Pilot Studies

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Marketing in Deregulated Electricity
Markets Presentation by Dr Philip E. Lewis
Seminar on Distributed Generation Related Power
System Behaviour, University of Vaasa 25th April
2002
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Worlds only university-based research centre
specialisingin electricity, gas related
utilities marketing to end customers Focus
on understanding how to get customers, keep
customers profit from customers Over 5 years
of research consultancy for over 120energy
organizations in competitive deregulated
markets Within the University of Vaasa
Department of Marketing Finlands Centre of
Expertise in Energy Technology Economy
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Our Research Focus
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Offerings
Mostly tailor-made research.Wide range of
marketing issues covered
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Combining Global Expertise
Global Round-Table of Energy Utilities
Marketing Experts
VAASAEMG together with Enegyforum and many other
excellent experts around the world are currently
forming a unique group of experts which will
create a forum of outstanding knowledge, produce
a periodical global report and annually present
a leading international conference hosted by
Energyforum.
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Psychology of Consumer Adoption
People want more time, more money, less worry (
stress), more fun Less/Not More(except
fun) Lower costs, Less time wasting, less
complexity, less confusion, less restriction on
movement and less risk etc.
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Psychology of Consumer Adoption
Customers resemble electricity, take routes of
least resistance Attention, Interest Desire
does not cause change, Action is key Action
depends on ratio of perceived loyalty
costs perceived changing benefit perceived
changing costs
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Green Energy
We must understandwho we are dealing with
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A Long Way To Go

• Approximately 30-40 of electricity supply in
  Finland is could arguably be considered as
  renewable (Peat is not included in this)
  source www.energia.fi  (electricity).
• But under 0.3 of Finnish energy supply is sold
  as Norppa or Wind.
• Of the green electricity selling companies (35)
  interviewed (excluding Ekosähkö, a company
  selling only Norppa) an average of approximately
  0.40 of their electricity sales were Norppa or
  Wind.
• Some more customers purchase non-wind
  electricity which is similar to Norppa but not
  registered as Norppa.
• There are approximately 7.200 Wind or Norppa
  customers in Finland. This includes over 300
  corporate customers.
• Approximately 2300 customers have changed to a
  new company in order to buy green electricity.

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What Energy Customers Want

• Security Satisfaction, familiarity, safety,
  no power cuts, general trustworthiness and
  flexible billing etc.
• Comfort Friendliness, expert customer service
  and clear bills etc.
• Environmentalism / Environmental intent
  Environmental energy and environmental image.
  
• Convenience 24 hour customer service, free
  customer service, internet services and
  flexible billing etc.
• Patriotism Nationality and Locality (may vary
  substantially by country and time)
• Value/Value intent Price, price guarantees,
  loyalty discounts etc.

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What Energy Customers Want
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Finnish Customers Opinion of the Level of
Environmentalism of different Energy Sources
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Finnish Customers Opinion of the Level of
Environmentalism of different Energy Sources
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Other Green Opinions of Finnish Customers

• 87 say that environmentalism is important to
  them
• Nuclear energy is perceived as green by some
  customers but overall it is considered as a
  relatively un-environmental form of energy. Those
  who want a 5th Nuclear power plant (42.1
  compared to 40.2 who do not want it not
  necessarily a significant difference) generally
  think it is environmental.
• 14.9 of customers are Very interested in buying
  Norppa or Wind (if no significant price
  difference) and 47.7 are at least interested.
• Generally, younger people are more interested in
  Norppa or Wind, especially those below 40-50
  years of age.
• Customers who believe environmentalism is very
  important tend to say they are likely to change
  to Norppa or Wind (if no significant price
  difference).

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Other Green Opinions of Finnish Customers

• Solar Cells Home Wind
• Customer interest in home-based solar cells and
  windmills is promising.
• 20.3 are Very interested in buying solar cells
• 12.1 are Very interested in buying a cost
  effective small wind turbine.
• However, more detailed qualitative and
  quantitative research would need to be done in
  order to predict the conditions under which these
  offering might be adopted.
• Perhaps unsurprisingly, electric heaters are more
  interested in solar panels.

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Businesses Green

• Stimulating demand for Green Energy by businesses
  presents a huge potential demand, but requires
  good knowledge relationship with the business

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Businesses Green
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Big Businesses Want Green
BP Connect internet access (including road
and weather reports), fresh food and drinks,
top-quality fuels and lubricants, and faster,
more convenient service - all powered by the new
generation of solar technology..
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A small number of large users may use more than
hundreds of thousands of households
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Why Businesses Buy Green Energy
Corporate Direction Corporate Goals related to
environmental improvement, sustainable business
practices Climate Change Targets Customer
Focus / Differentiation To set an example
External Pressure Public Policy Community /
Public Pressure Recognition Induvidual Seller
Marketing / Sum of Media Employee Pride / For
Staff
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Why Businesses Buy Green Energy
Internal Pressure Key Actor(s) usually senior
manager(s), initiate action, transpose personal
intentions minimize environmental harm, Do Ones
Bit making up for other actions, be recognized
as environmental Decision making may involve
many people Decision makers dont have to be
greenies Decision makers have different
objectives Intra-Group Values Concensus -
Group morality - Corporate Social Environmental
Responsibility Energy Supplier, if expert
trustworthy
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Why Businesses Buy Green Energy
Internal Pressure Just to have any kind of
certificated green energy To Buy a little bit
of green Because it is no more expensive They
already had it didnt realise
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Thank You ! Kiitos !