Consumer choice could increase renewable energy by 40% by end of the decade

The findings in Forecasting the Growth of Green Power Markets in the United States, by the National Renewable Energy Laboratory (NREL) and the Lawrence Berkeley National Laboratory (LBNL), have been reached through modelling of green power demand based on experiences of ‘green’ power markets and consumer response to ‘green’ products. The key to realising the full potential of green power markets lies in better information and education regarding renewable energy alternatives for customers, and in developing more favourable market rules and public policy regarding choice for energy consumers, says the report.

According to research cited in the report, 56-80% of US voters say that they are willing to pay more for environmental protection and renewable electricity. “Market research consistently shows that consumers prefer to receive their power from clean energy sources,” said co-author of the report Blair Swezey of NREL. “Our study shows that giving consumers energy supply choices can be a powerful mechanism for moving renewable energy into the marketplace.”

Although green pricing schemes – where customers pay a premium for renewable energy (see related story) – are currently being offered by more than 85 utilities in 29 states, the recent suspension of customer choice in California in response to the state’s energy crisis represents a setback to the development of competitive market choices in other states, says the report. “The California experience shows that the transition to competitive retail power markets will not be smooth,” said co-author Ryan Wiser of LBNL. “If competitive retail markets fail to materialise, utility programmes must pick up the slack.”

Prior to California’s current energy woes, renewable energy in the state had been relatively successful. At the end of 2000, about 1.7% of residential customers were being served by a competitive marketer, and nearly all were purchasing green power, partly due to a state subsidy for renewable energy purchases, says the report. However, since April 2001, residential customers being served by a competitive marketer has decreased to 0.9%, and it is now not known how and when retail competition and green power will return to the state.

Meanwhile, by the beginning of 2001 in Pennsylvania, around 10% of residential customers had changed suppliers as a result of competition between suppliers, with 15-20% of those choosing renewable energy, despite there being no significant subsidy, says the report.

In order to aid the development of renewable energy, aggressive promotion may be required, although customer-driven markets are unlikely to be an adequate replacement for more fundamental policy measures, says the report. Policies that would aid renewable energy markets range from financial measures to bring down renewable energy cost premiums, such as investment tax credits, to mandatory obligations to develop renewable generation, says the report.