Business: Blowin in the Wind
MOST OF US go through day-to-day life blithely unaware of the giant industrial complex that supplies our power. It’s easy to forget that electric lights were a marvel just a few generations ago. The mundane predictability that flipping a switch will turn something “on” blinds us to the huge infrastructure at the other end of the wire.
There are distribution lines and high-powered transmission lines and substations and such, all hooked up to a nationwide electrical transmission grid that’s been described as the largest machine in the world. There are companies that make the energy, companies that buy and deliver it, and layers of middlemen in between. At the base of the market are electrons, which have been turned into a commodity and are sold and traded as such, just like bushels of corn and hog bellies.
“When we started Community Energy,” Alderfer says, “the question was: How are we going to get a market for clean energy, which is still more expensive than existing types of generation?” Most of America’s power comes from plants that burn coal, and oil is our second most popular fossil fuel. Nuclear power also supplies a good percentage, though a new nuclear plant hasn’t been built in decades.
Wind is free, but at $3 million each, turbines are pricey. Wind energy right now costs a few cents more per kilowatt hour than traditional power. That’s where what Brent Alderfer calls his “passion for marketing” came in handy.
“We had to find leadership,” Alderfer says, “forward-looking people who were willing to say, ‘Yes, this is something we need. It’s not going to happen without us.’ In some ways, it’s no different from organic food or the choice to recycle. It’s a choice that says, ‘I’d like to see us move in this direction, so I’m going to put my consumer dollars behind it.’”
Alderfer’s first big customer was Mike Freeman at Exelon Generation in Kennett Square. Besides owning PECO and another big utility company in Illinois, Exelon is the largest producer of nuclear power in the country. Exelon gave Community Energy a guaranteed wholesale customer to help attract financing for two small wind farms in western Pennsylvania. But to get investors to put up the money, it needed some guaranteed retail customers, too. “It’s like building a shopping center,” Alderfer explains. “You need a long-term tenant to say, ‘If you build it, I’ll buy that power.’” He had to find a retail market. That’s where the universities came in.
It was 2001, five years before An Inconvenient Truth would galvanize public consciousness on the perils of global warming. But environmental awareness was already ahead of the curve on many college campuses, which often have the energy needs of small towns.
“Carnegie Mellon was the first to sign up,” Alderfer says. “They took a small percentage of our output. They agreed to pay a premium for wind so we could go back and start to build up our market. Shortly after that, the University of Pennsylvania and Penn State came in. So we had some other tenants for the shopping center.”
Last year, Penn purchased 120 million kilowatt hours of wind power — about a third of the campus’s total electrical usage — from Community. After New York University jumped ahead of it in buying green power, Penn upped its purchases to almost 200 million kilowatt hours, quickly issuing a press release making this announcement. A new kind of intercollegiate competitive sport is sprouting. Thirty-three universities have entered the wind game in Pennsylvania alone.