"These developments mean that there are significant short-term opportunities for retailers and large end users alike in some markets," van Nispen said. "For competitive retailers, it means that effective marketing strategies could lead to increased market share and long term customer relationships, if done properly. For large consumers, it means opportunities to lock in better prices for a longer period of time."
Growth prospects have led to an increase in the number of retail supplier licenses granted, with the greatest number of new entrants in Ohio, Pennsylvania, and Illinois. "These increases are due to a combination of favorable retail margins, pro-competition policies, and opt-out municipal aggregation opportunities," Kristie Deiuliis, report author and principal consultant for DNV KEMA's Retail Energy Markets Advisory Service, observed.
DNV KEMA projects a 6.6 percent compound annual growth rate (CAGR) in the total U.S. competitive market over the next two years, and flat to modest growth (1.7% CAGR) in the following years due to increased upward pressure on power prices. By 2017, DNV KEMA forecasts non-residential competitive sales to reach 622 TWh, a growth of 51 TWh from 2012. More than half (57%) of this growth is expected to occur in the next two years.
Overall, DNV KEMA estimates that the total competitive sales reached 740 TWh in 2012, representing 56 percent of the eligible market, and 20 percent of all U.S. power sales. In 2013, DNV KEMA expects that competitive sales volume will increase by 26 TWh, or 3% from 2012.
For 2014 and beyond, a considerably slower growth rate of 1.3% CAGR is forecasted, with non-residential markets returning to the driver's seat in competitive retail sales. "After 2014, we expect residential markets will be flat or slightly declining," Deiuliis said. Yet, some markets such as Illinois, Maine, and New Hampshire will continue to grow at a rapid pace. "We do not expect markets that have shown growth the last few years to retrench."
About DNV KEMA Energy & Sustainability
DNV KEMA's Retail Energy Practice provides a wide range of strategic and technical consulting services to organizations involved in competitive power and gas markets. DNV KEMA's Retail Energy Advisory Service provides a current, detailed knowledge base of the opportunities and risks in competitive markets. DNV KEMA also leads an industry benchmarking collaborative that develops performance data and comparative analysis for retail suppliers. DNV KEMA's assignments range from strategic planning and market analysis to operational gap analysis and process improvement to customer research and product design.
DNV KEMA Energy & Sustainability, with more than 2,300 experts in over 30 countries around the world, is committed to driving the global transition toward a safe, reliable, efficient, and clean energy future. With a heritage of nearly 150 years, we specialize in providing world-class, innovative solutions in the fields of business & technical consultancy, testing, inspections & certification, risk management, and verification. As an objective and impartial knowledge-based company, we advise and support organizations along the energy value chain: producers, suppliers & end-users of energy, equipment manufacturers, as well as government bodies, corporations and non-governmental organizations. DNV KEMA Energy & Sustainability is part of DNV, a global provider of services for managing risk with more than 10,000 employees in over 100 countries. For more information on DNV KEMA Energy & Sustainability, visit www.dnvkema.com.
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