Efficiency Policies and Individual Demand for Energy Services and Green Electricity

In analysing the economics of energy efficiency or green electricity the central assumption is that the consumer demands certain services and not commodities such as “kWh”. However, neither regulational practice on monopolised markets nor the strengthening of competitive mechanism on liberalised markets have been very successful in establishing a “level playing field“ for these concepts of energy service. Based on a theoretical and empirical framework this paper investigates the nature of individual energy consumption in the field of efficiency and green electricity. One possible reason for not meeting the stated objective potential for energy conversation or efficiency may be the reduction of complex economic and social interdependencies to a single indicator such as “energy efficiency” and neglecting cost elements such as time, quality, design, brand and other intangible factors. This may be one major reason why traditional policy principally fails to control for the individual energy demand. A similar problem arises in the field of green electricity. Successful policy measures such as the Feed-In regulation claim for a “primacy of policy” and tend to crowd-out private market activities. An actual green electricity consumer research reveals that there is a significant willingness to pay for green products in the market – given certain products and conditions. However, customers do not want to induce “additional” effects. Individual motivation is driven by the wish to purchase moral satisfaction. Instead of crowding-out and restricting the private activities, the question should be raised, how environmental policy can help to realise the private demand potential for energy services.

Keywords:

renewable energy policy , energy efficiency , efficiency policies , green electricity markets , consumer preferences