Research into consumer understanding of the green and renewable tariffs market
Reports, plans and updates
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In March 2014, we commissioned Big Sofa (formerly Insight Exchange) to carry out research to understand what information consumers need to make an informed decision around whether to choose a green energy tariff. This insight helped us to write our final proposal on improving consumer protection in the green and renewable energy offers market.
Summary
The research process involved establishing how engaged consumers were in the market and what they did and didn’t know about green and renewable tariffs already. It then explored how green tariffs work and some potential messaging to explain the differences between different types.
Big Sofa found that:
- Most consumers remain disengaged from the energy market (as observed in earlier research on green tariffs conducted for Ofgem by Insight Exchange).
- Existing consumer awareness and consideration of green tariffs are very low – largely as a result of:
- Perceived (and sometimes actual) high prices compared to ‘standard’ tariffs
- Low understanding of the potential benefits of a green tariff
- The complexity of the subject area – both green tariffs themselves and the broader ‘green agenda’
- The base assumption is that green tariffs will ‘provide renewable energy’ – but little is known or understood beyond this.
- Few consumers know about the UK’s Renewables Obligation, but awareness – and, crucially, understanding – of it fundamentally alters their expectations of what a green tariff should deliver.
- No one is aware that different types of green tariff currently exist, but the more they learn about them the more they feel there is a need for messaging to highlight differences between them.
- Tariffs with additionality are seen as ‘proper’ green tariffs – but pricing is key to the validity of those without. If they are priced at the same level as a ‘standard’ (i.e. non green) tariff, they become an increasingly attractive option to consumers because they support the green agenda with no downsides. If they are more expensive, their existence is seen as pointless.
- Therefore any messaging used to differentiate the tariff types should feel balanced in tone and be very prominent alongside supplier claims at the point of purchase or decision-making.
- Ultimately, the background information that underpins these tariffs (about the Renewable Obligation and how the different types of green tariff work) is felt to be vital to decision-making.
- However this information is very complex and consumer interest in this area is low so few would look (or even know to look) for messaging