75 Green Businesses You Can Start to Make Money and Make a Difference. Glenn Croston
the best plants to build: nuclear vs. wind, natural gas vs. solar, and coal vs. just about anything. There is another answer though, one that often is overlooked: reducing the amount of energy we need in the first place. By most accounts, the United States wastes at least a third of the power it produces while other major economies use power far more efficiently. Entrepreneurs helping consumers waste less energy are freeing up much-needed electricity, saving money, and creating new markets in conserved energy.
These gigawatts of wasted energy are a big problem, but they are also a big opportunity. Robert Wilder of Wildershares Investments (Encinitas, California) has said, “We have Saudi Arabia-sized oil reserves under our feet in America through energy efficiency.” Renowned efficiency expert Amory Lovins coined the term “negawatts” for this often-neglected energy resource.
DEFINITION TIME
One negawatt equals one megawatt of energy conserved for one hour.
Eco-entrepreneurs who turn wasted energy into negawatts of saved energy may unlock the next Saudi Arabia.
Consumers and utilities are partners in wasted energy. Consumers often don’t take advantage of even the easiest ways to stop wasting energy and money, such as changing light bulbs. Utilities generally have made money by selling power, and the more power they sell, the better off they are financially. In this scenario, with little or no motivation for the utilities to encourage conservation, it should not come as a surprise that energy efficiency has not received the attention it deserves.
Conservation can be increased, however. Since the 1970s, the state of California, along with the California Public Utilities Commission (CPUC), has worked with utilities to encourage conservation rather than consumption. As a result, Californians now use about half as much electricity as other Americans. The same measures that increased efficiency in California can work elsewhere; given the right financial incentives, utilities and customers can work together to improve how we use energy.
Realizing we waste energy is the first step, but how can we convert this knowledge into action? The problem does not require waiting for new technologies to be developed. We already have the light bulbs, insulation, double-pane windows and the many other efficiency measures needed to replicate the energy efficiency of California nationwide. What is missing is the right incentives. We need more carrots.
How can eco-entrepreneurs tap into the demand for more efficient energy use? One model is being adopted by demand-response companies such as EnerNOC in Boston, Massachusetts. The price utilities pay for energy can vary dramatically, from $.05 per kilowatt-hour (kwh) to four times as much during peak energy-consumption hours. EnerNOC does not produce or sell power. EnerNOC enrolls energy users into a network and asks them to cut back on use when consumption exceeds the utility’s ability to supply power or when the peak price is too high. Users are paid for enrolling in the program and are paid more if they curtail power when asked.
MEETING POWER DEMAND WITH DEMAND RESPONSE
Demand-response companies coordinate power use by large energy users to help utilities meet the uneven demand for electricity. Demand-response companies include relatively large companies, such as Comverge of East Hanover, New Jersey, and small upstarts such as U.S. West Energy Solutions (Wenatchee, Washington). Also called load management, more and more utilities are turning to demand response to even out the demand for power and avoid brownouts and costly electricity for peak energy demand. ❦
VARIATIONS ON A BIZ-THEME
One cool solution for leveling the load is the Ice-Bear, from Ice Energy (Windsor, Colorado). Using cheaper electricity at the night to make ice, the Ice Bear uses ice rather than electricity to chill refrigerant for air conditioning during the day, reducing their electrical bill.
Another way to encourage energy efficiency is a market-based approach. Things don’t have value unless someone can buy or sell them in a market. If people can take the energy they save and sell it, they may be more willing to invest in energy efficiency. Energy efficiency certificates, or “White Tags,” are being developed as a green trading mechanism to encourage energy efficiency. Each White Tag represents one megawatt-hour of electricity conserved over the course of a year, giving value to the energy that is not used, not just what is consumed. If a business saves energy by implementing efficiency measures, it can get the savings certified and receive White Tags for the negawatts it sends back into the grid.
WHITE VS. GREEN TAGS
Note the difference between white tags and green tags, which are also called renewable energy certificates (RECs). Green tags are tradable certificates connected to the production of renewable energy, selling separately the electricity produced from the environmental value of renewable energy, sold as green tags. Supporting green tags provides a subsidy for the production of renewable energy, and the environmental benefits that renewable energy provides.
Originating in Europe, White Tags have been implemented in the United Kingdom, Italy, and France, and, as of 2007, are spreading to the United States, starting with Connecticut, Pennsylvania, and Nevada. Utilities are required to buy White Tags in these states, and several more states are likely to follow, creating a growing market for trading energy-efficiency certificates.
This is not the first time that market mechanisms have been used to work toward green goals. Acid rain was addressed in the United States using a similar trading mechanism. Sulfur dioxide produced by industrial sources, such as coal-fired power plants, causes acid rain. Rather than impose a restriction for each individual generator of sulfur dioxide or telling users how they must fix the problem, the government imposed a cap on the overall production of sulfur dioxide and let the market find the most cost-effective solutions. Companies that emitted less sulfur dioxide received credits to sell to those who did not reduce their emissions. This market-based solution for acid rain reduced sulfur-dioxide pollution faster and more cheaply than originally expected by allowing the market to find the best, most cost-effective solution. Similar trading of carbon emissions is under way in Europe and the United States.
INFORMATION RESOURCE
See more about how White Tags work at sterlingplanet.com. The site also has a wide range of information about energy markets, including renewable-energy credits and offsets.
Although the concept of negawatts has been around for a while, creating a viable market has taken some work. Companies such as Sterling Planet are helping to create markets for White Tags, encouraging future energy efficiency. According to Kelly Bennett, vice president of White Tags at Sterling Planet: “We serve as an intermediary in the marketplace, a retailer. We buy White Tags from owners of efficiency projects and match them up with buyers such as utilities that are required to purchase energy-efficiency certificates.” Other buyers include individuals who want to buy offsets, or corporations or colleges that have set greenhouse-gas reduction targets and want to use market tools to help meet them. Creating their own efficiency projects is the best place to start reducing greenhouse gases, but White Tags can help them have even more of an impact in a cost-effective manner.
ECO-ISSUE
Sterling Planet has designed software to measure and validate the energy savings required to receive White Tags, solving one of the biggest obstacles keeping this market from taking off.
Bennett observes that the White Tag market is early in its development, but that it is “very much a growing market in response to our need to curtail additional generation, make individual homes and businesses more efficient and productive, and reduce carbon. Carbon is one of the big drivers.” The growth of White Tags does not depend entirely on government action, it is also growing through voluntary use by those who want to do the right thing for the environment. “No matter what happens on the compliance market,” Bennett says, “with the rules in place, there is an appetite in the voluntary market to use White Tags in the same way as renewable-energy certificates.”
IN THE LONG RUN
A general concern is that if White Tags