Willingness to Pay for Renewable Energy: Implications for UK Green Tariff Offerings

Abstract

Although financial support for renewable electricity sources has existed via the non-fossil fuel obligation since 1990, the UK ‘green power’ market is still in its infancy. This paper looks at attitudes to tariffs for ‘green power’ in light of the proposed phase-out of the non-fossil fuel obligation. The hypothesis tested was the consumers’ willingness to pay for electricity generated from renewable energy sources and to see if this was related to income and attitude. Data for analysis were taken from replies to a questionnaire sent to an energy-aware sub-population of Leicester which were analysed by a variety of statistical tests. Results of multiple regression analysis indicated that whether someone was willing to pay more was significantly correlated with attitude, experience (whether they had visited an environmental centre) and the purchasing power placed on £5. This finding has implications for the methods by which support for green tariffs can be increased. Education and raising people’s awareness through experience should be able to change attitudes and so increase their willingness to pay.

Willingly or grudgingly? A meta-analysis on the willingness-to-pay for renewable energy use

“…This goes the same with the years of survey with the exception of [45,76]who carried out their survey in 1999 and 1996. The publication and survey years indicate that interest and awareness on RES are on the rise in the recent decade.…”

“…There are however, three studies that provide WTP in percentages but with sufficient information for us to compute the mean WTP and its corresponding variance. We therefore include these studies into our analysis [44][45][46].…”

Willingness to pay for green power in an unreliable electricity sector: Part 1. The case of the Lebanese residential sector

“…Bigerna and Polinori [23] and Abdullah and Jeanty [24] ,5 reached similar findings as well with respect to income, age, and education for Italy and Kenya, respectively. Sardianou and Genoudi [25] found 'age' and 'education' to be statistically significant factors in Greece influencing the adoption of RE, in contrast to Diaz-Rainey and Ashton [26] who found these variables to be statistically insignificant in the U.K. Batley et al [12] also indicated that WTP extra for RE is sensitive to income.…”

“…WTP studies can either estimate the influence of various independent variables on the dichotomous decision to pay (or not to pay) for renewable electricity (for example, see [11][12][13][14]), and/or estimate the percentage premiums or absolute amounts that individuals are willing to pay (e.g. [16]).…”

“…Batley et al [12] found that 'energy efficiency' of an individual is positively related to the WTP extra for RE in the U.K. Also, several researchers found that WTP is a function of the type of renewable source in question [27][28][29], with Gracia et al [29] reporting that respondents were sensitive as to whether RE was produced in their region or not.…”