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Electricity markets are now fully or partially open to competition in more than a dozen states. To date, competitive marketers have offered green power to retail or wholesale customers in California, the District of Columbia, Illinois, Maryland, New Jersey, New York, Pennsylvania, Texas, Virginia, and several New England states.
Green power marketing has the potential to expand domestic markets for renewable energy technologies by fostering greater availability of renewable electric service options in retail markets. Although renewable energy development has traditionally been limited by cost considerations, customer choice allows consumer preferences for cleaner energy sources to be reflected in market transactions.
Opinion polls consistently find that a majority of people say they are willing to pay extra for electricity derived from renewable resources. But the reality doesn't always match the survey results. Of the 40 million U.S. households with access to green power today, roughly 350,000 households (less than 1%) have chosen to actually buy green power. And nonresidential demand for green power is only about 20% of residential demand, on average.
Reasons for this discrepancy between intention and action include a lack of customer awareness about green power options (partly due to lackluster promotional efforts), customer inertia due to the relatively low cost of the default electricity service in many areas, and the negative influence of the California electricity crisis on the emergence of restructured retail markets in other states.
A 2002 study by Platts estimated that the total U.S. demand for green power is about 8% of all households, equivalent to roughly 28,000 MW of renewable electricity generation. But Platts' data also indicates that as many as 75% of households that are eligible to buy green power are unaware that they have this choice.
With improved product offerings, better marketing, and increased consumer awareness, there is significant potential for future growth in the green power market, but uncertainty about the future of electricity deregulation makes it extremely difficult to predict the rate of market penetration.
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