Public preferences for electricity contracts including renewable energy: A marketing analysis with choice experiments

This study aims to understand people's preferences concerning different energy sources with a particular focus on renewables. Households' preferences were assessed by means of a choice experiment on a sample of people living in Veneto (north eastern Italy). The analysis considered real marketing scenarios, presenting different choice options inspired by real market offers by different companies on the Italian market. The energy packages were differentiated considering the monthly price, the source of the energy package (solar, biomass from agriculture and biomass from forestry), the size of the power plants, the minimum distance from houses, and, for biomass only, the certification of the origin. According to our results, there is a wide market for expanding “green” electricity contracts: 86% of the respondents stated that they are willing to pay more for them. People prefer electricity produced from photovoltaics, followed by forest biomass and by agricultural biomass. According to our results, the possibility to choose the renewable energy source matters: the willingness to pay for photovoltaic is 3.4 times that for forest biomass and 5.4 times that for agricultural biomass.

[1]  Marina Mura,et al.  Combining choice experiments with psychometric scales to assess the social acceptability of wind energy projects: A latent class approach , 2012 .

[2]  R. Luce,et al.  Individual Choice Behavior: A Theoretical Analysis. , 1960 .

[3]  L. Thurstone.  A law of comparative judgment. , 1994 .

[4]  Kenneth Train,et al.  Customers' Choice Among Retail Energy Suppliers: The Willingness-to-Pay for Service Attributes , 2000 .

[5]  Jeremy Firestone,et al.  Valuing the Visual Disamenity of Offshore Wind Power Projects at Varying Distances from the Shore: An Application on the Delaware Shoreline , 2011, Land Economics.

[6]  A. Bergmann,et al.  Rural versus urban preferences for renewable energy developments , 2008 .

[7]  Andreas Kontoleon,et al.  Assessing the determinants of local acceptability of wind-farm investment: A choice experiment in the Greek Aegean Islands , 2009 .

[8]  Daniel Vecchiato,et al.  The landscape benefits of the burial of high voltage power lines: A study in rural areas of Italy , 2014 .

[9]  D. McFadden.  Conditional logit analysis of qualitative choice behavior , 1972 .

[10]  G. Richard,et al.  Paving the way for sustainable bioenergy in Europe: Technological options and research avenues for large-scale biomass feedstock supply , 2014 .

[11]  J. Meyerhoff,et al.  Landscape externalities from onshore wind power , 2010 .

[12]  Frank Lupi,et al.  Valuing energy policy attributes for environmental management: Choice experiment evidence from a research institution , 2011 .

[13]  D. Hensher.  Stated preference analysis of travel choices: the state of practice , 1994 .

[14]  K. Train.  Discrete Choice Methods with Simulation , 2003 .

[15]  Jacob Ladenburg,et al.  Willingness to pay for reduced visual disamenities from offshore wind farms in denmark , 2007 .

[16]  R. Duncan Luce,et al.  Individual Choice Behavior: A Theoretical Analysis , 1979 .

[17]  Tineke van der Schoor,et al.  Power to the people: Local community initiatives and the transition to sustainable energy , 2015 .

[18]  J. Painuly.  Barriers to renewable energy penetration; a framework for analysis , 2001 .

[19]  A. Bergmann,et al.  Valuing the attributes of renewable energy investments , 2006 .

[20]  A. Menegaki.  Valuation for renewable energy: A comparative review , 2008 .

[21]  A. Hole.  Fitting Mixed Logit Models by Using Maximum Simulated Likelihood , 2007 .

[22]  Richard T. Carson,et al.  Experimental analysis of choice , 1991 .

[23]  Carlos E. Carpio,et al.  Consumer willingness to pay for locally grown products: the case of South Carolina , 2009 .

[24]  T. Sowlati,et al.  Assessment and optimization of forest biomass supply chains from economic, social and environmental perspectives – A review of literature , 2014 .

[25]  Ståle Navrud,et al.  Consumers' Preferences for Green and Brown Electricity : a Choice Modelling Approach , 2007 .

[26]  Alberto Longo,et al.  The Internalization of Externalities in the Production of Electricity: Willingness to Pay for the Attributes of a Policy for Renewable Energy , 2006 .

[27]  S. Yoo,et al.  Willingness to pay for renewable energy investment in Korea: A choice experiment study , 2010 .

[28]  D. Horst.  NIMBY or not? Exploring the relevance of location and the politics of voiced opinions in renewable energy siting controversies , 2007 .

[29]  J. Yellott.  The relationship between Luce's Choice Axiom, Thurstone's Theory of Comparative Judgment, and the double exponential distribution , 1977 .

[30]  P. Lal,et al.  Random preferences towards bioenergy environmental externalities: A case study of woody biomass based electricity in the Southern United States , 2011 .

[31]  T. Sowlati,et al.  Economic feasibility of utilizing forest biomass in district energy systems – A review , 2014 .

[32]  Rolf Wüstenhagen,et al.  Social acceptance of renewable energy innovation: An introduction to the concept , 2007 .

[33]  Mario Soliño,et al.  External benefits of biomass-e in Spain: an economic valuation. , 2010, Bioresource technology.

[34]  C. Manski.  The structure of random utility models , 1977 .

[35]  Consolación Gil,et al.  Scientific production of renewable energies worldwide: An overview , 2013 .

[36]  Jordan J. Louviere,et al.  Analyzing Decision Making: Metric Conjoint Analysis , 1988 .

[37]  Seung-Hoon Yoo,et al.  Measuring the environmental costs of tidal power plant construction: A choice experiment study , 2009 .

[38]  Jordan J. Louviere,et al.  DESIGN AND ANALYSIS OF SIMULATED CHOICE OR ALLOCATION EXPERIMENTS IN TRAVEL CHOICE MODELING , 1982 .

[39]  Azucena Gracia,et al.  Can renewable energy be financed with higher electricity prices? Evidence from a Spanish region , 2012 .

[40]  K. Willis,et al.  Willingness-to-pay for renewable energy: Primary and discretionary choice of British households' for micro-generation technologies , 2010 .

[41]  K. Lancaster.  A New Approach to Consumer Theory , 1966, Journal of Political Economy.

[42]  R. Lifran,et al.  The case for offshore wind farms, artificial reefs and sustainable tourism in the French mediterranean , 2013 .

[43]  M. Loureiro,et al.  A choice experiment model for beef: What US consumer responses tell us about relative preferences for food safety, country-of-origin labeling and traceability , 2007 .

[44]  D. Vecchiato.  How do you like wind farms? Understanding people's preferences about new energy landscapes with choice experiments , 2014 .

[45]  Thomas R. Allen,et al.  Wind turbines and coastal recreation demand , 2010 .

[46]  Teresa Del Giudice,et al.  Fossil energy versus nuclear, wind, solar and agricultural biomass: Insights from an Italian national survey , 2012 .

[47]  Rolf Wüstenhagen,et al.  The Price of Policy Risk - Empirical Insights from Choice Experiments with European Photovoltaic Project Developers , 2012 .

[48]  Carsten Schröder,et al.  Eliciting Public Support for Greening the Electricity Mix Using Random Parameter Techniques , 2011 .

[49]  Mitesh Kataria,et al.  Willingness to pay for environmental improvements in hydropower regulated rivers , 2009 .

[50]  Angeliki N. Menegaki,et al.  A social marketing mix for renewable energy in Europe based on consumer stated preference surveys , 2012 .

[51]  Peter McKendry,et al.  Energy production from biomass (Part 1): Overview of biomass. , 2002, Bioresource technology.

[52]  Jordan J. Louviere,et al.  Experimental choice analysis: Introduction and overview , 1991 .

[53]  David Hoyos,et al.  The state of the art of environmental valuation with discrete choice experiments , 2010 .

[54]  T. Tempesta,et al.  An analysis of the territorial factors affecting milk purchase in Italy , 2013 .

[55]  John M. Rose,et al.  Applied Choice Analysis: A Primer , 2005 .

[56]  Allison M. Borchers,et al.  Does willingness to pay for green energy differ by source? A contingent choice experiment , 2007 .