Review of green electricity products in the United Kingdom, Germany and Finland

Abstract

In liberalized electricity markets, environmental aspects are often used in marketing in addition to price competition and a wide variety of green electricity products marketed as environmentally friendly is available for customers. We study these green electricity markets in the UK, Germany and Finland and discuss possible problems between voluntary markets and renewable energy policies in particular.We find that products are claimed to support new renewable capacity building and to offer other environmental benefits through different kinds of mechanisms. Demand is relative high in Germany but has remained modest in the UK. In Finland, many passive private customers have automatically been sold green electricity products. Price premiums depend on several factors but typically they are in the range of 0–5%.The interface between voluntary markets and renewable energy policies can create problems; in the UK there are concerns that some suppliers double count renewable energy so that they assign the already required renewable energy to green tariff customers. We found that the share of imported hydropower is very large in green electricity products in Germany, which is why real additional benefits can be small. In Finland green electricity usually originates from hydro and wind power. As hydropower capacity is large in the Nordic countries, the additional impacts on new capacity can remain modest. For consumers, being a shareholder in companies devoted only to building new capacity, and products where price premiums are transparently directed to specific funds, carry the least risk of buying green products with false expectations.