis on generating a profit or positive cash flow or can it lose money or be a break even and still be a success?
Andrea Hart: Exactly. A lot of the programs out there and especially with most utilities, they are at a profit neutral stance, they’re making enough money to run the program. Kind of what we aim to do here in Palo Alto, some years we make some, some years we lose some. This is not a for profit program, it’s not designed to be that way.
Ben Lack: Andrea, why have you chosen to do what you’re doing and why are you in this space?
Andrea Hart: That’s also a great question. I studied environmental studies and political science in school for my BA and just found it really fascinating. I think under the sustainability environmental realm, there’s thousands of different things that kind of fit under the umbrella, one of them is energy. I looked into this sector, I found it really interesting. It’s fascinating how it moves and it will always be there, so how to get involved there, how to make it more sustainable. I find it really interesting because it’s constantly changing; it’s a high level of participation. The moment we were born, we were using some form of electricity, so ever changing is pretty complex and it’s rewarding in a sense that you can really see your effort out in the community. It’s pretty tangible thing to see, it’s kind of exciting industry to be a part of.
Ben Lack: What’s the biggest surprise that you’ve observed while working in this space?
Andrea Hart: I can’t really say I’ve ever been too shocked at something. I’m fascinated with just how the simple great system works. It’s almost the more basic electric understanding and rules that surprise me more than these high complex industries that are using things like racks and memory spots. It’s basically how did that electron get to your home, I find incredibly fascinating.

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