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Consumers' Preferences for Green and Brown Electricity : a Choice Modelling Approach

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  • Ståle Navrud
  • Kirsten Grønvik Bråten

Abstract

Many countries face the choice between continued investment in fossil fuels versus extensive development of renewable energy sources like wind and small scale hydro. While fossil fuels like coal and natural gas are characterized by emissions of greenhouse gases and regional air pollutants, renewables have mainly local impacts in terms of visual intrusion and ecological effects. Thus, for the renewable energy options the location and size of the development have become the main issues. We conduct a Choice Experiment (CE) to elicit people’s preferences and willingness-to-pay (WTP) for different energy sources and their characteristics. The results show that Norwegians prefer wind power in the choice between continued imports of electricity from coalfired power plants versus building more hydro power plants, windfarms or gasfired power plants domestically. They also prefer to concentrate the development to a few large wind farms rather than many small ones. However, we also find a Not-In-My-Back-Yard (NIMBY) effect of wind farms. The observed WTP reflects the difference in external costs between these energy sources, and can be used as an input to a plan that provides an economic optimal mix of investments in different energy sources.

Suggested Citation

  • Ståle Navrud & Kirsten Grønvik Bråten, 2007. "Consumers' Preferences for Green and Brown Electricity : a Choice Modelling Approach," Revue d'économie politique, Dalloz, vol. 117(5), pages 795-811.
  • Handle: RePEc:cai:repdal:redp_175_0795
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    References listed on IDEAS

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    Cited by:

    1. Simona Bigerna & Paolo Polinori, 2015. "Assessing the Determinants of Renewable Electricity Acceptance Integrating Meta-Analysis Regression and a Local Comprehensive Survey," Sustainability, MDPI, Open Access Journal, vol. 7(9), pages 1-24, August.
    2. Brennan, Noreen & Van Rensburg, Thomas M, 2016. "Wind farm externalities and public preferences for community consultation in Ireland: A discrete choice experiments approach," Energy Policy, Elsevier, vol. 94(C), pages 355-365.
    3. Ladenburg, Jacob & Möller, Bernd, 2011. "Attitude and acceptance of offshore wind farms—The influence of travel time and wind farm attributes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4223-4235.
    4. 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.
    5. 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.
    6. Yang, Yingkui & Solgaard, Hans Stubbe & Haider, Wolfgang, 2016. "Wind, hydro or mixed renewable energy source: Preference for electricity products when the share of renewable energy increases," Energy Policy, Elsevier, vol. 97(C), pages 521-531.
    7. Huh, Sung-Yoon & Woo, JongRoul & Lim, Sesil & Lee, Yong-Gil & Kim, Chang Seob, 2015. "What do customers want from improved residential electricity services? Evidence from a choice experiment," Energy Policy, Elsevier, vol. 85(C), pages 410-420.
    8. Mattmann, Matteo & Logar, Ivana & Brouwer, Roy, 2016. "Wind power externalities: A meta-analysis," Ecological Economics, Elsevier, vol. 127(C), pages 23-36.
    9. 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.
    10. Andrew D. Krueger & George R. Parsons & Jeremy Firestone, 2011. "Valuing the Visual Disamenity of Offshore Wind Power Projects at Varying Distances from the Shore: An Application on the Delaware Shoreline," Land Economics, University of Wisconsin Press, vol. 87(2), pages 268-283.
    11. del Río, Pablo & Calvo Silvosa, Anxo & Iglesias Gómez, Guillermo, 2011. "Policies and design elements for the repowering of wind farms: A qualitative analysis of different options," Energy Policy, Elsevier, vol. 39(4), pages 1897-1908, April.
    12. Byun, Hyunsuk & Lee, Chul-Yong, 2017. "Analyzing Korean consumers’ latent preferences for electricity generation sources with a hierarchical Bayesian logit model in a discrete choice experiment," Energy Policy, Elsevier, vol. 105(C), pages 294-302.
    13. Lauren Knapp & Jacob Ladenburg, 2015. "How Spatial Relationships Influence Economic Preferences for Wind Power—A Review," Energies, MDPI, Open Access Journal, vol. 8(6), pages 1-25, June.
    14. Nkansah, Kofi & Collins, Alan, 2014. "The Impact of Location and Proximity on Consumers’ Willingness to Pay for Renewable and Alternative Electricity: The Case of West Virginia," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 175698, Agricultural and Applied Economics Association.
    15. repec:gam:jsusta:v:10:y:2018:i:1:p:208-:d:127158 is not listed on IDEAS
    16. Bartczak, Anna & Chilton, Susan & Czajkowski, Mikołaj & Meyerhoff, Jürgen, 2017. "Gain and loss of money in a choice experiment. The impact of financial loss aversion and risk preferences on willingness to pay to avoid renewable energy externalities," Energy Economics, Elsevier, pages 326-334.
    17. 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, Open Access Journal, vol. 9(4), pages 1-15, March.
    18. Ma, Chunbo & Burton, Michael, 2016. "Warm glow from green power: Evidence from Australian electricity consumers," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 106-120.
    19. repec:gam:jeners:v:9:y:2016:i:4:p:252:d:66797 is not listed on IDEAS
    20. Meyerhoff, Jürgen & Ohl, Cornelia & Hartje, Volkmar, 2010. "Landscape externalities from onshore wind power," Energy Policy, Elsevier, vol. 38(1), pages 82-92, January.
    21. 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, pages 93-109.
    22. 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.
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