Consumers' willingness to pay for green electricity: A meta-analysis of the literature

At present, electricity generated from power plants using renewable sources costs more than electricity generated from power plants using conventional fuels. Consumers bear these expenses directly or indirectly through higher prices for renewable energy or taxes. The number of studies published over the last few years focusing on people's preferences for renewables has increased steadily, making it more and more difficult to identify key explanatory factors that determine people's willingness-to-pay (WTP) for renewables. We present results of a meta-regression on valuation of consumer preferences for a larger share of renewable energy in their electricity mix. Our meta-regression results reveal a number of important factors that explain the differences in WTP values for renewable energy. Different valuation methods show widely different values, with choice experiments producing the highest estimates. Our results further indicate that consumers' WTP for green electricity differs by source, with hydropower being the least valued. Variables that are often omitted from primary valuation studies are important in explaining differences in values. These variables describe individual and household characteristics as well as information on the type of power plant that will be replaced by renewables. Further, the marginal effect of a survey conducted in the US is pronounced. We also assess the potential for using the results for out-of-sample value transfer and find a median error of 21%.     

Assessment of public acceptance and willingness to pay for renewable energy sources in Crete

The aim of this study is to analyse and to evaluate the citizens’ public acceptance and willingness to pay (WTP), for Renewable Energy Sources (RES) in Crete. For this purpose a contingent valuation study was conducted, using a double bound dichotomous choice format to elicit people's WTP and factors affecting it. Residents of 1440 households all over Crete were interviewed face-to-face. Major conclusions can be used as a basis for sustainable energy planning, for policies and the formulation of awareness campaigns and for RES investment programs and projects in order to prepare implementation conditions and enhance public acceptance of renewable energy investments and programmes. Mean WTP per household was found to be 16.33€ to be paid quarterly as an additional charge on the electricity bill. Larger willingness to pay was reported by those with high family income and residence size, those having a higher level of energy information and awareness concerning climatic change, those who have invested in some energy saving measures, and those who suffer from more electricity shortages than others.     

Valuation for renewable energy: A comparative review

Environmental cost–benefit analysis is applied for the evaluation of renewable energy projects. Since some benefits and costs do not have monetary values, economic valuation techniques are applied to estimate them. This paper reviews the literature on the valuation/evaluation of renewable energy resources and summarizes the methods used in them. It discerns four main streams of valuation in renewable energy. The first is economic, welfare oriented and comprises stated and revealed preference methods; the second is the financial option analysis with a financial background; the third is emergy analysis, which is mostly an ecological engineering-based method with capable economic links, and the fourth is again economic but not welfare based. The paper discusses the main directions discerned in these studies and recognizes first that proper valuation takes place only in the first method while the other methods describe only evaluation procedures and second that there is a research gap that has yet to be filled in as compared to other areas of environmental, resource and energy economics.     

Technological learning and renewable energy costs: implications for US renewable energy policy

This paper analyzes the relationship between current renewable energy technology costs and cumulative production, research, development and demonstration expenditures, and other institutional influences. Combining the theoretical framework of ‘learning by doing’ and developments in ‘learning by searching’ with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models. Sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested. The implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption.     

Consumers' preference for renewable energy in the southwest USA

The southwestern part of the US has abundant supply of renewable energy resources but little is known about the consumers' preferences for renewable energy in this region. This paper investigates households' willingness to pay for a renewable energy program in a southwestern state, New Mexico (NM). Using the contingent valuation method, we provide different scenarios that include provision of 10% and 20% of renewable energy supply, to elicit households' willingness to pay (WTP) for the renewable energy. We estimate the WTP for specific shares of renewable energy in the total energy mix as it is a key factor in affecting the price of the energy portfolio in the market. The survey design also allows us to check the scope sensitivity of renewable energy which can help guide the future renewable energy policy. We hope results from this study will offer useful insights to energy regulators and utility companies and help them increase the share of renewable energy supply.     

Willingness to pay for renewable energy investment in Korea: A choice experiment study

Renewable energy sources are considered as alternatives for coping with the high price of oil and global warming. The Korean government has set a target that 11% of the total primary energy supply should be obtained through renewable energy sources until 2030. In order to develop proper policies for renewable energy investment, it is necessary to analyze the benefits of renewable energy investment based on households’ willingness to pay. This study attempts to apply a choice experiment (CE) for assessing renewable energy investment in Korea. Moreover, we employ a multinomial probit (MNP) model to relax the assumption that all respondents have the same preferences for the attributes being valued, which is usually required in empirical CE studies. An MNP model allows the most flexible pattern of error correlation structure. The results reveal that the Korean public puts a value on the protection of wildlife, reduction of pollution, and increased employment opportunities. On the other hand, respondents do not derive significant values from the improvement of landscapes. This study is expected to provide policy-makers with useful information for evaluating and planning policies related to renewable energy investment.     

Does willingness to pay for green energy differ by source?

We present the findings of a choice experiment designed to estimate consumer preferences and willingness-to-pay (WTP) for voluntary participation in green energy electricity programs. Our model estimates WTP for a generic “green energy” source and compares it to WTP for green energy from specific sources, including wind, solar, farm methane, and biomass. Our results show that there exists a positive WTP for green energy electricity. Further, individuals have a preference for solar over a generic green and wind. Biomass and farm methane are found to be the least preferred sources.     

Risk aversion and willingness to pay for energy efficient systems in rental apartments

This paper uses a random utility model to estimate consumers’ valuation of energy efficient insulation and ventilation systems in rental apartments. Given consumers’ limited experience in residential buildings and the perceived uncertainty about their comfort benefits and resulting energy savings, these relatively new technologies might be undervalued by risk-averse consumers. Using the concept of certainty-equivalence, this paper proposes a model to assess the consumers’ risk-aversion for adopting energy-efficient systems. These systems are treated as risky assets while conventional commodities are assumed to be risk-free. The curvature of the utility function is interpreted as a measure of aversion to perceived risks as opposed to explicit risks measured by observed variances. The proposed formulation is applicable in stated preference data with qualitative variables. The model is applied to data from a choice experiment conducted among 264 apartment tenants in Switzerland. The estimated curvatures reject the risk-neutrality hypothesis. The range of the estimated risk premiums suggests that risk considerations remain a central issue in dealing with energy efficiency in residential buildings. The analysis also indicates that assuming same risk attitudes toward new and conventional systems could bias the estimates of the willingness to pay, especially when the system is comprised of several components.     

Non-renewable and renewable energy consumption and CO2 emissions in OECD countries: A comparative analysis

This paper attempts to explore the determinants of CO₂ emissions using the STIRPAT model and data from 1980 to 2011 for OECD countries. The empirical results show that non-renewable energy consumption increases CO₂ emissions, whereas renewable energy consumption decreases CO₂ emissions. Further, the results support the existence of an environmental Kuznets curve between urbanisation and CO₂ emissions, implying that at higher levels of urbanisation, the environmental impact decreases. Therefore, the overall evidence suggests that policy makers should focus on urban planning as well as clean energy development to make substantial contributions to both reducing non-renewable energy use and mitigating climate change.     

CO2 emissions,nuclear energy,renewable energy and economic growth in the US

This study explores the causal relationship between carbon dioxide (CO₂) emissions, renewable and nuclear energy consumption and real GDP for the US for the period 1960–2007. Using a modified version of the Granger causality test, we found a unidirectional causality running from nuclear energy consumption to CO₂ emissions without feedback but no causality running from renewable energy to CO₂ emissions. The econometric evidence seems to suggest that nuclear energy consumption can help to mitigate CO₂ emissions, but so far, renewable energy consumption has not reached a level where it can make a significant contribution to emissions reduction.     

The link between renewable energy production and gross domestic product in Africa: A comparative study between 1980 and 2008

Renewable energy (RE) projects are arguably one of the most important strategies that can be used in the mitigation of climate change impacts. At the same time, RE technologies can generate clean energy and potentially boost the economy of the African continent. It is thus not surprising that recent studies have investigated the relationship between RE and economic growth in some African countries. However, the limitation of these reductionist analytical frameworks is that they can conceal the true regional picture in terms of the link between investments in RE technologies and gross domestic product (GDP). This holistic analysis is important in order to inform regional policies on climate change. The article uses statistical analytic techniques to examine the correlation between RE production and economic growth across different blocks of the African continent between 1980 and 2008. The analysis is between geographical blocks (e.g. Southern Africa, Western Africa, etc.) and between oil and non-oil producing blocks. Generally speaking, while there exists a similar pattern in all the studied blocks in terms of mean, standard deviation and correlation between RE and GDP, a few exceptions can be found. For instance, the rise in RE-GDP correlation from 1992/1993 onwards was conspicuously higher in North Africa and oil-producing countries compared to all the other blocks. Similarly, Southern Africa was the only block where the correlation between RE and GDP was negative throughout the period under review, except 1988, 1989 and 1997 when it was positive.     

Design for renewable energy systems with application to rural areas in Japan

This study uses optimization modeling to study efficient ways to integrate renewable energy systems to provide electricity and heat in rural Japan. The model provides minimum cost system configuration and operation taking into account hour-by-hour energy availability and demand. Grid electricity is available to rural areas of Japan, but it is relatively expensive. Local renewable energy generation can be economic while using grid electricity to compensate for the intermittency of the renewable generation. In the model, renewable electricity can be provided by a combination of wind, photovoltaic, and biomass. Heat can be provided by petroleum, LPG, and geothermal heat pumps (GHPs). We find that due to the relatively high cost of grid electricity, there is significant penetration of wind generation. In turn, the penetration of wind creates economic conditions that encourage GHP penetration. The integrated renewable system reduces the annual cost of the entire system by 31%, and reduces the carbon emissions by 50%.     

Financing rural renewable energy: A comparison between China and India

This paper analyses the current status of rural renewable energy (RRE) in China and India, develops and employs an analysis framework to study the environment, channels, instruments and innovative mechanisms of financing rural renewable energy in China and India, and makes a primary comparison.     

A six-phase synchronous generator for stand-alone renewable energy generation: Experimental analysis

This paper presents the steady-state behavior of a SPSG (six-phase synchronous generator) configured to operate as a stand-alone electric energy source in conjunction with a hydro power plant. A purely experimental treatment is provided with the emphasis placed on operating regimes that illustrate the advantages of using SPSG. In particular, it is shown that the generator can supply two separate three-phase loads which represent an additional advantage. Last but not least, outputs of the two three-phase windings can be used to supply a single three-phase load through an interconnecting six-phase to three-phase transformer, in which case failure of one three-phase winding does not lead to the system shutdown and the load can be still supplied from the remaining healthy winding. Experimental results include loading transients with independent three-phase resistive load at each of the two three-phase winding sets, and measured steady-state characteristics for various configurations and operating conditions.     

Barriers to renewable energy penetration; a framework for analysis

Renewable energy has the potential to play an important role in providing energy with sustainability to the vast populations in developing countries who as yet have no access to clean energy. Although economically viable for several applications, renewable energy has not been able to realise its potential due to several barriers to its penetration. A framework has been developed in this paper to identify the barriers to renewable energy penetration and to suggest measures to overcome them.     

A comparative analysis for multiattribute selection among renewable energy alternatives using fuzzy axiomatic design and fuzzy analytic hierarchy process

Renewable energy is the energy generated from natural resources such as sunlight, wind, rain, tides and geothermal heat which are renewable. Energy resources are very important in perspective of economics and politics for all countries. Hence, the selection of the best alternative for any country takes an important role for energy investments. Among decision-making methodologies, axiomatic design (AD) and analytic hierarchy process (AHP) are often used in the literature. The fuzzy set theory is a powerful tool to treat the uncertainty in case of incomplete or vague information. In this paper, fuzzy multicriteria decision- making methodologies are suggested for the selection among renewable energy alternatives. The first methodology is based on the AHP which allows the evaluation scores from experts to be linguistic expressions, crisp, or fuzzy numbers, while the second is based on AD principles under fuzziness which evaluates the alternatives under objective or subjective criteria with respect to the functional requirements obtained from experts. The originality of the paper comes from the fuzzy AD application to the selection of the best renewable energy alternative and the comparison with fuzzy AHP. In the application of the proposed methodologies the most appropriate renewable energy alternative is determined for Turkey.     

A comparative analysis of renewable electricity support mechanisms for Southeast Asia

This study evaluates the applicability of eight renewable electricity policy mechanisms for Southeast Asian electricity markets. It begins by describing the methodology behind 90 research interviews of stakeholders in the electricity industry. It then outlines four justifications given by respondents for government intervention to support renewables in Southeast Asia: unpriced negative externalities, counteracting subsidies for conventional energy sources, the public goods aspect of renewable energy, and the presence of non-technical barriers. The article develops an analytical framework to evaluate renewable portfolio standards, green power programs, public research and development expenditures, systems benefits charges, investment tax credits, production tax credits, tendering, and feed-in tariffs in Southeast Asia. It assesses each of these mechanisms according to the criteria of efficacy, cost effectiveness, dynamic efficiency, equity, and fiscal responsibility. The study concludes that one mechanism, feed-in tariffs, is both the most preferred by respondents and the only one that meets all criteria.     

Identifying the factors affecting the willingness to pay for fuel-efficient vehicles in Turkey: A case of hybrids

This paper aims to determine the factors that have an impact on the consumers’ willingness to pay a premium for hybrid automobiles in Turkey. A web-based random survey was conducted in different regions of Turkey. A questionnaire was administered to 1983 participants in January–March of 2009. The questionnaire was prepared by taking the issues raised in various sources into account. An ordered Probit model was used to meet the objective. Results show that variables such as income, gender, education, concerns about global warming, number of automobiles, importance of automobile performance, risk preference, attitude toward the alternative energy sources have an impact on the consumers’ willingness to pay a premium for hybrids. Findings suggest that consumers who have high income, higher educational level, and concerns about the global warming are more likely to pay a premium for hybrids. This study is expected to make important contributions to the current literature related to the consumers’ willingness to pay for hybrids by providing a research study from a developing country’s perspective. Results of this study also make important contributions to the policy and decision makers, environmental groups and automotive industry.     

A review on the relation between the energy and exergy efficiency analysis and the technical characteristic of the renewable energy systems

One of the most important factors that can persuade human to use the renewable energy systems versus the conventional energy systems are the technical characteristics that include the reliability, maintenance requirements, availability, sustainability and environmental impacts. Technical characteristics of a system can affect the performance of the system. In the context of this work, the existent studies on the relation between the technical characteristic and the performance of the system are reviewed. It is concluded that there is a close relation between the performance of the system based on energy and exergy analysis and the technical characteristics. The systems which are more reliable and sustainable have less environmental impact and high energy and exergy efficiencies.     

Causal relationship between nuclear energy consumption and economic growth: A multi-country analysis

This paper attempts to investigate the causal relationship between nuclear energy consumption and economic growth using the data from six countries among 20 countries that have used nuclear energy for more than 20 years until 2005. To this end, time-series techniques including the tests for unit roots, co-integration, and Granger-causality are employed to Argentina, France, Germany, Korea, Pakistan, and Switzerland. The main conclusion is that the causal relationship between nuclear energy consumption and economic growth is not uniform across countries. In the case of Switzerland, there exists bi-directional causality between nuclear energy consumption and economic growth. This means that an increase in nuclear energy consumption directly affects economic growth and that economic growth also stimulates further nuclear energy consumption. The uni-directional causality runs from economic growth to nuclear energy consumption without any feedback effects in France and Pakistan, and from nuclear energy to economic growth in Korea. However, any causality between nuclear energy consumption and economic growth in Argentina and Germany is not detected.