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 expressed an implicit willingness to pay a premium of about 16 % for green electricity. We conclude that consumers are willing to pay a significant price premium for an upgrade from the current average German default electricity mix 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.

Josef Kaenzig, Stefanie Heinzle, Rolf Wüstenhagen

Feb 2013