Trends Market Overview in B2C green energy industry ing

• Publication date: October 2009

Introduction National and EU governments are now showing the level of commitment to the green energy segment that would encourage the development and industry ing of green retail energy tariffs. There is scope for suppliers to boost their green energy sales by filling a growing gap in the industry place as green regulations increasingly take hold. Scope *Ten years of renewable power generation data for the USA, Europe, East /...

Introduction

National and EU governments are now showing the level of commitment to the green energy segment that would encourage the development and industry ing of green retail energy tariffs. There is scope for suppliers to boost their green energy sales by filling a growing gap in the industry place as green regulations increasingly take hold.

Scope

*Ten years of renewable power generation data for the USA, Europe, East / Southeast Asia, Oceania and South Asia.

*A detailed review of European consumer perceptions about climate change and the way in which these could be leveraged by utilities.

*A review of some of the significant efforts in green tariff industry ing: in the United States, the United Kingdom, the Netherlands and Australia.

*A review of some of the world's most pioneering green programs and how best practices can help offset current industry structure limitations.

Key Market Facts

Legislation and green awareness have spurred the generation of renewable power, led by EU Member States. Governments play a crucial role in making green energy economically viable, by stimulating the supply side, yet the green B2C industry remains very much a marginal part of the power market and has achieved a fraction of its true potential.

Green tariffs will remain peripheral where suppliers only industry them at a premium. Residential customers need reassurances that they are actually buying real green power. Excessively pushing the environmental angle may breed customer cynicism and be counterproductive. Pioneers of green programs have learned to stay clear of these pitfalls.

Green energy is subject to the economic needs of stakeholders and their wider regulatory constraints, yet the growing issue of climate change now provides suppliers with opportunities in selling green energy. For now, utilities can overcome industry structure limitations by deploying best practices that centre on price, product and promotion.

Why Should You Buy This Report?

*Determine how utilities can lobby governments and amend their own internal product management operations to sustainably boost green B2C sales.

*Determine what consumers are willing to do to fight climate change, what products and services they are likely to take up and at what additional cost.

*Understand how and why certain providers and countries are fairing much better than others in their efforts to industry green energy.

Global Renewable Energy Industry

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLGY 1
SOURCES 2
ANALYSIS 3
Environmental issues are taking centre stage across world energy industry s 3
To date, the global industry 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 distribution tariffs is a response to the liberalization of electricity and gas industry s 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 EUR peans feel informed about climate change 11
EUR peans 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 EUR pean citizens are willing to address 13
A significant proportion of EUR peans 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
EUR peans 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 market 19
A review of countries involved in green tariff industry ing suggests lessons are to be learned in the US 20
In the US' partly deregulated electricity industry, three types of green power distribution offerings coexist 20
Despite the economic downturn, US utilities significantly grow ed green power sales at a national level 21
Utility green energy sales in the US continue to make up an increasing part of total distribution 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 industry ing strategies and a falling premium 24
US green power industry s will continue growing but state RPS requirements threaten to alter industry 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 industry s and a strong accreditation program 34
Pioneering green distribution programs highlight the elements central to any successful green tariff strategy 35
Palo Alto has created one of the most effective and successfully industry ed green power programs in the US (1/2) 35
Palo Alto has created one of the most effective and successfully industry ed green power programs in the US (2/2) 35
Ecotricity has positioned itself as a semi-green, sustainable, non-premium, small and credible energy industry player 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 industry ing program 40
The deployment of best practices can offset many of the B2C renewable energy industry structure limitations 41
Regional, national, and international policies drive the industry 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 market 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 industry ing 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 distribution 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
Chart 1: The most interesting outcome of the Kyoto Protocol is the green impetus that it has generated 4
Chart 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
Chart 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
Chart 4: Over the past decade, only in the EU has the average growth in renewable electricity output outpaced that of conventional electricity 9
Chart 5: Globally, key renewable energy indicators have shown dramatic gains over the past three years - a trend which is likely to continue 10
Chart 6: More than half of EUR peans feel informed about climate change but more than four in ten respondents do not 11
Chart 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
Chart 8: Citizens from the top right cluster of countries are most likely to personally take action to fight climate change 13
Chart 9: On average, in EUR pe, 48% of citizens are willing to pay up to 13% more for energy produced from greener sources 14
Chart 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
Chart 11: Only in Cyprus, Denmark, Finland, Germany and Sweden do citizens truly 'talk the green talk' and 'walk the green walk' 16
Chart 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
Chart 13: Corporations and market are not doing enough to fight climate change 18
Chart 14: Majorities in all countries think that corporations and market, more than any other stakeholder, are not doing enough to fight climate change 19
Chart 15: Austin Energy boasted the highest total green power sales (as of Dec 2008) 21
Chart 16: Legislation often requires suppliers to offer green tariffs, which partly explains the higher loads of green power sales in 2008 22
Chart 17: Across all three US industry s and both customer sectors, more US consumers are making clean power choices than ever before (as of Dec 2008) 23
Chart 18: The price premium charged for new, customer-driven renewable power(a) in the US in 2008 varied widely from utility to utility 24
Chart 19: In this illustration of the relationship between the wholesale and supply industries, the supplier can either 'absorb' or 'pass on' the inputs from the wholesale industry to the supply industry 26
Chart 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
Chart 21: Green energy programs are niche programs and they must be industry ed to customers correctly if they are to gain acceptance 29
Chart 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
Chart 23: Natural Power Ltd offering dominates 32
Chart 24: Essent offers customers its 'green' option at the same price as its 'grey' option 33
Chart 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
Chart 26: Green Energy UK differentiated itself by only supplying two levels of green power 37
Chart 27: British Gas offers two one hundred percent green tariffs: Future Energy and Zero Carbon, both at a price premium 39
Chart 28: Bounce Energy offer fixed rate for their one hundred percent renewable energy and a modern and rewarding industry ing program 41
Chart 29: Regional, national, and international policies drive the industry for green energy, mainly from the supply-side 41
Chart 30: Green energy is subject to the economic needs of stakeholders and their wider regulatory constraints 42
Chart 31: Green energy providers are increasingly scrutinized and held to account by their customers and market 43
Chart 32: Best practices in green tariff industry ing centre on price, product and promotion 45
Chart 33: Selling green tariffs requires a different approach to the selling of 'brown' energy, linking key elements of strategic industry ing 46