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Perceived price complexity of dynamic energy tariffs: An investigation of antecedents and consequences

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  • Layer, Patrick
  • Feurer, Sven
  • Jochem, Patrick

Abstract

Dynamic tariffs have the potential to contribute to a successful shift from conventional to renewable energies, but tapping this potential in Europe ultimately depends on residential consumers selecting them. This study proposes and finds that consumer reactions to dynamic tariffs depend on the level of perceived price complexity that represents the cognitive effort consumers must engage in to compute the overall bill amount. An online experiment conducted with a representative sample of 664 German residential energy consumers examines how salient characteristics of dynamic tariffs contribute to perceived price complexity. Subsequently, a structural equation model (SEM) reveals that the depth of information processing is central to understand how price complexity relates to consumers’ behavioral intentions. The results suggest that it will be challenging to convince European consumers to select complex dynamic tariffs under the current legal framework. Policymakers will need to find ways to make these tariffs more attractive.

Suggested Citation

  • Layer, Patrick & Feurer, Sven & Jochem, Patrick, 2017. "Perceived price complexity of dynamic energy tariffs: An investigation of antecedents and consequences," MPRA Paper 91561, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:91561
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    Cited by:

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    3. Lehmann, Nico & Sloot, Daniel & Ardone, Armin & Fichtner, Wolf, 2022. "Willingness to pay for regional electricity generation – A question of green values and regional product beliefs?," Energy Economics, Elsevier, vol. 110(C).
    4. Lehmann, Nico & Sloot, Daniel & Schüle, Christopher & Ardone, Armin & Fichtner, Wolf, 2023. "The motivational drivers behind consumer preferences for regional electricity – Results of a choice experiment in Southern Germany," Energy Economics, Elsevier, vol. 120(C).
    5. Kazhamiaka, Fiodar & Jochem, Patrick & Keshav, Srinivasan & Rosenberg, Catherine, 2017. "On the influence of jurisdiction on the profitability of residential photovoltaic-storage systems: A multi-national case study," Energy Policy, Elsevier, vol. 109(C), pages 428-440.
    6. Prasanna, Ashreeta & Mahmoodi, Jasmin & Brosch, Tobias & Patel, Martin K., 2018. "Recent experiences with tariffs for saving electricity in households," Energy Policy, Elsevier, vol. 115(C), pages 514-522.
    7. Okur, Özge & Heijnen, Petra & Lukszo, Zofia, 2021. "Aggregator’s business models in residential and service sectors: A review of operational and financial aspects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    8. Lehmann, Nico & Sloot, Daniel & Ardone, Armin & Fichtner, Wolf, 2021. "The limited potential of regional electricity marketing – Results from two discrete choice experiments in Germany," Energy Economics, Elsevier, vol. 100(C).
    9. Will, Christian & Lehmann, Nico & Baumgartner, Nora & Feurer, Sven & Jochem, Patrick & Fichtner, Wolf, 2022. "Consumer understanding and evaluation of carbon-neutral electric vehicle charging services," Applied Energy, Elsevier, vol. 313(C).
    10. Lehmann, Nico & Sloot, Daniel & Ardone, Armin & Fichtner, Wolf, 2022. "Consumer preferences for the design of a demand response quota scheme – Results of a choice experiment in Germany," Energy Policy, Elsevier, vol. 167(C).
    11. Mohseni, Soheil & Brent, Alan C. & Kelly, Scott & Browne, Will N., 2022. "Demand response-integrated investment and operational planning of renewable and sustainable energy systems considering forecast uncertainties: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 158(C).

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    More about this item

    Keywords

    dynamic energy tariffs;

    JEL classification:

    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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