Bullfrog Power's business model is puzzling to some - it involves persuading consumers and businesses to pay more than they need to for electricity, in order to support green energy generation. Bullfrog's customers continue to use power normally, but the company pumps into the grid an equivalent amount of electricity it buys at a premium from renewable projects across the country.
Tom Heinzman, president and co-founder of Bullfrog, has signed up thousands of individuals and businesses across the country, and he's now adding a new dimension: selling "green" natural gas generated as bio-methane from landfills - a product that is less environmentally damaging than gas from underground deposits.
Can you measure how much impact you've had in supporting green power projects?
We have been running for just over five years, and there have been five new wind projects that we have signed power purchase agreements with, and in most of those cases we helped fund part of the equity. So that is steel in the ground, cement in the ground, and tens of millions of dollars of construction costs as a result of the voluntary market. Every time somebody [buys power from us]there is a renewable generator somewhere that is getting a premium they need in order to be economic.
Would the power projects you support not have occurred, or been slower coming on the grid, if Bullfrog hadn't invested in them?
It is difficult to compare against an unknown, but we are clearly a key part of the development of a number of renewable projects. Who knows what would have happened in the absence [of our investment] but in many cases we have [signed]long-term power purchase contracts that the project required in order to get financing. Without that, a bank wouldn't have financed it.
Why have so many companies signed up for Bullfrog Power?
Corporations are increasingly concerned about their environmental impacts, how their brands are perceived, and their investment risk, so the environment has become a crucial issue for business. It is now an issue that resonates in the most senior boardrooms across North America.
Isn't buying power from Bullfrog mainly a marketing effort so companies can look green?
I'm not a very cynical person. I believe it is all genuine, and in fact I believe corporations would do a lot more if it weren't for countervailing pressures. I definitely believe the desire is there to [make]real meaningful change, and that [executives]are not just interested in doing something for the purposes of marketing.
Some people seem willing to voluntarily pay more for green electricity, while others are vehemently opposed to any increase in power prices. Why the divide?
[There are]two camps, as there are on the environment. There are those who think [the environment]is a pressing issue and we have to invest in it, and those who do not. Obviously our customers are among those that really do think that the world will be slowly transforming into a low-carbon society.
I believe that many of the people who are worried about higher electricity rates would be more understanding if they had all the facts. Most of the [electricity]rate increases have to do with bringing on [more]conventional generation [and]transmission and distribution upgrades. I think there is a misperception that green electricity is the reason for all the increases, when it is really is just a small percentage
How do you deal with sceptics who question the value of your business?
For us it is all about education. Our approach is to try to communicate as much as possible in as many different channels as possible. About 10 years ago people did not discuss where their electricity came from, how it was generated, or what the environmental consequences were. It was an issue that was way off the average person's radar screen. So just the fact that it is part of the dialogue is a really healthy evolution. Our belief is that the more people understand, the more open they will be to paying a premium for renewable electricity.
How much overall impact can people have from voluntarily making higher power payments?
In the United States over the last six years the voluntary markets have provided as much demand for new renewable electricity as all governments put together. That's our vision, [although]we're not there by any stretch. Government initiatives and the voluntary sector can really work hand in hand. In the U.S. more than half of the states have some form of renewable portfolio standard [where minimum levels of renewables are mandated]and 80 per cent of the states have a voluntary program as well. So in many cases they co-exist and mutually support each other.
What do you say to people who oppose wind farms for health or aesthetic reasons?
We really should look at examples from other countries that have developed renewable power. In Germany and Denmark [wind power]is much more ubiquitous than it is in Canada, and people are fine. The economy runs well and health problems have not soared out of control. The key message is that we have to be really fact-based. It is hard to bring a dispassionate tone to a dialogue that has become increasingly emotional.
Why did you decide to expand into the green natural gas business?
It is a very similar business model. Bio-methane is the renewable electricity of the natural gas world. Before we were just addressing [customers']electricity needs, and now we can address all of their home energy needs. It has a similar delivery model, and we can use all of our forms of communication in the same way.
Are you concerned about the current federal government's environmental policies?
Right now it looks like they are taking a regulatory approach. I understand politically why that may make sense, but I think over the long haul, it will be superior both politically and economically to [adopt]carbon pricing. Canada cannot be a laggard on the world scene or else we really will get caught behind the eight ball and have terms and conditions [for carbon pricing]imposed upon us, which would be much more difficult to react to.
Why is setting a price on carbon a better approach than regulating emissions?
Regulation is incredibly blunt, and it doesn't allow creativity and flexibility on behalf of industry. And frankly the regulators can, and most often do, get it wrong. They just don't know the industries as well as the industries know themselves. So rather than saying what has to be done, it is preferable to set the objective and then let companies find the best way to do it. I think there is broad consensus among industry that regulation is not the best way to go.
Are you concerned that a new government in Ontario may backtrack on its green energy policies?
I believe that no government, regardless of their political stripe, can ignore the global move towards a lower-carbon society. In the heat of an election different parties may say different things, but over the longer haul all parties will promote policies that lead towards a greening of our electricity grid and energy system. That seems in escapable. So I am cautiously optimistic that regardless of which party wins the next election, they won't roll back the clock in terms of [eliminating]coal-fired electricity generation, and they will continue to support development of renewable power in some shape or form.