PPL Corporation (NYSE: PPL) is an energy company that controls roughly 12,000 megawatts (MW) of electricity. And while they still generate their power with natural gas and the increasingly taboo coal, there's something different about this company.
Their headquarters, in Allentown, PA, has stood since the 1920s. But recently the corporation outgrew its aging building and needed to house some employees in a new structure.
Unlike traditional power companies, however, PPL just didn't slap up the first building proposed by any old architect. They took their time, crunched the numbers, got some green building information and, ultimately, decided to go the green route.
And I know what you're thinking: Why would a utility company that still burns fossil fuels to produce electricity build a green building to house their employees and executives?
I could go the environmentalist route and tell you it was because they truly care about the environment and how their footprint affects it. I could tell you it was because of the natural light the building lets in, the energy and water it saves, or because of the plants growing in its atriums and on the roof.
But it was for none of those reasons. The reason PPL didn't just build a cookie-cutter building was simple economics. It actually helped their bottom line to go green.
As if the savings on electricity and water bills weren't enough, green buildings increase worker productivity up to 15%, while decreasing absenteeism. So commissioning and leasing a building certified as gold by the Leadership in Energy and Environmental Design (LEED) rating system of the US Green Building Council (USGBC), even if it came with a slight premium, actually saves PPL money in the long run.
The Carrot or the Whip
As President Clinton poignantly stated at the opening plenary of the Greenbuild 2007 conference in Chicago last week, climate change has been sold. It is now time to operationalize the solutions.
He said, "Climate change is perhaps the most important cause we can be involved in today." And he added, "Solving the issues associated with climate change is not a problem, it's an opportunity. Perhaps the greatest opportunity for broad-based prosperity since we mobilized for World War II. It is a staggering economic opportunity."
Those are powerful words from a powerful and intelligent man—words that were backed up, again and again, in the various sessions of the following days.
They were backed up by Andrew Marris, CEO of dcarbon8, a British carbon consulting agency, who used the image of a donkey, with a carrot dangling in front of it and its master whipping it from behind, to illustrate the current green building situation.
The whip represented legislation, while the carrot symbolized market drivers. It's the carrot, he said, not legislation, that will ultimately entice companies to go green if they want good consumer relations, a positive image among their peers and society, and an increase in share prices.
PPL is the perfect example of this phenomenon. A utility company, usually the outcasts of the green world, striving to improve is environmental image while making money at the same time. And, more and more, the two simply go hand in hand.
From Green Building to Green Energy
Last week, PPL Renewable Energy, an offshoot of PPL, announced it will develop a 4.8 MW power plant in Moretown, VT, using landfill gas as fuel.
The electricity produced by the plant will be introduced to the grid and be able to power about 3,000 homes. It will be completed late next year and will prevent 29,000 metric tons of CO2 from entering the atmosphere annually. If PPL Renewable Energy sells those carbon credits at today's prices, it stands to make an additional $700,000 a year.
PPL Renewable Energy already has more than 15 MW of renewable power in its portfolio, coming from solar, wind, and other landfill gas projects. And its efforts haven't gone unnoticed. The stock has grown nearly 50% in the past twelve months.
Stubborn utilities like Duke Energy Corporation (NYSE: DUK) and The Southern Company (NYSE: SO) wish they could say the same. Southern's stock has been flat for the past year, while Duke has lost over 30%. And the disparities between companies making clean efforts and those that refuse to change are only going to increase.
So whether it's greening your facilities, your operations, or both, there is only money to be made. And this is just one example of a company changing its practices. I've not yet delved into the profit potential for green building product manufacturers, architects and construction companies.
We'll save that for another time.
Until then,
Nick
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