Reaching Renewable Propane Consumers: A Critical Step

Written on: April 29, 2021

One of the primary missions of the Renewable Propane Alliance is to establish a supply chain for renewable propane by linking together Renewable Propane Producers > Wholesalers > Retailers > Consumers. That supply chain has missing links in most parts of the country and the opportunity to purchase renewable propane is not reaching potential consumers. As we work to reverse this, the industry needs to see an uptick in the three A’s: awareness, advocacy and adjustment.

Tom Jaenicke, vice president of propane marketing for Warm Thoughts Communications, and a founding member of the Renewable Propane Alliance, weighed in on these important issues.

Awareness

We’ve identified four major areas where the first A, awareness, can really make a difference.

1. Ramping up consumer education. Propane Education & Research Council (PERC) can increase consumer awareness of the increasing availability of renewable propane and its features and benefits to users and to the environment.
2. Increasing outreach to lawmakers and regulators. The National Propane Gas Association (NPGA) as well as state propane associations can ensure that policy makers understand the features and benefits of renewable propane.
3. Getting renewable propane onto environmentally conscious consumers’ radars. This consumer group will seek out sources of renewable propane as it becomes available.
4. Educating suppliers. Propane retailers need to lean in on their traditional suppliers of traditional propane to seek renewable propane supply sources.

Advocacy

Advocacy is a key component of awareness, and it’s up to us within the propane industry to move the effort forward. A real need for subsidies and benefits exists and advocacy is the way to make that happen. Establish lobbying efforts for renewable propane to get similar subsidies and benefits that other forms of renewable energy have.

Adjustment

Producers of renewable fuels, such as biodiesel, Bioheat® fuel and ethanol need to adjust their production facilities and business plans to include the production of renewable propane as demand increases. This needs to happen in many more geographic areas of the country. 

Let’s establish renewable propane as part of the broader renewable fuel conversation going forward.

Only a few producers of renewable fuels are willing to gear up production on renewable propane. The propane retailers who find those sources will have more success in selling to end-users. The trouble is, a few obstacles stand between renewable propane and potential end-users.

At this point the cost of production of renewable propane is higher than that of conventional propane production. This price disparity is a sales barrier to some. Potential solutions include the following:

• increased sources of production
• more efficient ways to produce renewable propane
• a specific conversation covering the environmental benefits of renewable propane

As these factors improve, consumer demand and price will no longer be a barrier.

Keep-dry contracts: what they are and how they can make a difference

Simply put, a keep-dry contract is a guarantee from the propane retailer to the renewable fuels producer that the propane retailer or other purchaser will buy all the renewable propane being produced over a certain time frame, such as a year. This agreement gives assurance to the producer that they can set up and go into production of renewable propane with a guaranteed sale at an agreed upon price of all that is produced.

Getting propane wholesalers involved in working with multiple renewable propane producers to aggregate production for sales and trades to retailers will open up more of the marketplace, especially to smaller retailers.

What will the upsides—both big and small—look like when the marketplace does open?

With awareness comes favorability. Then comes demand. At that point the expanding market for renewable propane will be a challenge for producers and wholesalers to keep production in sync with demand. Most likely we will continue to see a price differential between renewable propane and conventional propane but the favorability factor of renewable propane will overcome a moderately higher price.

Learn more about renewable propane and the Renewable Propane Alliance today! Check out the rest of the website and contact us with questions anytime.