green-e marketplace presents rei’s kevin hagen how green power delivers profit and value
TRANSCRIPT
Green-e Marketplace presents
REI’s Kevin HagenHow Green Power Delivers Profit and Value
Certify organization’s use of renewable energy and verify associated claims
52 organizations participate nationwide: Intel, PepsiCo, Aveda, SC Johnson, Santa Cruz Organics, Neenah Paper
Renewable energy purchased or generated by participants:
114,000 MWh in 2006
2.8 million MWh at the end of 2008
Over 70 unique products display the Green-e logo - 70+ more slated for 2009
Green-e logo use, renewable/climate policy updates, market research, promotional services
Why are companies interested in this certification program?
Logo is recognizable
Consumers, employees, and stakeholders interested in renewable energy
3rd party certification adds credibility
Green Power Delivers Value @ REI
Kevin Hagen - Director, Corporate Social Responsibility
With thanks to Allison Grappone, MBA in Sustainable Business
• Consumer co-op founded in 1938
• 3.7 million active members
• $1.4B annual sales - 2008
• 105 Stores in 27 States + REI.com
We inspire, educate and outfitfor a lifetime of outdoor adventure
and stewardship.
Sustainability (where mission meets metrics)
• In 2005, REI’s sustainability efforts moved • From random acts of kindness • To a frameworks-based strategic focus
• We look for ways to solve environmental challenges while we make our business stronger
• Example: Carbon footprint and annual accounting
Electricity 22.9% in 2007
REI Offset Strategy
REI offsets our largest GHG impact, our travel business, with a four year commitment to purchasing over 240,000 RECs from Bonneville Environmental Foundation
Climate Neutral Travel
Climate Change and Energy
• Aspiration: to be a climate-neutral company by 2020
• 2008 electricity usage: 60,600 MWh
• Developed a three part Energy Strategy
Energy Strategy
• Increase energy efficiency• Objective: zero kWh growth
• Purchase Green Power• 20% of total use• Financial hedge products
• On-Site Generation• BIPV tested at new locations• 11 store PV retrofit program in ‘08
Load Growth
+22% square feet
+9% electricity usage
kWh Consumption
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
2005 2006 2007 2008
MW
h
Bedford Total
Sumner Total
Fixture Shop Total
AHQ Total
Retail Total
The Next Generation of REI Stores
Round Rock, TX store is modeled at 49% below ASHRAE 2004
Committed to 100% Qualified Renewable Energy
• Since 2006 over 25,000 MWh of Green Power deals
• Over 10,000 MWh/year
Converting 6 more stores to Green power in 2009:
2,500 MWh/yr
Green Power “Pitch”
Utility C&I Customer
Base Charge Electrons
Green Power “Pitch”
Utility C&I Customer
Base Charge Electrons
Green PriceCO2 Benefits
“Green” Benefits
Green Power Value Proposition
Utility C&I Customer
ElectronsBase Charge
Green Power Value Proposition
Utility C&I Customer
Electrons
CO2 Benefits
“Green” Benefits
Stable Pricing
Avoided Fuelvolatility
Base Charge
Green Power Value Proposition
Utility C&I Customer
Electrons
CO2 Benefits
“Green” Benefits
Stable Pricing
Avoided Fuelvolatility
PremiumPricing
Business Value of Green Energy Products
RECs or Floating Green power
premium
Meet CO2,Green goals
Business Value of Green Energy Products
RECs or Floating Green power
premium
Full Value Green
Product
Meet CO2,Green goals
Financial hedge
benefits
Less value
Greatest value
Business Value of Green Energy Products
RECs or Floating Green power
premium
Capped Premium
Tariff with Surcharge Avoidance
Full Value Green
Product
Meet CO2,Green goals
Partnership with utility
Avoid fossil fuel volatility
Financial hedge
benefits
Less value
Greatest value
Business Value of Green Energy Products
RECs or Floating Green power
premium
Capped Premium
Tariff with Surcharge Avoidance
Full Value Green
Product
Meet CO2,Green goals
Partnership with utility
Avoid fossil fuel volatility
Financial hedge
benefits
$ 37,531
+ 6%
$ (116,598)
(12.0%)
$ (28,402)
(12.4%)
Net Cost/Benefit
Returns
$ 665,809$ 852,404$ 200,876“Brown Power” Pricing
$ 628,278$ 969,002 $ 229,279Actual Spend
REI Green Power Requirements
1. Quality• Independently verified source and chain of custody • Green-e certified
2. Financial value• Hedge value• Fixed prices• Avoided fuel cost adjustments• Tariff escalation tied to renewable cost
3. Premium – based on Net Present Value calculation
Conclusions
1. Green Power products can (and do) deliver financial benefits as well as “soft benefits”
2. Few suppliers have crafted Green Power products with a complete value proposition
3. Any utility can offer differentiated power products• IOU’s, Municipals, co-ops and 3rd Party providers• No deregulation required (but it helps)
4. We need to ask utilities for better products• Deliver bottom line results• Increase the market for renewable generation
www.REI.com/stewardship
REI reports publically on our progress
Questions?Kevin HagenDirector, Corporate Social Responsibility [email protected]/stewardship
Orrin CookSenior AnalystGreen-e Marketplace Center for Resource [email protected]/marketplace