SUSTAINABLE ENERGY STRATEGIES AND GREEN ELECTRICITY MARKET DEVELOPMENT : EMPIRICAL EVIDENCE FROM GERMANY

Abstract: Human misuse of environmental assets especially energy is causing environmental degradation, which hampers social and economic welfare for present as well as for future generations. A worldwide shift to sustainable energy sources is one of the required actions to solve the problem. Electricity from sustainable energy sources is called green electricity and has arose as one of the most motivating tools for developing the sustainable energy market. This has resulted in the restructuring of Germany's energy industry with a dramatic change in energy use in electricity. The change has been aided by the German renewable energies act (EEG), which is been criticized for its resulting high green electricity prices which consumers have to pay. Green electricity prices seem to call for more consumers' attention than threats posed by conventional energy because only a small fraction of energy is sold as green electricity neccesitating the rethinking of the energy market. Due to the need for future research on more factors influencing consumers buying behavior in the green electricity market, this thesis seeks to investigate the following research questions: Is green electricity price the major influencing factor for its market unattractivess? Does the concern about price really calls for more attention than environmental concerns? It specifically aims to describe German consumers' perceptions of factors influencing their green electricity buying behavior. The research methodology involves the use of secondary and primary data. The secondary data gives a background knowledge of Germany and its energy historical development, Germany's sustainable energy strategies and strategies for market development (electricity feed-in-tariffs, the renewable energy act and problems), green electricity marketing, consumers' purchasing behavior and factors influencing this behavior. The primary data is gotten through a questionnare survey and analysed using both excel and the statistical package for social sciences. Evidence is taken from Germany because of its ambitious goals of 20-30% green electricity by 2020 and 80-100% by 2050. The result of the study shows that, although price is the most influencing factor in choosing an electricity supplier and also calls for more attention than environmental concerns, it's not the major hindering factor for the green electricity market unattractivess. Most German electricity consumers (42%) have no idea about green electricity prices. In comparison to competitors, 27% of them assume the prices are higher while 31% say the prices are thesame and even lower. All green electricity consumers confirm the prices are moderate and even cheaper. Even when prices are the same, most respondents gave other reasons like conviniences before environmental friendliness as the first motive for their electricity choice. Despite Germany's ambitous goals, consumers selfinterest and ignorance about green electricity prices remain a problem for the market.