Date November 16, 2001 Date
Berkeley Lab Science Beat Berkeley Lab Science Beat
Green power needs marketing
      by Allan Chen,
Berkeley Lab Science Beat

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By burning fossil fuels, electrical power generation affects not only the environment directly and the global climate potentially but the nation's economic strength and its prospects for energy security as well. Using solar power, wind power, and other forms of "green power" to generate electricity is one response to these concerns.

Yet a new study coauthored by researchers from Berkeley Lab's Environmental Energy Technology Division (EETD) and the National Renewable Energy Laboratory (NREL) in Golden, Colorado, finds that the potential impact of green power on fossil fuel consumption depends crucially on whether consumers have a choice in how their electricity is generated — that is, on the existence of a retail marketplace where green power is a real option.

"Our study shows that giving consumers energy supply choices can be a powerful mechanism for moving renewable energy into the marketplace," says Blair Swezey of NREL, a coauthor of the study. "Market research consistently shows that consumers prefer to receive their power from clean energy sources."

Under the best conditions, use of green power could grow 40 percent in less than a decade, to a capacity of 7,000 megawatts. However, achieving this result would require an orderly transition to competitive power markets and a significant expansion of the green pricing programs currently offered by regulated utilities.

"The California experience shows that the transition to competitive retail power markets will not be smooth," says coauthor Ryan Wiser of EETD. Moreover, to make a significant difference, green power must not only be available, it might have to be aggressively promoted and its costs reduced or supported by government subsidies. "If competitive retail markets fail to materialize, utility programs must pick up the slack."

Indeed, the nationwide reaction to public utility deregulation, sparked by the debacle of California's recent energy crunch and the subsequent suspension of customer choice in the state, led Wiser, Swezy, and their colleagues to include "restructuring regrets" and "restructuring meltdown" scenarios when running their models of the future of green power markets.

They constructed low-growth and high-growth models by studying the actual penetration of green power markets to date, by considering the S-shaped "product diffusion curve" of new products generally — slow in the beginning, then accelerating before tapering off — and by taking into account a range of other factors, including public policy.

To gain insight into the progress of green products in the marketplace, they paid special attention to the history of consumer goods such as bottled water, organic food, and compact fluorescent bulbs, and to activities such as recycling and socially responsible investing. The most relevant lesson was that "it often takes some time for markets to build"; even with something so familiar as long-distance telephone service, the researchers note, it took 15 years for AT&T to lose half of its market share after competition appeared on the scene.

The researchers conclude that the size of the green power market remains small but that there are prospects for sizable growth; that slow, steady growth in early years is normal; that green power could substantially impact means of power production overall; that the energy crisis in Western states may have a serious impact; that vigorous promotion and education are essential to success; and that market options alone cannot do the job of increasing reliance of renewable energy sources.

Forecasting the Growth of Green Power Markets in the United States, by Ryan Wiser and Mark Bollinger of Berkeley Lab, Edward Holt of Ed Holt & Associates, and Blair Swezey of NREL, was supported the U.S. Department of Energy.

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