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Eliciting public support for greening the electricity mix using random parameter techniques

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  • Grösche, Peter
  • Schröder, Carsten

Abstract

With its commitment to double the share of renewable fuels in electricity generation to at least 30% by 2020, the German government has embarked on a potentially costly policy course whose public support remains an open empirical question. Building on household survey data, in this paper we assess people's willingness-to-pay (WTP) for various fuel mixes in electricity generation, and capture preference heterogeneity among respondents using random parameter techniques. Based on our estimates, we trace out the locus that links the premia charged for specific electricity mixes with the fraction of people supporting the policy. Albeit people's WTP for a certain fuel mix in electricity generation is positively correlated to the renewable fuel share, our results imply that the current surcharge effectively exhausts the financial scope for subsidizing renewable fuels.

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  • 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.
  • Handle: RePEc:eee:eneeco:v:33:y:2011:i:2:p:363-370
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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. 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.
    3. Rommel, Jens & Sagebiel, Julian & Müller, Jakob R., 2016. "Quality uncertainty and the market for renewable energy: Evidence from German consumers," Renewable Energy, Elsevier, vol. 94(C), pages 106-113.
    4. Rehdanz, Katrin & Schröder, Carsten & Narita, Daiju & Okubo, Toshihiro, 2017. "Public preferences for alternative electricity mixes in post-Fukushima Japan," Energy Economics, Elsevier, vol. 65(C), pages 262-270.
    5. 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.
    6. Sauthoff, Saramena & Danne, Michael & Mußhoff, Oliver, 2017. "To switch or not to switch? Understanding German consumers' willingness to pay for green electricity tariff attributes," DARE Discussion Papers 1707, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    7. Malte Hübner & Christoph M. Schmidt & Benjamin Weigert, 2012. "Energiepolitik: Erfolgreiche Energiewende nur im europäischen Kontext," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 13(4), pages 286-307, November.
    8. Manuel Frondel & Nolan Ritter & Christoph M. Schmidt, 2011. "Die Kosten des Klimaschutzes am Beispiel der Strompreise," RWI Positionen, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 24, 04.
    9. Meier, Helena & Tode, Christian, 2015. "How Technological Potentials are Undermined by Economic and Behavioural Responses - The Treatment Effect of Endogenous Energy Efficiency Measures," EWI Working Papers 2015-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    10. Simona Bigerna & Carlo Andrea Bollino & Paolo Polinori, 2014. "The Question of Sustainability of Green Electricity Policy Intervention," Sustainability, MDPI, Open Access Journal, vol. 6(8), pages 1-23, August.
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    12. Mark A. Andor, Manuel Frondel, and Colin Vance, 2017. "Germanys Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    13. 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.
    14. 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.
    15. 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.
    16. Oberst, Christian & Madlener, Reinhard, 2015. "Prosumer Preferences Regarding the Adoption of Micro‐Generation Technologies: Empirical Evidence for German Homeowners," FCN Working Papers 22/2014, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    17. Lim, Kyoung-Min & Lim, Seul-Ye & Yoo, Seung-Hoon, 2014. "Estimating the economic value of residential electricity use in the Republic of Korea using contingent valuation," Energy, Elsevier, vol. 64(C), pages 601-606.
    18. Frondel, Manuel & Ritter, Nolan & Schmidt, Christoph M., 2011. "Die Kosten des Klimaschutzes am Beispiel der Strompreise," RWI Positionen 45, RWI - Leibniz-Institut für Wirtschaftsforschung.
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    21. 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.
    22. Noblet, Caroline L. & Teisl, Mario F. & Evans, Keith & Anderson, Mark W. & McCoy, Shannon & Cervone, Edmund, 2015. "Public preferences for investments in renewable energy production and energy efficiency," Energy Policy, Elsevier, vol. 87(C), pages 177-186.

    More about this item

    Keywords

    Green electricity Willingness-to-pay Preference heterogeneity Policy evaluation;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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