Walmart is America’s largest grocer. Yet farmers’ markets seem to be more popular than ever. Both can survive and thrive because they offer consumers distinct choices and cater to different types of customers. At Walmart, I can save money, live better, and buy a can of “dolphin safe” tuna at a competitive price. At my local farmers’ market, I can buy an heirloom tomato from a fourth-generation farmer, and know it was grown with the strictest organic methods. Sure, I’ll pay more for the tomato, but I will feel better about supporting a local farmer and to my palate, the tomato will taste better.
The way consumers buy everything from fresh produce, to telecommunications, to books, coffee or just about any consumer good has undergone radical transformation in the past decade or two. But we are still buying electricity the same way my grandparents purchased it from Samuel Insull’s old Commonwealth Edison monopoly back in the 1920’s.
Innovation in electricity buying has been almost non-existent in the past 100 years. The energy sector as a whole represents between 8 and 9 percent of America’s total economy, but the consumer choice revolution appears to have largely passed it by. I can download the newest bestseller to my Kindle or Nook, read it at a Starbucks while sipping my organic, shade-grown coffee, grown in Mexico’s last remaining cloud forest, and wonder why my electricity use is still measured by a meter behind my house that looks the same as the original model produced in the 1890’s.
In the July 2011 issue of Wired magazine, software billionaire Bill Gates is interviewed on his wide-ranging opinions on energy and innovation. He expresses some misgivings about the economics of small-scale solar power, but admits that he has solar panels on his roof at home, because they are “cute” and he is rich. Why not? Why not let the rich and fashionable buy bespoke electricity at haute couture prices? The rest of us can buy our power at Walmart.
Instead, much of our energy policy is centered around having all ratepayers pay for the energy production preferences of a few, elite consumers. We should make greater use of a tool that already exists: green pricing programs, which allow wealthier consumers to pay a premium to feel better about their energy consumption.
Successful green pricing programs have had as much as 5, 10, even up to 20 percent of all customers participating. Pricing approaches have been more along the lines of the Starbuck’s latte, affordable luxury for the masses.
When I buy electricity, there is no “eagle safe” wind power option. I can buy the standard “green pricing” product (usually a generic wind program), or if I am lucky, pay slightly more for the local utility’s “house brand” solar product.
Although green pricing programs have been popular where tried, I think we could learn still more from the “conspicuous nonconsumption“ movement and market haute couture electricity as an ultra-premium product. We can then use the extra revenue to make electricity more affordable for the rest of us, while funding some true, next-generation experiments in alternative energy.
The key, I think, is solving the “conspicuous” part of the equation: those who buy the premium product want other people to know of their virtue, like the Prius buyer wants other drivers to know that she drives “green.”
Today, the “green price” option just shows up as a line item on my utility bill. For the ultra-premium product, let the buyer qualify for some tangible token of their earth-friendly purchase. Like the LEED-certified plaque in office building lobbies or the Frank Lloyd Wright red tile, let the buyer display a small, discrete sign outside their homes. Different colors or designs can denote a different level or type of purchase. Forget a garden gnome, I want a Frank Gehry-designed monument at the end of my driveway that shows that I buy only the most expensive, most sustainable electricity made in America.
I am convinced that regardless of whether our goal in energy is independence, security, environmental improvement, or greater affordability, we will not succeed until and unless we engage the consumer with meaningful choices and real value.