answer is (blowing) in the wind, The

In Business, May/Jun 2003 by Uhland, Vicky

It's not surprising that Quayle Hodek has lofty ambitions for his company, Renewable Choice Energy. After all, he's selling wind.

LONGMONT, Colorado-based Renewable Choice is the only private business in the Rocky Mountain region that sells wind energy, going up against public utilities such as Xcel Energy. Renewable Choice's path is particularly arduous because it's based in a state where utilities are regulated.

"It's not like Pennsylvania or Texas, where the market's deregulated and the competition thrives," says Kathy Belyew, spokeswoman for the Washington, D.C.-based American Wind Energy Association. "In regulated states like Colorado, people don't know the wind energy market exists. People aren't used to choosing their utility providers."

Nevertheless, Colorado ranks tenth among all states in the amount of wind energy consumed, at 61.2 megawatts as of early 2003, according to the association. The state has two wind farms and another in the works. These wind farms contract exclusively with Xcel's Windsource division, however. Renewable Choice gets its energy from Foot Creek wind farm near Arlington, Wyoming, Indian Mesa in Pecos County, Texas and Waverly Wind in Waverly, Iowa.

Unlike Xcel, which sells wind energy generated from its wind farms directly to customers, Renewable Choice is a wind energy marketer. It buys green tags or green certificates from wind farms and then sells the certificates to its clients. One certificate equals 1,000 kilowatts of wind energy. Other U.S. green tag marketers are Green Mountain Energy Co. in Austin, Texas, Community Energy in Wayne, Pennsylvania (see page 8), Bonneville Environmental Foundation in Portland, Oregon, and Sterling Planet in Atlanta.

Even though the number of customers using Xcel's Windsource energy dwarfs those who have signed up for Renewable Choice's American Wind product, the company is holding its own and is currently profitable, says Quayle Hodek, company president. He won't give specific figures, but said Renewable Choice, which began selling American Wind in January 2002, grossed between $1 million and $2 million in sales last year and posted an 80 percent increase in revenue in the first half of this year.

As of September 2002, Renewable Choice had 1,200 residential and 60 business customers in 12 states. A recent article in the Boulder County Business Report cites higher numbers - 5,000 residential and 80 business customers in February. In contrast, Xcel Energy spokesman Steve Roalstad said Windsource had about 24,600 residential and 400 business customers in Colorado at the end of 2002.

But Renewable Choice scored a coup earlier this year when, together with Bonneville Environmental Foundation, it landed White Wave soy products, based in Boulder, Colorado, as a customer. White Wave agreed to a three-year commitment to buy 20 million kilowatts of wind energy hours per year. It's the largest U.S. corporation to be powered solely by wind energy, said Kurt Johnson, director of the Environmental Protection Agency's Green Power Partnership.

COMPANY RUN BY 20-SOMETHINGS

When the 25-year-old Hodek moved to Colorado three years ago, his goal was not to play David to Xcel's Goliath. He and two of his friends from Chapel Hill, North Carolina already had founded one business: Zoom Culture, a media company for young people. They moved to the Boulder-Longmont area with the idea of starting another business. The only problem, notes Hodek, was "we didn't know exactly what kind of company we wanted to start."

But then Hodek heard about Windsource and saw an opportunity. He did some research and found that 98 to 99 percent of Coloradans don't use wind power, but that about 30 percent would be willing to try it. Windsource was launched in April 1998 and has grown at 50 percent a year, according to Roalstad. Still, less than two percent of Xcel's 1.3 million customers have signed up for Windsource. "There's a huge, unfilled demand," Hodek says, who also liked the idea of a private enterprise selling renewable energy. "I realized that someone else other than the utility company, which is a gas and oil company, should be selling wind energy."

Backed by $350,000 from private investors, Hodek and his friends from Chapel Hill - Kris Lotlikar and Shea Gunther - started Renewable Choice Energy in September 2001. Hodek is president and CEO, Lotlikar is vice president of marketing and Gunther is vice president of design and media. The company has 12 other employees.

MARKETING DOOR-TO-DOOR

American Wind Energy Association's Belyew said one reason why there are so few wind energy marketers in the United States is because selling the product is difficult. "To get people interested, there has to be a pretty strong force," he explains. "A company has to market a lot, and has to market to a customer who is willing to pay a premium to get this industry on its feet."

Hodek says American Wind energy costs about 2.5 cents more per kilowatt hour than electricity generated by coal or natural gas. He admits that explaining to customers how wind energy is generated, why they should buy it and why they should pay extra to use it is difficult. "Our biggest challenge is customer education, so we went for a one-on-one approach," he says. "A lot of companies rely on sending out mass-market mailers, but we look at ourselves as almost the ground troops getting out the word about wind power. We have rolled out an extensive grassroots education and marketing campaign this summer." The personalized approach has paid off, he adds, with 30 to 35 percent of residential customers contacted signing up for American Wind.