IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v51y2015icp1-8.html
   My bibliography  Save this article

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

Author

Listed:
  • Sundt, Swantje
  • Rehdanz, Katrin

Abstract

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%.

Suggested Citation

  • Sundt, Swantje & Rehdanz, Katrin, 2015. "Consumers' willingness to pay for green electricity: A meta-analysis of the literature," Energy Economics, Elsevier, vol. 51(C), pages 1-8.
    • Handle: RePEc:eee:eneeco:v:51:y:2015:i:c:p:1-8
    DOI: 10.1016/j.eneco.2015.06.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988315001784
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2015.06.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Luke Brander & Raymond Florax & Jan Vermaat, 2006. "The Empirics of Wetland Valuation: A Comprehensive Summary and a Meta-Analysis of the Literature," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(2), pages 223-250, February.
    2. Zhang, Lei & Wu, Yang, 2012. "Market segmentation and willingness to pay for green electricity among urban residents in China: The case of Jiangsu Province," Energy Policy, Elsevier, vol. 51(C), pages 514-523.
    3. Grösche, Peter & Schröder, Carsten, 2011. "Eliciting public support for greening the electricity mix using random parameter techniques," Energy Economics, Elsevier, vol. 33(2), pages 363-370, March.
    4. Gracia, Azucena & Barreiro-Hurlé, Jesús & Pérez y Pérez, Luis, 2012. "Can renewable energy be financed with higher electricity prices? Evidence from a Spanish region," Energy Policy, Elsevier, vol. 50(C), pages 784-794.
    5. Andriy Danyliv & Milena Pavlova & Irena Gryga & Wim Groot, 2012. "Willingness to pay for physician services: Comparing estimates from a discrete choice experiment and contingent valuation," Society and Economy, Akadémiai Kiadó, Hungary, vol. 34(2), pages 339-357, June.
    6. Chakrabarti, Snigdha & Chakrabarti, Subhendu, 2002. "Rural electrification programme with solar energy in remote region-a case study in an island," Energy Policy, Elsevier, vol. 30(1), pages 33-42, January.
    7. Ram Shrestha & John Loomis, 2003. "Meta-Analytic Benefit Transfer of Outdoor Recreation Economic Values: Testing Out-of-Sample Convergent Validity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(1), pages 79-100, May.
    8. Borchers, Allison M. & Duke, Joshua M. & Parsons, George R., 2007. "Does willingness to pay for green energy differ by source?," Energy Policy, Elsevier, vol. 35(6), pages 3327-3334, June.
    9. Aldy, Joseph Edgar & Leiserowitz, Anthony A & Kotchen, Matthew J, 2012. "Willingness to Pay and Political Support for a U.S. National Clean Energy Standard," Scholarly Articles 8832942, Harvard Kennedy School of Government.
    10. Boxall, Peter C. & Adamowicz, Wiktor L. & Swait, Joffre & Williams, Michael & Louviere, Jordan, 1996. "A comparison of stated preference methods for environmental valuation," Ecological Economics, Elsevier, vol. 18(3), pages 243-253, September.
    11. Batley, S. L. & Colbourne, D. & Fleming, P. D. & Urwin, P., 2001. "Citizen versus consumer: challenges in the UK green power market," Energy Policy, Elsevier, vol. 29(6), pages 479-487, May.
    12. Carlo Andrea Bollino, 2009. "The Willingness to Pay for Renewable Energy Sources: The Case of Italy with Socio-demographic Determinants," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 81-96.
    13. Gossling, Stefan & Kunkel, Timo & Schumacher, Kim & Heck, Nadine & Birkemeyer, Johannes & Froese, Jens & Naber, Nils & Schliermann, Elke, 2005. "A target group-specific approach to "green" power retailing: students as consumers of renewable energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 9(1), pages 69-83, February.
    14. Komarek, Timothy M. & Lupi, Frank & Kaplowitz, Michael D., 2011. "Valuing energy policy attributes for environmental management: Choice experiment evidence from a research institution," Energy Policy, Elsevier, vol. 39(9), pages 5105-5115, September.
    15. Nick Hanley & Douglas MacMillan & Robert E. Wright & Craig Bullock & Ian Simpson & Dave Parsisson & Bob Crabtree, 1998. "Contingent Valuation Versus Choice Experiments: Estimating the Benefits of Environmentally Sensitive Areas in Scotland," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(1), pages 1-15, March.
    16. Menegaki, Angeliki, 2008. "Valuation for renewable energy: A comparative review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(9), pages 2422-2437, December.
    17. Bigerna, Simona & Polinori, Paolo, 2011. "Italian consumers’ willingness to pay for renewable energy sources," MPRA Paper 34408, University Library of Munich, Germany.
    18. Nick Hanley & Robert Wright & Vic Adamowicz, 1998. "Using Choice Experiments to Value the Environment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 413-428, April.
    19. van der Horst, Dan, 2007. "NIMBY or not? Exploring the relevance of location and the politics of voiced opinions in renewable energy siting controversies," Energy Policy, Elsevier, vol. 35(5), pages 2705-2714, May.
    20. Domínguez Arcos, Fernando & Labandeira Villot, Xavier & Loureiro García, María, 2011. "Climate Change Policies And Social Preferences In Galicia And Spain," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 20(1).
    21. Joseph E. Aldy & Matthew J. Kotchen & Anthony A. Leiserowitz, 2012. "Willingness to pay and political support for a US national clean energy standard," Nature Climate Change, Nature, vol. 2(8), pages 596-599, August.
    22. Kim, Jihyo & Park, Jooyoung & Kim, Jinsoo & Heo, Eunnyeong, 2013. "Renewable electricity as a differentiated good? The case of the Republic of Korea," Energy Policy, Elsevier, vol. 54(C), pages 327-334.
    23. Aitken, Mhairi, 2010. "Why we still don't understand the social aspects of wind power: A critique of key assumptions within the literature," Energy Policy, Elsevier, vol. 38(4), pages 1834-1841, April.
    24. Shrestha, Ram K. & Loomis, John B., 2001. "Testing a meta-analysis model for benefit transfer in international outdoor recreation," Ecological Economics, Elsevier, vol. 39(1), pages 67-83, October.
    25. Brander, Luke M. & Van Beukering, Pieter & Cesar, Herman S.J., 2007. "The recreational value of coral reefs: A meta-analysis," Ecological Economics, Elsevier, vol. 63(1), pages 209-218, June.
    26. Nomura, Noboru & Akai, Makoto, 2004. "Willingness to pay for green electricity in Japan as estimated through contingent valuation method," Applied Energy, Elsevier, vol. 78(4), pages 453-463, August.
    27. Susaeta, Andres & Lal, Pankaj & Alavalapati, Janaki & Mercer, Evan, 2011. "Random preferences towards bioenergy environmental externalities: A case study of woody biomass based electricity in the Southern United States," Energy Economics, Elsevier, vol. 33(6), pages 1111-1118.
    28. Liu, Wenling & Wang, Can & Mol, Arthur P.J., 2013. "Rural public acceptance of renewable energy deployment: The case of Shandong in China," Applied Energy, Elsevier, vol. 102(C), pages 1187-1196.
    29. Jon Nelson & Peter Kennedy, 2009. "The Use (and Abuse) of Meta-Analysis in Environmental and Natural Resource Economics: An Assessment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(3), pages 345-377, March.
    30. Cicia, Gianni & Cembalo, Luigi & Del Giudice, Teresa & Palladino, Andrea, 2012. "Fossil energy versus nuclear, wind, solar and agricultural biomass: Insights from an Italian national survey," Energy Policy, Elsevier, vol. 42(C), pages 59-66.
    31. Brouwer, Roy, 2000. "Environmental value transfer: state of the art and future prospects," Ecological Economics, Elsevier, vol. 32(1), pages 137-152, January.
    32. Soliño, Mario & Farizo, Begoña A. & Vázquez, María X. & Prada, Albino, 2012. "Generating electricity with forest biomass: Consistency and payment timeframe effects in choice experiments," Energy Policy, Elsevier, vol. 41(C), pages 798-806.
    33. Kaenzig, Josef & Heinzle, Stefanie Lena & Wüstenhagen, Rolf, 2013. "Whatever the customer wants, the customer gets? Exploring the gap between consumer preferences and default electricity products in Germany," Energy Policy, Elsevier, vol. 53(C), pages 311-322.
    34. Zografakis, Nikolaos & Sifaki, Elli & Pagalou, Maria & Nikitaki, Georgia & Psarakis, Vasilios & Tsagarakis, Konstantinos P., 2010. "Assessment of public acceptance and willingness to pay for renewable energy sources in Crete," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(3), pages 1088-1095, April.
    35. Soliño, Mario & Vázquez, María X. & Prada, Albino, 2009. "Social demand for electricity from forest biomass in Spain: Does payment periodicity affect the willingness to pay?," Energy Policy, Elsevier, vol. 37(2), pages 531-540, February.
    36. Yoo, Seung-Hoon & Kwak, So-Yoon, 2009. "Willingness to pay for green electricity in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 37(12), pages 5408-5416, December.
    37. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
    38. Roland Menges & Carsten Schroeder & Stefan Traub, 2005. "Altruism, Warm Glow and the Willingness-to-Donate for Green Electricity: An Artefactual Field Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(4), pages 431-458, August.
    39. Aravena, Claudia & Hutchinson, W. George & Longo, Alberto, 2012. "Environmental pricing of externalities from different sources of electricity generation in Chile," Energy Economics, Elsevier, vol. 34(4), pages 1214-1225.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Soon, Jan-Jan & Ahmad, Siti-Aznor, 2015. "Willingly or grudgingly? A meta-analysis on the willingness-to-pay for renewable energy use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 877-887.
    2. Ma, Chunbo & Rogers, Abbie A. & Kragt, Marit E. & Zhang, Fan & Polyakov, Maksym & Gibson, Fiona & Chalak, Morteza & Pandit, Ram & Tapsuwan, Sorada, 2015. "Consumers’ willingness to pay for renewable energy: A meta-regression analysis," Resource and Energy Economics, Elsevier, vol. 42(C), pages 93-109.
    3. Oerlemans, Leon A.G. & Chan, Kai-Ying & Volschenk, Jako, 2016. "Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 875-885.
    4. Gianluca Grilli, 2017. "Renewable energy and willingness to pay: Evidences from a meta-analysis," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2017(1-2), pages 253-271.
    5. Alló, Maria & Loureiro, Maria L., 2014. "The role of social norms on preferences towards climate change policies: A meta-analysis," Energy Policy, Elsevier, vol. 73(C), pages 563-574.
    6. Bakkensen, Laura & Schuler, Paul, 2020. "A preference for power: Willingness to pay for energy reliability versus fuel type in Vietnam," Energy Policy, Elsevier, vol. 144(C).
    7. 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.
    8. Ladenburg, Jacob, 2014. "Dynamic properties of the preferences for renewable energy sources – A wind power experience-based approach," Energy, Elsevier, vol. 76(C), pages 542-551.
    9. Lee, Chul-Yong & Lee, Min-Kyu & Yoo, Seung-Hoon, 2017. "Willingness to pay for replacing traditional energies with renewable energy in South Korea," Energy, Elsevier, vol. 128(C), pages 284-290.
    10. Simona Bigerna & Carlo Andrea Bollino & Paolo Polinori, 2014. "The Question of Sustainability of Green Electricity Policy Intervention," Sustainability, MDPI, vol. 6(8), pages 1-23, August.
    11. Bigerna, Simona & Polinori, Paolo, 2014. "Italian households׳ willingness to pay for green electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 34(C), pages 110-121.
    12. Simona Bigerna & Paolo Polinori, 2015. "Assessing the Determinants of Renewable Electricity Acceptance Integrating Meta-Analysis Regression and a Local Comprehensive Survey," Sustainability, MDPI, vol. 7(9), pages 1-24, August.
    13. Martínez-Cruz, Adán L. & Núñez, Héctor M., 2021. "Tension in Mexico's energy transition: Are urban residential consumers in Aguascalientes willing to pay for renewable energy and green jobs?," Energy Policy, Elsevier, vol. 150(C).
    14. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    15. Carsten Herbes & Lorenz Braun & Dennis Rube, 2016. "Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies," Energies, MDPI, vol. 9(4), pages 1-15, March.
    16. Bae, Jeong Hwan & Rishi, Meenakshi, 2018. "Increasing consumer participation rates for green pricing programs: A choice experiment for South Korea," Energy Economics, Elsevier, vol. 74(C), pages 490-502.
    17. Gracia, Azucena & Barreiro-Hurlé, Jesús & Pérez y Pérez, Luis, 2012. "Can renewable energy be financed with higher electricity prices? Evidence from a Spanish region," Energy Policy, Elsevier, vol. 50(C), pages 784-794.
    18. Cardella, Eric & Ewing, Brad & Williams, Ryan Blake, 2018. "Green is Good – The Impact of Information Nudges on the Adoption of Voluntary Green Power Plans," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266583, Southern Agricultural Economics Association.
    19. Vecchiato, Daniel & Tempesta, Tiziano, 2015. "Public preferences for electricity contracts including renewable energy: A marketing analysis with choice experiments," Energy, Elsevier, vol. 88(C), pages 168-179.
    20. Zorić, Jelena & Hrovatin, Nevenka, 2012. "Household willingness to pay for green electricity in Slovenia," Energy Policy, Elsevier, vol. 47(C), pages 180-187.

    More about this item

    Keywords

    Meta-analysis; Renewable energy; Valuation; Value transfer; Willingness to pay;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:51:y:2015:i:c:p:1-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.