In 2004, Tom Heintzman and Greg Kiessling co-founded Bullfrog Power Inc., a Toronto-based provider of renewable energy.
After they spent almost a year setting up the business, Bullfrog quickly signed up thousands of consumers and hundreds of businesses willing to pay a premium to make green energy their preferred electricity choice.
But with the company then operating only in Ontario, it faced a challenge in getting large corporate clients, with energy needs across the country, to sign on.
While national brands that Bullfrog approached expressed interested in renewable electricity sources, they were reluctant to sign multiple contracts with multiple suppliers in multiple locations for their energy needs.
How could Bullfrog Power get these big national players to become customers?
Before starting Bullfrog Power, Mr. Heintzman practised law for six years and spent almost another six years consulting for energy companies while at McKinsey & Co. and Zenon Environmental, now a division of General Electric Co..
"After my time at Zenon, I knew I wanted to start something green, and was looking for ways to connect business and the environment," Mr. Heintzman says.
He recalled noticing green energy providers operating in California in the eighties. That got him wondering why so little renewable energy was being added to Canada's electricity grid.
In 2004, Mr. Heintzman was introduced by a mutual friend to Mr. Kiessling, who had sold out a software company in 2002, and was looking for his next move.
It turned out that he, too, was looking for a way to connect business and the environment.
Both founders believed that, if properly explained and clearly audited, people would be happy to pay more for green energy. Mr. Heintzman, the company's president, and Mr. Kiessling, its executive chairman, also believed that if more people chose green energy, they could send a message to businesses and governments that there was a market for such alternative energy providers, and more producers would be created.
"We knew that, in order for it to work, we had to create a private market for green power – not just rely on the different levels of government," Mr. Heintzman says.
Renewable energy is not delivered directly to a customer's home or business. Instead, Bullfrog matches a customer's energy usage from traditional sources with green energy input from pollution-free renewable sources, such as wind farms and low-impact hydroelectric projects.
Customers receive two bills. The first comes from their local utility, for the cost of conventional electricity at the provincial rate. The second comes from Bullfrog for the incremental cost of greening their electricity, ensuring the energy that Bullfrog injects into the grid on the customer's behalf is from green sources.
Bullfrog only allows energy providers that meet or exceed the EcoLogo standard for renewable electricity to count as green sources of electricity.
Early customers were gathered by calling friends, peers, and luminaries. These efforts brought support from politicians such as former Toronto mayor David Crombie, an endorsement from the Toronto Region Conservation Authority, and Royal Bank of Canada as a customer in Ontario in 2005.
Bringing more players like RBC on board was important to Bullfrog for three reasons, Mr. Heintzman says.
First, as customers, they might tell their own customers, which could help spread the word about renewable electricity sources and Bullfrog itself.
Second, big companies consume large amounts of electricity, creating not only a bigger environmental effect from going green but also providing more business for Bullfrog. And third, having national brands as customers would send messages to governments and renewable energy producers that there was a demand for renewable electricity from businesses, not just consumers, Mr. Heintzman says.
"RBC was one of the first customers to sign on. They just happened to be doing some environmental initiatives and had some early adopters inside the company," he says. But getting other national brands to follow suit "was a challenge," he admits. "Visionary supporters could see where this could be going, but it was hard to serve national brands when you only run your business with coverage in a single province."
Purchasing renewable energy was a concept that did not have natural geographic boundaries. So to solve their challenge, Bullfrog's co-founders decided that they had to move their company's offering beyond the geographical boundaries of Ontario to ultimately become a single nationwide provider of renewable electricity that big customers could turn to.
First up was Alberta in 2007. "At the time, Alberta was the largest producer of wind power, so it just made sense to go there next," says Mr. Heintzman, whose company opened an office in Calgary, hired salespeople and started to source renewable energy from providers in the region.
Two years later, Bullfrog added British Columbia and the Maritimes, opening offices in Vancouver and Halifax.
"We included British Columbia because it is a large population centre and people there are very green. We then chose the Maritimes because we thought we should have a coast-to-coast value proposition," Mr. Heintzman says.
"By creating coast-to-coast coverage, we allowed national brands to have a single provider for renewable electricity service and made it easier for them to tell a common story in all of their locations."
The strategy worked. RBC has expanded its initial contract to include power needs for its ATMs and digital display networks in all of its Canadian branches. Other national brands, including Unilever Canada Ltd.., Wal-Mart Canada Corp.and Bank of Montreal, have also signed on.
Bullfrog Power now services more than 7,000 homes and 1,300 businesses and organizations across Canada, with more than one-third of business coming from outside of Ontario.
The 45-employee company now offers renewable electricity as well as green natural gas services, added in 2011, in every province.
Since 2005, it has delivered more than 1.56 million megawatts of renewable electricity to its customers. While this may seem like a large number, it actually represents less than one-tenth of 1 per cent of the electricity used in Canada every year.
As Bullfrog aims to support the continuing development of renewable power generation in Canada, it has recently partnered with SolarShare, a non-profit renewable energy co-op, to provide financing to develop community-based solar PV systems that convert sunlight into electricity.
"We believe the next logical step is to move from beyond our current model of add-on billing to developing partnerships with traditional energy providers so customers can pay for green energy on a single bill," Mr. Heintzman says. "We believe this will convert those who are willing to use green energy but want it to be easier to be a supporter."
Special to The Globe and Mail Craig Elias is the founder of Shift Selling Inc. and an entrepreneurship instructor at the Haskayne School of Business at the University of Calgary.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Small Business website.
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