Winning the green energy customer - opening up the new residential market

TABLE OF CONTENTS

CHAPTER 1 EXECUTIVE SUMMARY 3

• Introduction 3
• Market context 4
• Country profiles 4
• Best practice customer acquisition of the green customer 5
• Future of the green energy market 6

CHAPTER 2 MARKET CONTEXT 16

• Introduction 16
• Key findings 17
• What is green energy? 17
• The importance of green energy 18
• Market size - evaluating the green customer base 20
• Summary - cultures of environmental responsibility 26

CHAPTER 3 GREEN ENERGY COUNTRY PROFILES 32

• Key findings 32
• Austria 32
• Finland 35
• Ireland 41
• Sweden 43
• United Kingdom 45
• Summary 48

CHAPTER 4 BEST PRACTICE CUSTOMER ACQUISITION OF THE GREEN CUSTOMER 52

• Key findings 52
• Profile highlights 52
• Introduction 54
• EWEB - 4% penetration with $50,000 budget 54
• SMUD - breaking the dark green barrier 61
• Green Mountain - differentiating the light from the dark green 68
• Oekostrom - cracking an immature market 71
• SRP - experience and ideals: bridging the say-do gap 73
• Enmax - tangible benefits from green energy 78
• Pacificorp - low but fast growing uptake 81
• Cogas - building customer relationships through green tariffs 86
• NaturEnergie - the pro-active utility 89
• Lessons to learn: attracting attention and interest 92
• Getting people to say yes 94
• Messages that do not work 96
• Conclusions for best practice 97

CHAPTER 5 FUTURE OF THE GREEN ENERGY MARKET 98

• Introduction 98
• Key findings 99
• Comparator markets to green energy 100
• Scenarios for the future of green energy - high and low growth potential 102
• Low scenario uptake of green energy to 2008 110
• High scenario uptake of green energy to 2008 113
• Conclusions 115

CHAPTER 6 APPENDIX 118

• Definitions 118
• Bibliography 118
• Future readings 118
• Relevant links 118
• SPP writing team 118
• How to contact experts in your industry 119

LIST OF TABLES

• Table 1: Indicative targets for renewable electricity (RES-E) for member states in the European Union 19
• Table 2: The number of energy-saving measures people currently take, and intend to take in future, in the Member States of the European Union 23
• Table 3: Would you be prepared to pay more for energy produced from renewable sources than for energy produced from other sources? 24
• Table 4: When you decide to buy a new one, please tell me whether you pay attention to the energy it uses or not - yes answers 25
• Table 5: Recycling rates for municipal waste in Europe 26
• Table 6: Breakdown of customer groups in the Netherlands by key driver in switching considerations 29
• Table 7: Potential market size of residential green market in Europe 31
• Table 8: Market penetration of green energy in Europe 48
• Table 9: Utility executives' views on the importance of green tariffs to various elements of the overall supply proposition 49
• Table 10: Indicative savings through improved retention on the green energy tariff - a business case for marketing support 50
• Table 11: Cluster targets for marketing by lifestyle profile - SMUD 66
• Table 12: Positive and negative considerations of the market structure upon customer uptake of green energy in the Netherlands 105
• Table 13: Summary of scores: high and low scenarios for influence of market rules upon green energy uptake 107
• Table 14: Consumer understanding and acceptance of green power - high and low scenario assessments of green culture development 108
• Table 15: "Would you be prepared to pay more for energy produced from renewable sources than for energy produced from other sources?" 109
• Table 16: High and low scenario scoring for the willingness to pay extra for renewable energy 109
• Table 17: Low scenario uptake of green energy by 2005 111
• Table 18: Five-year forecast of residential green tariff uptake in Europe - low scenario 112
• Table 19: High scenario uptake of green energy by 2005 113
• Table 20: Five-year forecast of residential green tariff uptake in Europe - high scenario 114
• Table 21: Summary of forecast customer numbers, high and low scenario 116

LIST OF FIGURES

• Figure 1: Inputs to the forecast methodology - high and low scenarios to 2008 6
• Figure 2: Breaking out of the dark green customer segment - a long-term project 7
• Figure 3: In respect of energy, what do you think the two first priorities for the government should be? (Max. 2 answers) 21
• Figure 4: Assessment of the depth of an environmental culture in Europe 27
• Figure 5: Summary of scores by country for the indicators of a culture of environmental receptiveness 28
• Figure 6: Propensity for various customer segments to switch to green energy in the Netherlands 30
• Figure 7: Barriers and drivers for the development of residential green energy markets in Europe 51
• Figure 8: EWEB's WindPower rates 56
• Figure 9: Growth in EWEB WindPower customer numbers 58
• Figure 10: Uptake by windpower percentage was greater than research indicated prior to WindPower launch 59
• Figure 11: SMUD's channel targeting strategy for GreenEnergy 64
• Figure 12: A sales and marketing calendar was used to ensure continuous brand awareness throughout the year, in particular through mail shots 65
• Figure 13: Customer uptake of GreenEnergy - 5% penetration with a $203,000 annual budget 66
• Figure 14: Residential switching in Texas - an immature market 68
• Figure 15: Clarity of message - effective advertising from Green Mountain Energy 70
• Figure 16: Mental map of customers' ideal experience of a renewable energy program in Arizona 75
• Figure 17: Closer matching of ideal and actual / expected experience amongst EarthWise participants than non-participants 76
• Figure 18: Motivational segmentation of customers by participants and non-participants 77
• Figure 19: Greenclub tangible benefits with Enmax's Greenmax tariff 79
• Figure 20: How do customers sign up to Greenmax? 80
• Figure 21: Pacificorp acquisitions by sign-up channels - outbound sales being re-considered for cost reasons (May 2003) 85
• Figure 22: Creation of the NaturEnergie supply brand 90
• Figure 23: Developing green markets must ensure advertisements are familiar and make renewable energy a more tangible option 93
• Figure 24: Best practices: the message, the call to action, and ongoing involvement in the programme 97
• Figure 25: Inputs to the forecast methodology - high and low scenarios to 2008 99
• Figure 26: Penetration of the bottled water market in Europe 101
• Figure 27: Green energy uptake - an S-curve development as marketing breaks out of the eco-niche 102
• Figure 28: Positive and negative considerations of the market structure upon customer uptake of green energy - low scenario 104
• Figure 29: Positive and negative considerations of the market structure upon customer uptake of green energy - high scenario 106
• Figure 30: Five-year forecast of residential green tariff uptake in Europe - low scenario 112
• Figure 31: Five-year forecast of residential green tariff uptake in Europe - high scenario 114
• Figure 32: High forecast by customer numbers - ROI through scale? 116
• Figure 33: The green market - a sustainable profit future 117