Environmental issues are taking centre stage across world energy markets
To date, the global market for green energy tariffs has been driven by three main factors
Interest in protecting the world’s environment has increased dramatically, presenting new opportunities for B2C green tariffs
The emergence of green retail tariffs is a response to the liberalization of electricity and gas markets worldwide
The Kyoto Protocol instigated a political movement that drove the uptake of large-scale renewable power worldwide
Renewable energy directives worldwide have sparked the adaptation of numerous legal frameworks (1/2)
Renewable energy directives worldwide have since sparked the adaptation of numerous legal frameworks (2/2)
Legislation and green awareness have spurred the strong uptake of renewable power on the supply side, led by EU Member States
Globally, key renewable energy indicators have shown dramatic gains over the past three years – a trend which is likely to continue
Consumers will change their habits provided utilities offer them the means and incentives to do so
More than half of Europeans feel informed about climate change
Europeans deem climate change to be a very serious issue and one of the most serious problems facing the world
Climate change is perceived as a serious problem, but one which European citizens are willing to address
A significant proportion of Europeans citizens are willing to pay more for green energy
Green tariffs linked to the reduction of energy consumption in the home demonstrate great comparative potential
Genuine concern about climate change does not always result in remedial actions with tangible green benefits
Where electricity prices are much higher than the EU average, citizens are less willing to pay for green energy
Europeans citizens believe that the different stakeholders aren’t doing enough to fight climate change
Green tariffs could help meet the expectations that citizens have of corporations and industry
A review of countries involved in green tariff marketing suggests lessons are to be learned in the US
In the US’ partly deregulated electricity market, three types of green power retail offerings coexist
Despite the economic downturn, US utilities significantly expanded green power sales at a national level
Utility green energy sales in the US continue to make up an increasing part of total retail electricity sales
More US consumers are making clean power choices than ever before
The success of US green tariffs is attributed to persistent and creative marketing strategies and a falling premium
US green power markets will continue growing but state RPS requirements threaten to alter market dynamics
In the UK, the disjuncture between green wholesale and green supply is caused by the Renewables Obligation
In the UK, the disjuncture between green wholesale and green supply is caused by the Renewables Obligation
Of the five types of ‘green’ tariffs offered by suppliers in the UK in 2008, some were much ‘greener’ than others
Of the five types of ‘green’ tariffs offered by suppliers in the UK in 2008, some were much ‘greener’ than others
In 2008, most ‘green’ energy tariffs suffered from a lack of transparency and clarity.
In September 2009, there are less green source and green fund tariffs than at the same time in 2008
In the UK, there is still no impartial green tariffs accreditation or audit scheme to substantiate supplier’s claims
In Germany, green energy tariffs are actively being promoted as an alternative and way of curbing unpopular nuclear and coal power
Green tariffs are mainstream in the Netherlands but incoming EU legislation could unsettle high rates of take-up
The success of Australia’s green tariff program hinges on liberalized energy markets and a strong accreditation program
Pioneering green retail programs highlight the elements central to any successful green tariff strategy
Palo Alto has created one of the most effective and successfully marketed green power programs in the US (1/2)
Palo Alto has created one of the most effective and successfully marketed green power programs in the US (2/2)
Ecotricity has positioned itself as a semi-green, sustainable, non-premium, small and credible energy company
Green Energy UK differentiated itself by only supplying ‘deep green’ or ‘pale green’ electricity
Good energy’s has positioned itself as the UK’s greenest and only 100% true ‘deep’ green energy supplier
British Gas offers two 100% green tariffs: Future Energy and Zero Carbon, both at a price premium
Bounce Energy offer fixed rate for their 100% renewable energy and a modern and rewarding marketing program
The deployment of best practices can offset many of the B2C renewable energy market structure limitations
Regional, national, and international policies drive the market for green energy, mainly from the supply-side
Green energy is subject to the economic needs of stakeholders and their wider regulatory constraints
Green energy providers are increasingly scrutinized and held to account by their customers and industry
Utilities must create new ‘low hanging fruit’ by driving the adoption of renewable energy, by partnership
Beyond government legislation, best practices in green tariff marketing centre on price, product and promotion
The successful sale of utility green energy tariffs must focus on five key elements of strategy
The burden is on utilities to lobby governments and amend their own internal product management operations
APPENDIX
Footnotes
Graphs of US green pricing program renewable energy sales and US price premium charged for new renewable power – footnotes:
Graph of US green pricing program renewable energy sales
Graph of US green power sales as a percentage of total retail sales
Graph of US customer participation rate
Graph of US price premium charged for new renewable power
Ask the analyst
Datamonitor consulting
Disclaimer
FIGURES
Figure: The most interesting outcome of the Kyoto Protocol is the green impetus that it has generated
Figure: By the end of 2007, no less than 60 countries (37 developed and transition countries and 23 developing countries) have some form of policy to promote renewable power generation
Figure: By the end of 2007, no less than 60 countries (37 developed and transition countries and 23 developing countries) have some form of policy to promote renewable power generation
Figure: Over the past decade, only in the EU has the average growth in renewable electricity output outpaced that of conventional electricity
Figure: Globally, key renewable energy indicators have shown dramatic gains over the past three years – a trend which is likely to continue
Figure: More than half of Europeans feel informed about climate change but more than four in ten respondents do not
Figure: Nearly all countries polled considered poverty and the lack of food and drinking water, and global warming/climate change to be the most serious problems facing the world
Figure: Citizens from the top right cluster of countries are most likely to personally take action to fight climate change
Figure: On average, in Europe, 48% of citizens are willing to pay up to 13% more for energy produced from greener sources
Figure: In all countries covered, the reduction of energy consumption appears to be the most widespread action taken by citizens in order to combat climate change.
Figure: Only in Cyprus, Denmark, Finland, Germany and Sweden do citizens truly ‘talk the green talk’ and ‘walk the green walk’
Figure: Hungarians, Italians and Slovaks show lower willingness to pay for green energy, while the opposite is true of Estonians, Finnish, French, Greeks and Latvians.
Figure: Corporations and industry are not doing enough to fight climate change
Figure: Majorities in all countries think that corporations and industry, more than any other stakeholder, are not doing enough to fight climate change
Figure: Austin Energy boasted the highest total green power sales (as of Dec 2008)
Figure: Legislation often requires suppliers to offer green tariffs, which partly explains the higher loads of green power sales in 2008
Figure: Across all three US markets and both customer segments, more US consumers are making clean power choices than ever before (as of Dec 2008)
Figure: The price premium charged for new, customer-driven renewable power(a) in the US in 2008 varied widely from utility to utility
Figure: In this illustration of the relationship between the wholesale and supply markets, the supplier can either ‘absorb’ or ‘pass on’ the inputs from the wholesale market to the supply market
Figure: In the UK, certain ‘green’ tariffs are such that part—or even all—of the supplied electricity may actually come from non-renewable sources
Figure: Green energy programs are niche programs and they must be marketed to customers correctly if they are to gain acceptance
Figure: In the UK, certain ‘green’ tariffs are such that part—or even all—of the supplied electricity may actually come from non-renewable sources
Figure: Natural Power Ltd offering dominates
Figure: Essent offers customers its ‘green’ option at the same price as its ‘grey’ option
Figure: Australia has among the highest penetration of residential customers buying accredited green energy in the world, with one in nine households taking a green product in 2009.
Figure: Green Energy UK differentiated itself by only supplying two levels of green power
Figure: British Gas offers two one hundred percent green tariffs: Future Energy and Zero Carbon, both at a price premium
Figure: Bounce Energy offer fixed rate for their one hundred percent renewable energy and a modern and rewarding marketing program
Figure: Regional, national, and international policies drive the market for green energy, mainly from the supply-side
Figure: Green energy is subject to the economic needs of stakeholders and their wider regulatory constraints
Figure: Green energy providers are increasingly scrutinized and held to account by their customers and industry
Figure: Best practices in green tariff marketing centre on price, product and promotion
Figure: Selling green tariffs requires a different approach to the selling of ‘brown’ energy, linking key elements of strategic marketing
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