Green Energy Market Development in Germany: Effective Public Policy and Emerging Customer Demand

Achieving a socially desirable goal such as increasing the use of renewable energy is usually considered as a public policy issue. In addition to public policy, however, green marketing responding to customer demand has been an important driver in .greening. other industries, e.g. in the case of organic food. This paper reviews the development of renewable energy in Germany from the 1970s until 2003, including the evolution of public opinion, energy policy, industry development and technological change. It particularly investigates the relative importance of energy policy and green power marketing in growing the German market for renewable energy. More than a decade of consistent policy support for renewables under the feed-in law (StrEG) and its successor (EEG) has been a very important driver for increasing renewable electricity generation to date, putting the country in a better position than most of its peers when it comes to achieving European Union targets for renewable energy. Green power marketing driven by customer demand, on the other hand, is growing but has had limited measurable impact in Germany so far. We discuss potential intangible benefits of green power marketing and scenarios for future market development. The paper concludes with lessons that can be learned from the German case for policy design and market development in other countries.