Green Power Marketing in Retail Competition: An Early Assessment

LBL and NREL recently released this study on green power marketing that finds that the green marketplace is still in an early stage of development with no clear indication of its ultimate size.

The study examines experiences to date with green marketing programs in states across the country. Among the findings:
– pilot programs which include green products are philosophically supported by consumers, but fail to attract real buyers when consumers are asked to switch to green suppliers;
– where markets have been fully opened to competition, green marketers provide a superior quality product over pilot programs;
– disclosure of resource mix is a key element of consumer interest in green products; and evaluating green market demand is difficult.

The abstract  is shown below, and the entire report
can be downloaded at either of these two sites:

LBL’s Electricity Markets & Policy website:

DOE’s Green Power Network website:


Green Power Marketing in Retail Competition: An Early Assessment

(report #  LBNL-42286,    NREL/TP.620.25939)
Ryan Wiser LBNL,    510-486-5474;
Jeff Fang, Kevin Porter, and Ashley Houston,  NREL

February 1999


Green power marketing—the business of selling electricity products or services based in part on their environmental values—is still in an early stage of development. This Topical Issues Brief presents a summary of early results with green power marketing under retail competition, covering both fully competitive markets and relevant direct access pilot programs. The brief provides an overview of green products that are or were offered, and discusses consumers’ interest in these products. Critical issues that will impact the availability and success of green power products under retail competition are highlighted. Some of the key observations and conclusions of the work include:

Experience from pilot programs in New Hampshire, Massachusetts, and Oregon—while insightful in many respects—should not be broadly generalized. The direct access pilot programs in these three states all included green marketing. Yet only a fraction of the green products were differentiated based on their renewables content, and the environmental quality of many of the products has been questioned. Because of the nature of pilot programs, however, there are limits to what can be learned from these experiences.

Green power markets have developed in all four states currently open to full competition. Experiences in the more fully competitive markets of California, Massachusetts, Rhode Island, and Pennsylvania provide a more realistic test of green marketing. These markets have only been open for a short time, and each differs substantially. Green power marketing is occurring in each market, however, and a total of 20 green power products have been launched. All of these products have been differentiated based on their renewables content, and 60% of the products include commitments to incorporate some new renewables over time. While concerns remain over the environmental and resource content of some products, overall product quality is superior to that seen in the pilot programs.

The availability and success of green power products will hinge on several factors, including the regulatory rules and public policies established at the onset of restructuring. Differences among the markets discussed here can largely be traced to the design of specific market rules and public policies, particularly the default generation price offered by incumbent utilities. For the green market to succeed, regulators and policymakers will have to develop market structures, rules and policies in ways that are at least neutral to, and perhaps even support, this emerging new market. Surprisingly, market rules that promote vigorous price competition and overall customer switching appear especially important.

Environmental disclosure requirements and certification programs may also play an important role in the success of green power markets. Given ongoing concerns about the credibility and environmental value of some of the green power products, customer information requirements and credibility-enhancing programs may be critical.

Evidence to date shows that green products have had some success in markets newly opened to competition. Niche markets clearly exist for green power. Residential demand has been most prominent, though nonresidential demand has been more significant than many expected. Nonetheless, it will clearly take time for the green market to mature, and there remain legitimate concerns about the ability of customer-driven markets to support significant amounts of renewable energy. Unfortunately, there is currently insufficient data with which to predict the long-term prospects for green power sales with any accuracy.

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