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 THE STAT 26Percentage of wireless customers who use their cell phones to take picturesMore Vitals
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OCTOBER 8, 2004
Racing to Energy's Great Green Future From hybrid autos and solar panels to fuel cells and beyond, alternative energy is fast going from fringe to mainstream Back in 2000, when Frederick Schilling concocted Dagoba Organic Chocolate in Central Point, Ore., he faced a choice: He could buy the cheapest possible electricity to make his organic chocolate bars containing hazelnuts, pecans, and berries, or he could pay 20% extra to have the local utility pump him energy derived from renewable sources, such as sun and wind. Most small-business owners count every penny, making this a no-brainer: Go with the cheapie. But Schilling, a long-time environmentalist who wraps his bars in recycled paper, went with his principles. That turned out to be a major ingredient in his sweet (or bitter, if you like dark chocolate) success. Last year, unit sales of his 16 different kinds of chocolate bars, sold nationwide in stores like Whole Foods (WFMI ), jumped nearly 400%. Schilling attributes some of that success to his belief that "our customer base appreciates that we're using alternative energy. It works as a marketing point." ANTI-STATUS SYMBOL. Not too long ago, it would have seemed absurd to suggest that people would pay more for products produced with alternative energy. That this notion no longer seems so odd reflects how the quickly maturing world of alternative energy has moved from the fringe to the mainstream. Nearly everyone is an environmentalist now -- it's just a question of what kind. National public opinion polls show that 75% of U.S. residents support increased use of renewable energy. The public, long infatuated with gas-guzzling SUVs, has a growing crush on alternative cars. Thanks to rising concerns about greenhouse gases and global warming -- and not incidentally, fuel economy -- Toyota's (TM ) new hybrid gas-electric Prius has become a Hollywood anti-status symbol, driven by stars like Tom Hanks and Leonardo DeCaprio. Ford (F ) is convinced it can sell 20,000 of its new hybrid Escape SUV annually. And this fall, General Motors (GM ) will start selling its the first hybrid pickup. As an extra incentive to buy hybrid vehicles, environmentally minded consumers get tax credits -- $1,500 from the federal government, plus as much as $5,000 from certain states. Registrations of hybrid vehicles were up 25.8% in 2003, to 43,435, according to automotive consultancy R.L. Polk & Co. "THE TIPPING POINT." Well beyond leaner, cleaner cars, renewable energy is one of the world's great growth businesses. Power from sources such as the sun, wind, and fuel cells has grown from a $9.5 billion global industry in 2002 to $12.9 billion in 2003, according to research consultancy Clean Edge. The firm expects the market to reach $92 billion worldwide by 2013. "These are no longer alternative technologies," says Ron Pernick, co-founder of Clean Edge. "We are at the tipping point." That huge business opportunity is making venture capitalists see green. In the first half of 2004, $76 million in VC investments were pumped into alternative energy, nearly double the amount in all of 2003, according to PricewaterhouseCoopers' MoneyTree Survey. Venture-capital firm Draper Fisher Jurvetson has poured more than $20 million into alternative energy startups since 2002. "We are seeing the same ramp-up as we've seen with the Web," says Draper Managing Director Raj Atluri. Multinational corporations, from carmakers to oil companies, are tripping over each other in the race to the great, green future. British Petroleum (BP ) has practically rebranded itself as an alternative energy company. BP's new logo, a cheery-looking sun surrounded by green rays, is plastered across streets and highways around the world, and it's not just clever PR. Oil and gas heavyweight Shell (SC ) expects renewable sources -- including solar, wind, hydrogen and biofuels -- to account for a quarter to a third of world energy by 2050. EVER MORE IMPORTANT. Investments in alternative energy are turning out to be a great business. General Electric (GE ) acquired Enron's wind-power business in 2002. And it entered the solar energy business in April, 2004, by purchasing AstroPower, the nation's largest solar-equipment supplier. Both companies have been growing at a double-digit annual rate, while GE's total sales rose only 1% last year. Shell says its investments in alternative energy could hit $1 billion by 2005. "We see that those technologies are on a very fast trajectory," says Robert Kleiburg, vice-president for strategy and planning for renewable sources of energy and hydrogen at Shell in the Hague, Netherlands. "They'll soon be an order of magnitude or more important than they are today." Such forecasts have been made since the first Earth Day celebration in 1970, and they've never quite panned out. More people than ever are driving SUVs, the least energy-efficient passenger vehicle on the roads today. And an earth-toned wardrobe did little to help Al Gore's Presidential campaign in 2000. And yet, there's reason to believe that alternative energy really is taking off this time.
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