Companies have long been willing to pay a lot of money to attach their names to prominent places. The future home of the New York Mets in Queens will be called Citi Field, after Citigroup. The Academy Awards ceremony takes place at the Kodak Theater in Los Angeles.
So at a time when most companies are scrambling for a prime seat on the green bandwagon, why not a company-branded wind farm?
John Deere Wind Energy is building an eight-turbine, 10-megawatt wind farm in Panhandle, Tex., that is scheduled to open in May.
Steelcase, the big furniture company in Grand Rapids, Mich., has committed to buying the farm’s entire output of renewable energy credits – the alternative energy version of carbon offsets, usually just called R.E.C.’s – for its first five years of operation. And it is paying a premium – it declines to say how much – for the right to name it the Wege Wind Energy Farm, after Peter Wege, the son of the founder of Steelcase and a prominent environmentalist in Michigan.
Nancy W. Hickey, the chief administrative officer of Steelcase, said both the name and the purchase fit in with Steelcase tradition. Steelcase is well on the way, she said, toward reaching its goal of reducing its carbon footprint by 25 percent by 2012, “and this is another way to help get us there.” Energy credits from the wind farm will offset the equivalent of 20 percent of the power used by Steelcase operations.
Ms. Hickey said the Wege name (pronounced WEGG-ee) is strongly associated with environmentalism, so the naming fits well with the Web-based “Green Giants Campaign” that the company initiated in January to draw attention to prominent environmentalists.
Even without the naming rights thrown in, it is unusual for a company other than a utility to buy all of the energy credits of a project before it is built. But environmental experts say such deals may become commonplace.
“The demand for wind power and for R.E.C.’s is outpacing the supply, so I won’t be surprised to see more companies trying to lock up the renewable energy credits that become available,” said Andrew Winston, an environmental consultant and co-author of “Green to Gold,” a book about environmental marketing.
Environmentalists, meanwhile, are hoping he is right. “After all, the best environmental policies are the ones where there’s a strong economic rationale for doing the right thing,” said Mark S. Brownstein, managing director for business partnerships for the Environmental Defense Fund.
The access to upfront money could also herald a new era for small wind farms, said Elizabeth Salerno, manager of policy analysis for the American Wind Energy Association. “This could really make more communities embrace local wind projects,” she said.
Whether it can make shareholders and customers embrace Steelcase is not as clear. Steelcase will affix “provided by Steelcase” to all of the Wege farm’s signs and promotional materials. But branding specialists say it should have placed its own name front and center.
“So many people care about the environment now that you really can get a lot more juice from naming a wind farm than from naming a stadium,” said Hank Stewart, vice president for strategic messaging at the environmentally themed advertising agency Green Team. “But they really missed an opportunity by not leading with their brand name.”
Michael Watras, president of the brand consulting firm Straightline, said that using the Wege name just muddles what should have been a straightforward message. “Few people know who Peter Wege is, so it creates a disconnect in people’s minds,” he said. “If they’d called it the Steelcase Wind Farm, the tagline could have said, ‘We support an eco-friendly environment.’ ”
In a sense Deere & Company also has a vested interest in Steelcase’s adding luster to its reputation. That could attract more customers for naming rights to wind farms.
In general, it costs $1 million to $2 million to build each turbine on a wind farm. Bradley W. Johnson, John Deere’s director for business development, said his company would probably have built this farm even without the extra money. But he expects that premium prices for naming rights would enable Deere to undertake projects that are too small to be economically practical right now.
“It costs us $350,000 to bring in a crane, whether you are building 4 turbines or 40,” Mr. Johnson said. “And you have the same legal fees, and costs of mobilizing a crew or negotiating contracts with utilities.”
Mr. Johnson said that several companies had already expressed interest in providing upfront financing for small wind farms in exchange for naming rights. Ted G. Rose, vice president for business development for Renewable Choice Energy, which arranged the deal between Deere and Steelcase, envisions naming rights catching on for all sizes of farms.
“This is a new business model, and it could attract any brand that wants to be linked with sustainability,” he said. “Imagine the G.M. wind farm, the Apple wind farm – it’s not unthinkable at all.”
By Claudia H. Deutsch
18 March 2008
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