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.     

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%.     

Current challenges of Germany’s energy transition project and competing strategies of challengers and incumbents: The case of direct marketing of electricity from renewable energy sources

Electricity generated by renewable energies (RES-E) already accounts for 25% of Germany’s electricity supply. This has led to recent discussions for a better market integration of RES-E. The paper examines how competing actors and their ideas on market integration developed new services for direct marketing according to their respective origins and tried to shape the regulatory framework. The paper analyses this process and explains the current shape of the field of direct marketing. Medium-sized structured actors, who favoured RES-E integration via the conventional wholesale power markets, and who formed early close coalitions with RES-E power producers at the same time, have been most successful in terms of market shares. Moreover, they have been very successful for different reasons in building-up coalitions with governance units and influencing the field rules and routines. Based on those findings, the paper will conclude with some policy advices for the future adjustment of the current regulative frameworks. As long as there is no evidence of how RES-E can be integrated most effectively and efficiently, policies should maintain a competition between different direct marketing strategies to find out which strategies serve the best in terms of achieving a successful energy transition.     

Consumer switching in retail electricity markets: Is price all that matters?

We model consumer switching in retail electricity markets in New Zealand to identify important determinants of switching and estimate willingness to pay (WTP) for six non-price attributes of electricity services, namely, call waiting time, length of fixed rate contract, renewable energy, loyalty rewards, supplier ownership, and supplier type. The results provide important insights into residential consumer switching, which inform policy and enable suppliers to differentiate their products. The analysis is based on 2688 choice responses generated using an online choice experiment administered to a sample of 224 residential bill-payers. A latent class model is used to distinguish important determinants of switching and preference heterogeneity. We find that non-price attributes of electricity services are significant determinants of consumer switching. Three latent classes with distinct preferences for the attributes are identified. The first class (40%) is mainly concerned about power bills and would switch supplier to save at least NZ$125 per year in power bills, ceteris paribus. This value mainly captures the status quo effect or preference for incumbent traditional suppliers. The second class (46%) exhibits no status quo preference, values all attributes, and particularly dislikes entrants from other sectors. These suppliers must charge NZ$135 per year less than traditional suppliers for a 50% chance of attracting customers. The third class (14%) consists of captive and loyal customers who are unlikely to switch supplier for any realistic power bill savings.     

Estimating the willingness to pay for reliable electricity supply: A choice experiment study

This research examines households' willingness to pay (WTP) for an improved electricity service. Households' stated WTP is estimated using the choice experiment (CE) method. The data used in the estimations come from 350 in-person interviews conducted during the period 5–22 August 2008 in North Cyprus. Compensating variation (CV) estimates for a zero-outage scenario are calculated using the parameter estimates from the mixed logit (ML) model; these are 6.65 YTL (Turkish lira) per month (3.02 USD) for summer and 25.83 YTL per month (11.74 USD) for winter. In order to avoid the cost of outages, households are willing to incur a 3.6% and a 13.9% increase in their monthly electricity bill for summer and winter, respectively. The WTP per hour unserved is 0.28 YTL (0.13 USD) for summer, and 1.08 YTL (0.49 USD) for winter. A preliminary cost–benefit analysis indicates that the annualized economic benefits are approximately 42.7 million YTL (19.4 million USD) for the residential sector. This would justify an investment in additional generation capacity of approximately 268 MW, which is far more than that which is needed to eliminate the service reliability problem.     

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.     

What do customers want from improved residential electricity services? Evidence from a choice experiment

Improvements in customer satisfaction as well as product/service quality represent a common objective of all businesses, and electricity services are no exception. Using choice experiments and a mixed logit model, this study quantitatively analyzes customers' preferences and their marginal willingness to pay for improved residential electricity services. The study provides an ex ante evaluation of customers' acceptance of hypothetical electricity services. According to the results, customers consider the electricity bill and the electricity mix as the two most important attributes when choosing their electricity services. Customers are willing to pay 2.2% more in the average electricity bill (an additional monthly electricity bill of KRW 1,064; USD 0.96) for a significant increase in the share of renewable energy, which is far less than the actual cost of achieving this renewable target. Therefore, it is better to maintain the current electricity mix in principle, and the renewable share should be gradually expanded instead of making a sudden change in the electricity mix. In addition, customers are willing to pay KRW 6,793 (USD 6.15) more to reduce blackouts once in a year and KRW 64/year (USD 0.06/year) to reduce a minute of each blackout.     

Choice experiment study on the willingness to pay to improve electricity services

Modern forms of energy are an important vehicle towards poverty alleviation in rural areas of developing countries. Most developing countries’ households rely heavily on wood fuel which impacts on their health and socio-economic status. To ease such a dependency, other modern forms of energy, namely electricity, need to be provided. However, the quality of the electricity service, namely reliability, is an important factor in reducing this dependency. This paper discusses a choice experiment valuation study conducted among electrified rural households located in Kisumu, Kenya, in which the willingness to pay (WTP) to avoid power outages or blackouts was estimated. A mixed logit estimation was applied to identify the various socio-economic and demographic characteristics which determine preferences in reducing power outages among a household’s users. In conclusion, several of the socio-economic and demographic characteristics outlined in this paper were identified and can assist service differentiation to accommodate the diverse households’ preferences towards the improvement of the electricity service.     

A regulatory policy to promote renewable energy consumption in China: Review and future evolutionary path

Renewable energy has become the world's strategic choice to solve environmental pollution, address the energy crisis and achieve social sustainable development. The establishment of a regulatory system coincides with the development stage of renewable energy and electricity market operation is significant in standardizing the market competition and guaranteeing healthy development of renewable energy in China. This paper analyses the current situation of renewable energy development and the existing renewable energy regulation system in China, pointing out that the main problems restricting renewable energy development are institutional mechanisms and market factors. The existing regulatory mechanisms also have deficiencies, such as the inclination towards economic regulation and the lack of a market adjustment mechanism. This paper proposes that China should comprehensively consider the renewable energy development stage, electricity market trading mechanisms and other factors in electricity regulatory requirements when policy making, actively exploring a new renewable energy regulation model adapted to different development phases. In addition, this paper suggests China's regulatory policy path based on the forecasting of renewable energy developing models.     

Willingness to pay for carbon offset certification and co-benefits among (high-)flying young adults in the UK

Voluntary carbon offsets represent a growing share of the carbon market as a whole, and have the potential to contribute to meeting greenhouse gas emissions targets and reducing anthropogenic climate change. Certain offset project types may also deliver co-benefits including safeguarding or promoting biodiversity, supporting human development and poverty reduction, and enabling market and technology development in low-carbon sectors. These co-benefits might encourage consumers to participate in the voluntary offset market, depending on their effects both on consumers’ willingness to pay (WTP) for offsets and on implementation costs. However, the offset market is not yet sufficiently developed to give a clear indication of consumer WTP for offsets with varying attributes. This exploratory stated preference study therefore uses a choice experiment to estimate WTP for certified and uncertified offsets, with or without these specific co-benefits, in an aviation context. It is, to the best of our knowledge, the first to do so. Our results suggest that uptake of voluntary offsets may be encouraged by investing in projects with co-benefits and by emphasising those co-benefits to consumers. They also suggest that certification regimes will add value to offsets, helping compensate for increased costs, provided that consumers are made fully aware of them.     

The impact of wind power support schemes on technology choices

In energy systems with large shares of variable renewable energies, electricity generation is lower during unfavorable weather conditions. System-friendly wind turbines (SFTs) rectify this by producing a larger share of their electricity at low wind speeds. This paper analyzes to what extent SFTs' benefits out-weigh their additional costs and how to incentivize investments into them. Using a wind power investment model for Germany, I show that SFTs indeed deliver benefits for the energy system that over-compensate for their cost premium. Floating market premium schemes incentivize their deployment only where investors bear significant price risks and possess sufficient foresight. Alternatively, a new production value-based benchmark triggers investors to install SFTs that meet the requirements of power systems with increasing shares of variable renewable energies.     

Quality uncertainty and the market for renewable energy: Evidence from German consumers

Consumers can choose from a wide range of electricity supply contracts, including green power options. Electricity produced from renewable energy involves information asymmetries. With a sample of more than 2,000 German electricity consumers, we tested the proposition of a “lemon market” for renewable energy in a discrete choice experiment. Specifically, we found that, compared to investor-owned firms, additional willingness-to-pay for renewable energy is approximately double when offered by cooperatives or municipally-owned electricity utilities. Consumers who are experienced with switching suppliers have an additional willingness-to-pay of one Eurocent per kilowatt hour for cooperatives and two Eurocents for public enterprises. The results demonstrate that organizational transformation in dynamically-changing electricity markets is not only driven by political initiatives but also by consumers' choices on the market. Public policy may reduce information asymmetries by promoting government labeling of green energy products.     

Low energy efficiency in rental properties: Asymmetric information or low willingness-to-pay?

Asymmetric information may explain low energy efficiency in rented properties. Energy ratings, while a solution to the information problem, will only lead to higher efficiency levels if renter's willingness-to-pay (WTP) exceeds landlord's investment costs. Using a sample of renters from one university, this paper estimates this WTP using a discrete choice experiment where respondents choose from a hypothetical set of single-bedroom apartments that differ according to a number of attributes including the energy rating. Results show that there is a strong disutility associated with the least efficient properties and that renters will pay significantly more for efficiency improvements at the lower end of the efficiency scale. Importantly, our WTP estimates are calculated in a setting where respondents were informed about the energy rating system prior to choosing and where the rating was shown for every property. Therefore, in order to maximise the impact of energy rating systems, policymakers are encouraged to ensure that both these informational characteristics are in place.     

Assessment of Korean customers’ willingness to pay with RPS

To increase the use of renewable energy, the Korean government will introduce the Renewable Portfolio Standard (RPS) in 2012. The RPS places responsibility for extra renewable energy costs on the consumers and allows price competition among different renewable sources. Accordingly, this study analyzes through the contingent valuation (CV) the willingness of Korean households to pay more for electricity generated by wind, photovoltaic (PV), and hydropower. Our empirical results show that, although the willingness to pay (or WTP) was highest for wind power and lowest for hydropower, the differences in WTP among the renewable sources were statistically insignificant. This suggests that Korean consumers prefer a renewable portfolio that minimizes power supply costs.The average WTP for all three energy types was KRW 1562.7 (USD 1.350) per month per household, which was approximately 3.7% of the average monthly electricity bill in 2010. This amount represents only 58.2% of what the Korean government allocated in its budget to the new and renewable energy dissemination program in 2010. Thus, our results imply that the promotion of the new and renewable energy dissemination program may be difficult only with the WTP for electricity generated from renewable sources. Specifically, the mean WTP will not support the set-aside dissemination capacity for PV after 2014.     

Support schemes for renewable electricity in the European Union: Producer strategies and competition

Current discussion about how to reform European support schemes for renewable electricity neglects certain risks of market power in wholesale electricity markets. In a stylized Cournot model of interacting spot and forward electricity markets, I analyze how different price-based support schemes affect producer strategies and, ultimately, competition in the wholesale market. I compare the strategic behavior of renewable and conventional producers in terms of electricity production and forward market sales in the presence of two different price-based support schemes: feed-in tariffs and feed-in premiums. I show that the feed-in premium, which is the European Commission's current scheme of choice, may enhance market power and favor conventional electricity production. It may also reduce the likelihood of achieving the political objective to increase production from renewable energy sources.     

Valuing energy-saving measures in residential buildings: A choice experiment study

Air-conditioning and heating energy-saving measures can cut back the usage of energy. This paper attempts to apply a choice experiment in evaluating the consumer's willingness to pay (WTP) for air-conditioning and heating energy-saving measures in Korea's residential buildings. We consider the trade-offs between price and three attributes of energy-saving (window, facade, and ventilation) for selecting a preferred alternative and derive the marginal WTP (MWTP) estimate for each attribute. We also try to test irrelevant alternatives property for the estimation model holds and compare the estimation results of the multinomial logit (MNL) and the nested logit (NL) models. The NL model outperforms the MNL model. The NL model show that MWTPs for increasing the number of glasses and their variety, for increasing the thickness of facade for 1 mm, and for establishing a ventilation system are KRW 17,392 (USD 18.2), 1,112 (1.2), and 11,827 (12.4), respectively. Overall, the potential consumers have significant amount of WTP.     

Information inefficiency and willingness-to-pay for energy-efficient technology: A stated preference approach for China Energy Label

The paper examines the extent to which consumers' willingness-to-pay for energy-efficient room air conditioners may be altered by correcting the information inefficiency on the China Energy Label. The data are collected from a discrete choice experiment with two alternatives (variable-speed and constant-speed room air conditioners) characterized by attributes of brand, purchase price and energy grade. Three versions of the questionnaires with choice sets differing only in energy consumption indicators were distributed randomly to 1602 potential consumers in Nanjing, China and a sample of 1569 was obtained after dropping missing data. The analysis with multinomial and mixed logit models reveal that the price premium that consumers are willing to pay for a variable-speed room AC over a constant-speed room AC increases significantly when energy consumption information becomes comparable and additional energy-related information is provided. Furthermore, the impact of information on WTP varies under different energy-saving scenarios. It is suggested that China Energy Label should correct information inefficiency by adopting same energy indicators for room ACs with different technologies and providing energy consumption information based on different climate zones.     

Valuing energy policy attributes for environmental management: Choice experiment evidence from a research institution

Many governments, firms, institutions and individuals have become increasingly cognizant of their impact on the environment, most notably with respect to global climate change. Coupled with the possibility of future regulations aimed at curbing greenhouse gas emissions, firms and institutions have begun to critically evaluate their own carbon footprint. This paper examines the preferences of stakeholders within a large academic institution for attributes of alternative greenhouse gas (GHG) reduction strategies. The attributes considered by constituents include: the fuel portfolio mix, effort for conserving energy use, carbon emissions reduction, timeframe for emissions reduction to be achieved and cost. We use a choice experiment technique that enables the examination of greenhouse gas reduction program attribute preferences across three constituent groups. The results show that each of the constituent groups have a positive WTP for carbon emissions reductions and prefer investments in reductions in the shorter- rather than longer-term. The results also suggest differences between the constituent groups in their WTP for types of fuels in the fuel portfolio. Finally, we use the results to examine the welfare implications of different combinations of the policy attributes that coincide with alternative GHG program strategies.     

Stated preferences of Finnish private homeowners for residential heating systems: A discrete choice experiment

Our aim is to examine how different attributes of residential heating systems affect private homeowners' choice of heating system following renovations when heterogeneity in the homeowners' preferences is considered. Utilizing the results of our choice model, we then aim to simulate the market shares of different heating systems under various policy scenarios. The data were retrieved by a questionnaire mailed to a random sample of Finnish private owners of detached houses built in the 1960s–1990s with a response rate of 52%. The labeled choice sets in the discrete choice experiment (DCE) had 6 heating system alternatives (wood pellet boiler, solid wood fired boiler, district heat, electricity, ground heat (pump) and oil boiler) with varying levels of predetermined attributes (investment cost, annual operating cost, CO₂ emissions, fine particle emissions and required own work). The choice modeling results emphasized the role of the investment cost as the main attribute affecting the decisions, although nonfinancial attributes also had a considerable effect. Systematic preference heterogeneity was caused by the availability of district heat, the existing heating system and the homeowner's forest ownership. In addition, the results indicated a significant unobserved preference heterogeneity. Based on the simulation of market shares, the use of wood pellets in residential heating is projected to increase threefold during 2009–2020.     

How does Germany's green energy policy affect electricity market volatility? An application of conditional autoregressive range models

Based on a dynamic model for the high/low range of electricity prices, this article analyses the effects of Germany's green energy policy on the volatility of the electricity market. Using European Energy Exchange data from 2000 to 2015, we find rather high volatility in the years 2000–2009 but also that the weekly price range has significantly declined in the period following the year 2009. This period is characterised by active regulation under the Energy Industry Law (EnWG), the EU Emissions Trading Directive (ETD) and the Renewable Energy Law (EEG). In contrast to the preceding period, price jumps are smaller and less frequent (especially for day-time hours), implying that current policy measures are effective in promoting renewable energies while simultaneously upholding electricity market stability. This is because the regulations strive towards a more and more flexible and market-oriented structure which allows better integration of renewable energies and supports an efficient alignment of renewable electricity supply with demand.