Finance

Finance

CDG Model – Subscriber Acquisition

Jan Borchert, Current Hydro and Dana Hall, Esq.

Central to the success of CDG is the acquisition of subscribers (customers or members) who buy the project’s electricity. CDG economics depend on it. Once you have decided how to organize subscriptions in your CDG it’s time to consider how to go about finding subscribers, develop marketing strategies and to build alliances within your community to garner support for a community hydropower project.

Engaging a Third-Party Subscriber Management Organization

For project owners who are less inclined to market their product and develop subscriber relationships, there are an increasing number of Subscriber Management Organizations (SMO) offering to market to, sign up, and manage subscriptions for CDG owners. These organizations offer CDG hosts assistance in acquiring and maintaining subscribers. There are many energy service companies (ESCOs) who provide this service, however a CDG host should be aware that the history of ESCO abuse in New York State[1] has made some consumers wary of these companies, and care should be taken in selecting a suitable SMO.

Subscriber Management Software

Recent progress in software products offer new opportunities for CDG hosts to acquire and manage subscriptions with less effort and cost. Internet portals with effective marketing strategies can reach consumers online and engage them in subscriptions. Very small CDG hosts with only a few subscribers can easily manage their subscriptions with Excel spreadsheets, however with larger power output and an unwieldy number of subscriptions, simple spreadsheets may not be adequate.

In the solar industry, some of the larger companies have developed their own software to manage their complex subscriber relation needs. CDG hosts interested in managing their own subscriber databases could work with software developers to create customized solutions.

Marketing to a Community

If you are interested in engaging with your community to find and sign up subscribers, you might be able to increase your success by preparing a marketing strategy that recognizes the environmental impacts of hydropower and the potential to build new alliances around cultural resource protection, public education and recreation and environmental protection.

Hydropower can be a clean, renewable, reliable and efficient source of energy. Installing microhydro on an existing dam, where environmental conditions are appropriate, is a great way to contribute new green power to the larger supply mix and help reduce greenhouse gases in your community. A hydro site owner interested in CDG should be familiar with the environmental impacts of hydropower, as well as the potential to enhance environmental conditions as a steward of the river.

Microhydro Financial Models – CDG Model Description Marketing CDG can be successful if campaigns are designed to be appealing, accessible and clear. Have a look at the NYSPSC website to find sample contracts and marketing material of existing community DG projects (mainly solar).

Environmental Concerns and Enhancements

A significant release of greenhouse gases can occur when a hydropower dam is first constructed and the new impoundment that is created drowns trees and other organic matter below the water level. When this material decomposes in the first years, methane, a powerful greenhouse gas, can bubble into the atmosphere. After the initial decomposition period, the GHGs emitted are comparable to naturally-occurring pond or wetland area. In most cases, the development of microhydro facilities utilize existing non-powered dams and operate as run-of-river facilities.

Run-of-river operation does not alter the existing impoundment and thus does not add to the amount of GHG released, but new hydropower facilities may alter the natural water flow of a stream or river and can threaten riverine habitats. These flow modifications can have a critical impact on species habitat, which requires hydro site owners to carefully manage flows and meet standards required by regulatory agencies in their permit and/or license. Other environmental concerns associated with dams and dam impoundments are related to increased water temperatures, reduced dissolved oxygen, increased algae bloom, flood related issues, etc.

Hydropower can be sustainable when it works in harmony with the riverine environment. “Low Impact” project design can enhance fish migration, ensure wetland health, and mitigate downstream and upstream storm event damage. Investments and enhancements in the watershed can be part of your microhydro development, an attractive feature for community supporters. Check out ourMicrohydro NY – Environmental Considerations web page for more information on environmental aspects of microhydro power development.

Historic and Cultural Preservation

Historic and cultural preservation of dams recognizes the role that water power—mills and dams—played in the formation and development of communities of all sizes and in their ongoing identity. Many aging dams are targeted for removal because of environmental damage. The development of generating capacity at suitable historic dams may allow them to remain intact, making them once again a valuable resource to the community.

Education and Recreation

Operating a microhydro CDG can provide your community with valuable educational and recreational resources. Public access for fishing, boating, and for school trips to learn about the renewable resource at the hydro site are important tools for building community support. CDG site owners will benefit from developing these resources to create net benefits for the community.

Sometimes these resources are already in place but are threatened by an aging dam in disrepair. A hydropower facility can give additional incentive for the dam owner to properly maintain the dam, preserving the upstream impoundment and its recreational uses.

Finding Allies

CDG site owners may also work towards alliances with environmental non-governmental organizations (NGOs), municipal environmental commissions, chambers of commerce, historic and cultural resource organizations and other constituencies. These kinds of alliances can be valuable both in the permitting and approval for a microhydro project, and in marketing to potential subscribers and align with the “Hydropower by Design” concept.

Next Steps

Marketing to your community is the most hands-on way of doing a CDG. You will need to know a lot about your own hydro-project and how it affects your community. But you will also need to have an understanding of significant legal considerations related to CDG. Hopefully our next post can offer you a good starting point for that.

Or download our full Microhydro Community DG report.


[1] Order Establishing Oversight Framework and Uniform Business Practices for Distributed Energy Resource Suppliers. (October 19, 2017) CASE 15-M-0180.  “The Commission’s experience in regulating energy services companies (ESCOs) in the gas and electric supply market has demonstrated that oversight is needed to prevent false promises, exploitative pricing, and other deceptive or intentionally confusing behavior in marketing to residential customers and small businesses.”


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