Such sales were first allowed in 1998 and Corporate and Institutional Procurement of Electricity says that growth is expected to continue, predicting a market worth almost $56 billion by 2020.
The single biggest factor that will impact competitive procurement is the continued belief by customers that they can realize cost savings and improved services from providers other than their local utility, the report says.
“Sellers that obtain their electricity from highly competitive wholesale power markets can generally offer lower prices for electricity than a rate-based utility – especially to larger customers. The volatility of pricing in electricity and natural gas markets, however, has at times put competitive procurement at a disadvantage,” the report says.
The increase in non-utility procurement has also spurred development of “green” markets for renewable energy and renewable energy certificates, and new options for on-site generation of electricity by commercial and manufacturing facilities, according to the report.
The industries buying the most energy directly from suppliers are the chemicals and primary metals industries. Currently, such direct sales are only allowed in 20 states and the District of Columbia, according to the report.