Customer Choice and Green Power Marketing: A Critical Review and Analysis of Experience to Date

This article explores whether and to what extent individuals are willing to voluntarily pay a premium for products that provide public environmental benefits. In particular, we critically review and analyze the status and impacts of U.S. green power marketing to date. Green power marketing—the business of selling electricity products distinguished by their environmental attributes—seeks to develop a private market for renewable energy driven by consumer demand for green products. Debate has centered on the ability of such a market to provide a significant level of support for renewable energy sources. This paper examines experience to date with green power markets in the United States, providing an historical overview, reviewing product offerings, assessing customer response, and calculating overall support for renewable energy. While market research shows that a majority of the populace states a willingness to pay a premium for renewable energy, early experience with green power marketing shows that those attitudes have not yet translated into large-scale behavior change, tracking experience in other environmental product markets. While a niche market for green power does exist, the data presented in this paper indicate that the collective impact of customer-driven demand on renewable generation has been modest thus far. Several lessons on how to potentially improve the prospects of green power marketing are discussed.