IBM Survey: Consumers Willing to Pay More for Green Energy

It’s encouraging to learn that, even with home heating and energy costs rising, consumers in developed nations are willing to pay more for environmentally friendly energy. That is one of the key findings from a new IBM energy consumer survey conducted in Australia, Germany, Japan, the Netherlands, the United Kingdom and the United States.   

The study also reveals a paradox: consumers clearly want more choices about the type of energy they buy, but are unaware of the range of options available to them.

Although nearly half of consumers surveyed across the globe would pay more for environmentally friendly non-energy products, when it comes to purchasing "green" energy, two-thirds of consumers are willing to pay more for power that could be definitively shown to have lower emissions of greenhouse gases.  Australians are most willing to pay a premium for green power, but Americans are most willing to pay a sizable premium, up to an additional 20% or more, according to the survey results.

"The emergence of climate change as broad public concern has galvanized people to an extent seldom seen for issues involving their energy providers," said Michael Valocchi, Global Energy and Utilities Industry Leader, IBM Global Business Services.  "Historically, consumers didn’t care about energy.  This survey suggests that they want to engage and make a more personal connection to it."

Overall, consumers want to be more active in their energy decision-making; however, they do not appear to have enough awareness and knowledge to do so. While carbon footprints and other analyses of personal environmental impact have attracted widespread attention, 75% of consumers surveyed outside the U.S. have not performed one — and only 15% of US consumers have done this.  

Most consumers want the option to choose their electric or gas utility provider (83% of those surveyed), but the majority reported either they cannot or do not know they can.  Finally, a full one quarter of consumers who have renewable power options available to them actually purchase renewable power, and most of those who do not have renewable power options (65%) said they would like the option to do so.

The survey also found that the promise of reduced energy costs would impact how and when consumers heat and cool their homes, do their laundry and cook their meals. Of those surveyed, 84% said that a 50% reduction in energy cost during off-peak hours was the most important.  61% would change their energy-consuming behavior in response to claims that there would be a positive environmental impact from such changes, and this would rise to 65%, if such benefits could be demonstrated.

These survey results are part of a new report, recently released by IBM Global Business Services, titled, "Plugging in the Consumer: Innovating utility business models for the future."  The report forecasts how the change in energy customers’ expectations will impact the utility industry’s business model in the next five to ten years, and predicts a steady progression toward a Participatory Network where consumers actively "plug in" to their energy decisions to a degree not seen before.