DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLGY 1
SOURCES 2
ANALYSIS 3
Environmental issues are taking centre stage across world energy markets 3
To date, the global market for green energy tariffs has been driven by three main factors 3
Interest in protecting the world's environment has increased dramatically, presenting new opportunities for B2C green tariffs 4
The emergence of green retail tariffs is a response to the liberalization of electricity and gas markets worldwide 5
The Kyoto Protocol instigated a political movement that drove the uptake of large-scale renewable power worldwide 6
Renewable energy directives worldwide have sparked the adaptation of numerous legal frameworks (1/2) 7
Renewable energy directives worldwide have since sparked the adaptation of numerous legal frameworks (2/2) 8
Legislation and green awareness have spurred the strong uptake of renewable power on the supply side, led by EU Member States 9
Globally, key renewable energy indicators have shown dramatic gains over the past three years - a trend which is likely to continue 10
Consumers will change their habits provided utilities offer them the means and incentives to do so 11
More than half of Europeans feel informed about climate change 11
Europeans deem climate change to be a very serious issue and one of the most serious problems facing the world 12
Climate change is perceived as a serious problem, but one which European citizens are willing to address 13
A significant proportion of Europeans citizens are willing to pay more for green energy 14
Green tariffs linked to the reduction of energy consumption in the home demonstrate great comparative potential 15
Genuine concern about climate change does not always result in remedial actions with tangible green benefits 16
Where electricity prices are much higher than the EU average, citizens are less willing to pay for green energy 17
Europeans citizens believe that the different stakeholders aren't doing enough to fight climate change 18
Green tariffs could help meet the expectations that citizens have of corporations and industry 19
A review of countries involved in green tariff marketing suggests lessons are to be learned in the US 20
In the US' partly deregulated electricity market, three types of green power retail offerings coexist 20
Despite the economic downturn, US utilities significantly expanded green power sales at a national level 21
Utility green energy sales in the US continue to make up an increasing part of total retail electricity sales 22
More US consumers are making clean power choices than ever before 23
The success of US green tariffs is attributed to persistent and creative marketing strategies and a falling premium 24
US green power markets will continue growing but state RPS requirements threaten to alter market dynamics 25
In the UK, the disjuncture between green wholesale and green supply is caused by the Renewables Obligation 26
In the UK, the disjuncture between green wholesale and green supply is caused by the Renewables Obligation 26
Of the five types of 'green' tariffs offered by suppliers in the UK in 2008, some were much 'greener' than others 27
Of the five types of 'green' tariffs offered by suppliers in the UK in 2008, some were much 'greener' than others 28
In 2008, most 'green' energy tariffs suffered from a lack of transparency and clarity. 29
In September 2009, there are less green source and green fund tariffs than at the same time in 2008 30
In the UK, there is still no impartial green tariffs accreditation or audit scheme to substantiate supplier's claims 30
In Germany, green energy tariffs are actively being promoted as an alternative and way of curbing unpopular nuclear and coal power 31
Green tariffs are mainstream in the Netherlands but incoming EU legislation could unsettle high rates of take-up 32
The success of Australia's green tariff program hinges on liberalized energy markets and a strong accreditation program 34
Pioneering green retail programs highlight the elements central to any successful green tariff strategy 35
Palo Alto has created one of the most effective and successfully marketed green power programs in the US (1/2) 35
Palo Alto has created one of the most effective and successfully marketed green power programs in the US (2/2) 35
Ecotricity has positioned itself as a semi-green, sustainable, non-premium, small and credible energy company 36
Green Energy UK differentiated itself by only supplying 'deep green' or 'pale green' electricity 37
Good energy's has positioned itself as the UK's greenest and only 100% true 'deep' green energy supplier 38
British Gas offers two 100% green tariffs: Future Energy and Zero Carbon, both at a price premium 39
Bounce Energy offer fixed rate for their 100% renewable energy and a modern and rewarding marketing program 40
The deployment of best practices can offset many of the B2C renewable energy market structure limitations 41
Regional, national, and international policies drive the market for green energy, mainly from the supply-side 41
Green energy is subject to the economic needs of stakeholders and their wider regulatory constraints 42
Green energy providers are increasingly scrutinized and held to account by their customers and industry 43
Utilities must create new 'low hanging fruit' by driving the adoption of renewable energy, by partnership 43
Beyond government legislation, best practices in green tariff marketing centre on price, product and promotion 45
The successful sale of utility green energy tariffs must focus on five key elements of strategy 45
The burden is on utilities to lobby governments and amend their own internal product management operations 47
APPENDIX 48
Footnotes 48
Graphs of US green pricing program renewable energy sales and US price premium charged for new renewable power - footnotes: 48
Graph of US green pricing program renewable energy sales 48
Graph of US green power sales as a percentage of total retail sales 48
Graph of US customer participation rate 49
Graph of US price premium charged for new renewable power 49
Ask the analyst 50
Datamonitor consulting 50
Disclaimer 50
List of Figures
Figure 1: The most interesting outcome of the Kyoto Protocol is the green impetus that it has generated 4
Figure 2: 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 7
Figure 3: 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 8
Figure 4: Over the past decade, only in the EU has the average growth in renewable electricity output outpaced that of conventional electricity 9
Figure 5: Globally, key renewable energy indicators have shown dramatic gains over the past three years - a trend which is likely to continue 10
Figure 6: More than half of Europeans feel informed about climate change but more than four in ten respondents do not 11
Figure 7: 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 12
Figure 8: Citizens from the top right cluster of countries are most likely to personally take action to fight climate change 13
Figure 9: On average, in Europe, 48% of citizens are willing to pay up to 13% more for energy produced from greener sources 14
Figure 10: 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. 15
Figure 11: Only in Cyprus, Denmark, Finland, Germany and Sweden do citizens truly 'talk the green talk' and 'walk the green walk' 16
Figure 12: Hungarians, Italians and Slovaks show lower willingness to pay for green energy, while the opposite is true of Estonians, Finnish, French, Greeks and Latvians. 17
Figure 13: Corporations and industry are not doing enough to fight climate change 18
Figure 14: Majorities in all countries think that corporations and industry, more than any other stakeholder, are not doing enough to fight climate change 19
Figure 15: Austin Energy boasted the highest total green power sales (as of Dec 2008) 21
Figure 16: Legislation often requires suppliers to offer green tariffs, which partly explains the higher loads of green power sales in 2008 22
Figure 17: Across all three US markets and both customer segments, more US consumers are making clean power choices than ever before (as of Dec 2008) 23
Figure 18: The price premium charged for new, customer-driven renewable power(a) in the US in 2008 varied widely from utility to utility 24
Figure 19: 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 26
Figure 20: In the UK, certain 'green' tariffs are such that part-or even all-of the supplied electricity may actually come from non-renewable sources 27
Figure 21: Green energy programs are niche programs and they must be marketed to customers correctly if they are to gain acceptance 29
Figure 22: In the UK, certain 'green' tariffs are such that part-or even all-of the supplied electricity may actually come from non-renewable sources 30
Figure 23: Natural Power Ltd offering dominates 32
Figure 24: Essent offers customers its 'green' option at the same price as its 'grey' option 33
Figure 25: 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. 34
Figure 26: Green Energy UK differentiated itself by only supplying two levels of green power 37
Figure 27: British Gas offers two one hundred percent green tariffs: Future Energy and Zero Carbon, both at a price premium 39
Figure 28: Bounce Energy offer fixed rate for their one hundred percent renewable energy and a modern and rewarding marketing program 41
Figure 29: Regional, national, and international policies drive the market for green energy, mainly from the supply-side 41
Figure 30: Green energy is subject to the economic needs of stakeholders and their wider regulatory constraints 42
Figure 31: Green energy providers are increasingly scrutinized and held to account by their customers and industry 43
Figure 32: Best practices in green tariff marketing centre on price, product and promotion 45
Figure 33: Selling green tariffs requires a different approach to the selling of 'brown' energy, linking key elements of strategic marketing 46