A surprising 20 percent of customers are voluntarily paying more for “green” electricity in half a dozen pilot projects around the nation, according to a study funded by 40 major public utilities.
The findings - the first real-world evidence that sizable numbers of customers will pay extra for power from so-called clean sources such as solar or wind - have significant implications for the rapidly deregulating electricity market.
It shows that when given a choice, a “significant segment of consumers” will pay premiums of up to 10 percent for environmentally clean energy, said executives at Xenergy, the Burlington, Mass.-based consulting firm that surveyed some 25,000 customers in Massachusetts, New Hampshire, New York, Ohio and Illinois.
This improves the chance that such energy can legitimately compete with more traditional sources, such as natural gas and coal-fired power plants. The widespread assumption among power companies and policymakers has been that alternative energy sources will continue to need taxpayer subsidies to reduce their prices to market levels.
The survey found a large share of residential consumers - but a much smaller percentage of businesses - respond well to “green” marketing, whether the green refers to the source of the power or the agenda of the provider. For example, some marketers did well selling natural gas with a promise to donate a portion of profits to environmental causes.
“Saving the planet is worth a little extra money. If we can do anything for the environment, I think we should do it,” said Maureen Tilly, a registered nurse and resident of Lynn, Mass., who chose “green energy” at a cost of more than 5 percent over the lowest priced alternative in her Massachusetts pilot.
There is no way to assure that a green customer will get green electricity transmitted to his home or office, any more than an ATM customer can withdraw the same $20 bills he deposited. But the demand created by that consumer will cause that green energy to be produced and delivered over the power grid, displacing power generated by dirtier sources.
Among issues to be decided is what is green. Should green energy be defined only as that generated by “renewable” sources such as solar, wind and geothermal, or as anything less damaging to the atmosphere than coal or fuel oil? Should nuclear power be counted since it has a benign effect on the atmosphere, or left off the green menu because of its hazardous waste?
However those questions are answered, “green” will be heavily marketed when free energy markets open up, as one will in California Jan. 1.