U.S. Department of Energy - Energy Efficiency and Renewable Energy
Green Power Network
Past Conferences
Prepared by
Blair Swezey
Ashley Houston
National Renewable Energy Laboratory
Terry Peterson
Electric Power Research Institute
December 1998
Proceedings (PDF 84 KB) Download Adobe Reader
Overview
Green power is a market-driven product developed to meet expressed customer preference for electricity derived from renewable sources such as solar, wind, biomass, and geothermal. Over the last several years, more than 30 electric utility companies have designed green power service options for their customers as differentiated from the standard utility service. And now, as state electricity markets start to open to competition, a new industry is emerging to sell competitively priced green power products and services to discriminating consumers.
In June 1998, the U.S. Department of Energy (DOE) and the Electric Power Research Institute (EPRI), in association with the Edison Electric Institute (EEI) and the Renewable Energy Alliance (REA), organized the Third National Green Power Conference in Sacramento, California. The theme of the conference, "Selling Green Power in Competitive Markets," recognized that moving toward competitive electricity markets will have a significant impact on the green power industry's development. The Sacramento Municipal Utility District and the California Energy Commission (CEC) served as local hosts for the conference.
More than 120 conference attendees gained insight and perspective on emerging green power markets from representatives of the green power marketing industry as well as from regulators, utilities, public interest groups, and electricity customers. General consensus seemed to be that, as electric industry restructuring unfolds, market potential for green power services should expand substantially. However, the pace and extent to which the market develops will depend on supportive market rules and policies.
Several key messages emerged from the one and a half-day conference:
Consumers, when informed, will consider more than price in making electricity purchase decisions.
Market research shows that most consumers don't know where their power comes from and think that electricity generation is cleaner than it actually is. However, when consumers are informed and educated about the environmental differences among generation sources, they are willing to pay more for cleaner energy sources. A series of utility-sponsored "deliberative polls" in Texas reinforce these findings. Business customers also value clean energy choices and will be willing to make green power purchases either as a competitive business advantage or as a way of reinforcing the company's own environmental ethic.
Consumer information, education, and marketing will be key to the success of the green power marketing industry.
At the same time, consumers must be assured that the products they are purchasing actually result in environmental improvement. Several efforts are underway at the state and national levels to design and implement information disclosure, as well as to certify green power and to establish advertising and marketing guidelines.
The nature of rules adopted for the competitive marketplace will strongly influence the pace and development of green power markets.
Several green power marketers noted that new rules and mechanisms being established for restructured electricity markets are critical both to the development of competition in general and the success of green power markets in particular.
Attendees used the different rules that marketers face in California, Massachusetts, and Pennsylvania as examples. In California and Massachusetts, there is no retail energy price margin against which marketers can compete, so these markets will be "value-added" markets only. In these states, marketers must sell green power on its virtues at a premium to the retail price. Pennsylvania provides customers with a retail "shopping credit," which creates a retail energy price margin. As a result it is expected that, at least over the short term, Pennsylvania will provide the best market environment for green power sales.
States can support emerging green power markets with appropriate policies.
Both California and Massachusetts restructuring legislation adopted the use of a system benefits charge (SBC) to support renewables during the transition to competitive markets. In California, the SBC will be used to support a combination of existing, new, and emerging renewable technologies in the state. In Massachusetts, the fund will be used to create incentives for change in the marketplace, rather than to subsidize existing technologies.
In addition, specific policies can be adopted to support developing green power markets. In California, a portion of the SBC funds will be used as customer rebates for green power purchases, as well as for consumer education. And in Texas, the Public Utility Commission is considering a rule that would require all electric utilities in the state to offer a green power tariff to their customers.
The number of utility green-pricing programs continues to grow.
More than 30 utilities now have either developed or announced plans to develop green-pricing programs for their customers. These programs differ in size, pricing, customer targets, and other factors. Key elements of successful green-pricing programs identified by panelists included the need for strategic partnerships to effectively drive the market, customer aggregation, well-designed tariffs, and focused, clear programs that can demonstrate environmental benefits.
Ordering Information:
Third National Green Power Marketing Conference Proceedings
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