Australian energy users going green as tariffs become affordable

Paul Boughton

The number of households in Australia consuming accredited Green Power is expected to expand rapidly over the next 2–3 years. While accredited Green Power has remained just a niche market in Australia for many years, the launch of more affordable tariffs coupled with more active sales and marketing from selected retailers is helping to drive growth.

According to a new report from independent market analyst Datamonitor, Australians are amongst the most willing worldwide to support the environment and take up green energy, but need to be better informed of the options available to them, with more accessible pricing options offered.

Households embrace green power

According to Datamonitor’s survey of over 2000 households, 81 per cent of customers would take green energy if the prices were the same, but just 9percent would be attracted if the prices were 6percent higher than their current costs, says Datamonitor South Asia director David Kurtz. “With only a very small share of consumers prepared to pay a significant premium for green energy, there is demand for utilities to offer green electricity products that although they may deliver a smaller proportion of accredited Green Power, the price premium is minimised and thereby allow more consumers to make a contribution towards the expansion of renewable power generation.”

But barriers still exist

Aside from price, other barriers to take-up of green energy include customer confusion, the time required to compare different options and concerns that green energy is simply a marketing gimmick. In order to overcome these, electricity retailers have already begun to offer more simple products to customers and ensuring the sign-up process is as quick and easy as possible. Meanwhile government support for green energy and awareness programs are helping to overcome customer concerns relating to the efficacy of green products, Kurtz says.

“The Green Power national accreditation program sets stringent environmental and reporting standards for green energy products offered in Australia. The accreditation of a supplier’s product reassures the customer that the extra being spent is being used for expanding the renewable energy generation market.” And gradual removal of these is expected to lead to rapid growth.

Through to the end of 2007, the number of customers on accredited Green Power schemes is expected to grow very rapidly. From 125128 at the end of 2004, this number is expected to exceed 450000 by the end of 2007 (only including customers for those schemes currently accredited, as opposed to any newly accredited schemes launched during the period). While Queensland currently accounts for the largest share of Green Power customers, Victoria is expected to lead the way by the end of 2007, accounting for approximately half of the total as a result of competition in the residential market and more intensive marketing activities in the state, Kurtz says.

“The interest in green energy is encouraging, but consumers need to understand the difference between accredited and non-accredited green products. Only the former, with the Green Power tick of approval guarantee that the consumer is helping drive additional renewable energy development in Australia.

For more information, visit www.datamonitor.com

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