Something radical is happening in the staid world of electricity production. While most people give little thought to where their electricity comes from, the deregulation of the power industry now under way in a number of states means that, for the first time, consumers will have a choice of how the electricity that they pay for is produced. And in states that have already deregulated their electricity monopolies, consumers are increasingly choosing renewable energy sources, such as wind power, over cheaper but more highly polluting coal and other fossil fuels.
A startup called GreenMountain.com is the company moving most aggressively to take advantage of this “green” preference in what the U.S. Department of Energy estimates is a $217 billion electricity market. Indeed, by making the choice of renewable energy just a mouse click away, Vermont-based GreenMountain hopes to establish itself as the green brand of energy. “I want to be the Starbucks, the Coca-Cola, and the Ben & Jerry’s of electricity all rolled up into one,” says Dennis Kelly, GreenMountain’s president and CEO.
More than half of the states have or are starting to dismantle their electricity monopolies. GreenMountain has already begun business in two-California (where 66 percent of electricity comes from coal, oil and nuclear power) and Pennsylvania (which generates 98 percent of its electricity from fossil fuels and nuclear power). This year, the company will enter Connecticut and New Jersey, with New York and Massachusetts not far behind, according to Kelly. So far, more than 100,000 households, plus businesses such as Kinko’s and Birkenstock, have switched to GreenMountain.com, even though it costs a typical household between $6 and $12.50 more per month.
Customers sign up for the service on the company’s Web site, then have their power delivered through the same municipal power grids and electrical lines they’ve always used. The difference is that GreenMountain.com offers an environmentally cleaner mix of energy than conventional power producers, who rely heavily on fossil fuels and nuclear power. The startup produces or buys all its energy from renewable sources, including windmill farms in three states. And it recently broke ground on a $10 million windmill farm in rural Pennsylvania that it says will produce enough electricity to power 2,500 homes.
But the business of green energy has not been all clean sailing. While the company claims that 100 percent of its energy comes from renewable sources, Kelly acknowledges that a large part of it is derived from older hydroelectric dams-facilities that can have a negative impact on fish and local wildlife. In addition, the company has had financial woes. After losing $65 million prior to an aborted attempt at an initial public offering in 1999, the company scaled back its plans to create a “green portal” for the Web. Currently, it is attempting to raise $100 million more in venture capital funding.
And the more customers GreenMountain signs up, the more big-time rivals it will attract. “If they are at all successful, they will encourage competitors, including the big utilities in the power-generating business to match their environmental performance,” says Francis Cummings, a principal at Xenergy, a Burlington, Mass. consulting firm. “Now it’s just a segment of the market. But as the availability of environmentally sustainable power becomes known, it could become the mainstream.”
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