Whatever the customer wants, the customer gets? Exploring the gap between consumer preferences and default electricity products in Germany

In liberalized electricity markets, residential customers can choose their preferred provider and select among a variety of different electricity products, including green power options. Successful product design and marketing strategies for green electricity may provide electricity providers with a competitive advantage, while at the same time contributing to energy policy objectives. This requires, however, a thorough understanding of customer preferences. We investigate the relative importance of different product attributes in creating customer value, and find that price and electricity mix are the two most important attributes. The German electricity customers we surveyed in 2009 expressed an implicit willingness to pay a premium of about 16% for electricity from renewable sources. We conclude that consumers are willing to pay a significant price premium for an upgrade from the current default electricity mix in Germany to a more environmentally friendly default electricity mix, and discuss implications for marketing strategy and energy policy. Our findings are based on a dataset of 4968 experimental choices made by 414 German residential consumers, collected in a stated preference survey.

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