Will eco-power survive the next five years?
Green power is now offered to residential and commercial customers by more than 600 utilities in 34 states, and most observers expect that number to grow. We believe the opposite may happen—that in the next five years, almost all of these green-power programs may be gone. This trend already has begun. According to the U.S. Department of Energy, 12 utilities have discontinued green-power offerings, citing, among other things, a lack of profitability.
The most damaging inference from these events is that people do not want renewable energy or don't care about environmental protection, both of which are untrue. The second most damaging inference is that utilities that operate green-power programs cannot make any money at it—also untrue. Using either justification, utilities may be persuaded that discontinuing these programs makes sense. We disagree and believe that green-power programs can be a profit center.
Dollars and Sense
In our estimation, only a handful of utility green-power programs are profitable. The math is quite simple. Consider the costs. The time and materials cost to begin a green-power program typically falls between $10,000 and $500,000. This does not include the costs involving sales and the acquisition of customers, which must be added to this amount. Once a program is operating, it may cost roughly $40,000 to $425,000 per year to administrate.1