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Mandatory versus voluntary payment for green electricity

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  • Akcura, Elcin

Abstract

Renewable energy sources have a critical role to play in contributing to the diversity, sustainability and security of energy supplies. The main objective of the paper is to gain an understanding of the support mechanism of renewable energy sources most preferred by households in the United Kingdom. This paper analyses households' preferences and willingness to pay under a mandatory scheme where all households contribute compared to a voluntary scheme where only those who wish to pay to support renewables do so (such as the green tariffs offered by electricity suppliers in the UK). Two contingent valuation method (CVM) surveys are used to explore whether the type of payment option has an impact on households' willingness to pay (WTP) for increasing share of renewable energy in electricity generation. The paper also investigates whether the type of payment mode affects respondents' self-reported certainty of paying their stated valuations. The results indicate that the likelihood of paying a positive amount for supporting renewable energy is higher under a mandatory scheme compared to a voluntary payment option in the UK. Respondents have a higher level of certainty in paying their stated WTP under a mandatory payment scheme.

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  • Akcura, Elcin, 2015. "Mandatory versus voluntary payment for green electricity," Ecological Economics, Elsevier, vol. 116(C), pages 84-94.
    • Handle: RePEc:eee:ecolec:v:116:y:2015:i:c:p:84-94
    DOI: 10.1016/j.ecolecon.2015.02.027
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    2. Herbes, Carsten & Friege, Christian & Baldo, Davide & Mueller, Kai-Markus, 2015. "Willingness to pay lip service? Applying a neuroscience-based method to WTP for green electricity," Energy Policy, Elsevier, vol. 87(C), pages 562-572.
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    9. Johane Dikgang & Nomsa P. Nkosi, 2018. "Pricing electricty blackout among South African households," Working Papers 727, Economic Research Southern Africa.
    10. McKenna, Russell & Herbes, Carsten & Fichtner, Wolf, 2015. "Energieautarkie: Definitionen, Für- bzw. Gegenargumente, und entstehende Forschungsbedarfe," Working Paper Series in Production and Energy 6, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
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