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Energy Efficiency Investments in the Home: Swiss Homeowners and Expectations about Future Energy Prices

Anna Alberini, Silvia Banfi, and Celine Ramseier

Year: 2013
Volume: Volume 34
Number: Number 1
DOI: 10.5547/01956574.34.1.3
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Abstract:
Using conjoint choice experiments, we surveyed 473 Swiss homeowners about their preferences for energy efficiency home renovations. We find that homeowners are responsive to the upfront costs of the renovation projects, government-offered rebates, savings in energy expenses, time horizon over which such savings would be realized, and thermal comfort improvement. The implicit discount rate is low, ranging from 1.5 to 3%, depending on model specification. This is consistent with Hassett and Metcalf (1993) and Metcalf and Rosenthal (1995), and with the fact that our scenarios contain no uncertainty. Respondents who feel completely uncertain about future energy prices are more likely to select the status quo (no renovations) in any given choice task and weight the costs of the investments more heavily than the financial gains (subsidies and savings on the energy bills). Renovations are more likely when respondents believe that climate change considerations are important determinants of home renovations.



Consumer Preferences for Solar Energy: A Choice Experiment Study

Jamal Mamkhezri, Jennifer A. Thacher, and Janie M. Chermak

Year: 2020
Volume: Volume 41
Number: Number 5
DOI: 10.5547/01956574.41.5.jmam
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Abstract:
Electricity generation in the United States is rapidly moving towards integrating more renewables into the system due to several factors, including cost competitiveness, consumer preferences, and state and federal policies, such as production and income tax incentives, renewable portfolio standards (RPSs), and state level subsidies for solar energy. While these policies have been researched comprehensively, in this paper we investigate consumer preference and willingness to pay toward renewable energy. Consumer preferences may impact the type of renewable energy utilized, as well as state-determined RPS requirements. We implement a choice experiment survey to gain understanding of consumer preferences and their preference heterogeneity. We conduct the survey in New Mexico, a state with RPS and great potential for renewables, particularly in solar where it ranks third in the U.S. for that potential. Focusing on the consumers of the state�s major utility, our choice experiment considers an increase in renewable energy and preference for different types of solar energy (rooftop solar and solar farm). We control for location heterogeneity (i.e., rural vs. urban), as well as exposure to solar installations. Utilizing multinomial logit and random parameter logit our results suggest respondents support an increased RPS solar requirement and they have a positive marginal willingness to pay (MWTP) for rooftop solar and smart meter installation. These values are impacted by several factors, including location and exposure to solar. We also observe a distance decay effect on respondents� MWTP for different solar plans. For regulators considering additional RPS levels, or utilities considering solar installations, the results provide improved information on consumer preferences, heterogeneity of response, and MWTP for solar energy.



Peak Load Habits for Sale? Soft Load Control and Consumer Preferences on the Electricity Market

Thomas Broberg, Runar Brännlund, and Lars Persson

Year: 2021
Volume: Volume 42
Number: Number 1
DOI: 10.5547/01956574.42.1.tbro
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Abstract:
The main purpose of this paper is to estimate lost consumer values due to various restrictions on household electricity use involving behavior adaptation. To do this, we conduct a choice experiment where households choose between hypothetical electricity contracts including various restrictions on the use of high-power household appliances. In addition, we use a contingent valuation question related to complete blackouts to study a restriction on other types of electricity usage (heating, lighting, TV, etc.). The results indicate a significant difference between the value lost due to the soft control, and the blackouts. Furthermore, policies aiming at stimulating behavioral changes are costly and it is far from obvious that demand response requiring behavioral adaptation is more cost effective than supply response (i.e., increased production of electricity).



Green is Good—The Impact of Information Nudges on the Selection of Voluntary Green-Power Plans

Eric Cardella, Bradley T. Ewing, and Ryan B. Williams

Year: 2022
Volume: Volume 43
Number: Number 1
DOI: 10.5547/01956574.43.1.ecar
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Abstract:
A recent trend has been a move toward greater reliance on renewable or “green” energy sources, especially in the residential sector. Using a choice experiment, this paper examines how providing information regarding the efficiency, cost, and environmental impacts of different power-generating sources impact consumers’ stated preferences for selecting voluntary green-power plans. Based on 21,000 plan choices from two different samples totaling over 1,800 respondents, our results indicate that information nudges significantly impact respondents’ choice of plan. Promoting the advantages of the green plan or the disadvantages of the “gray” plan increase green plan selection. The magnitudes of these estimated effects are economically significant being roughly equivalent to a change in the monthly green price premium of $4/month. We also find that promoting the advantages of the green plan is more effective when the green plan premium is relatively small, while highlighting the drawbacks of the gray plan is more effective when the green plan premium is relatively large. Our results suggest that information nudges have the potential to be a plausible, economical, and effective mechanism to increase adoption of voluntary green-power plans.



"Show Me the Energy Costs": Short and Long-term Energy Cost Disclosure Effects on Willingness-to-pay for Residential Energy Efficiency

James Carroll, Claudia Aravena, Marco Boeri, and Eleanor Denny

Year: 2022
Volume: Volume 43
Number: Number 3
DOI: 10.5547/01956574.43.3.jcar
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Abstract:
Imperfect information on future energy costs can lead households to underestimate the monetary savings of more energy efficient technologies, with implications for future energy supply, emissions and the climate. These hypotheses are explored using a randomised discrete choice experiment for property rental decisions. Results show that when energy consumption is expressed in physical units (as per the current EU labels) the willingness-to-pay for energy efficiency improvements is small and marginally significant. While bimonthly energy cost information has no effect on the valuation of energy efficiency, annual monetary energy cost information leads to a significant increase. This is the first paper to compare short and long-term point of sale energy cost information for household property decisions. There are clear implications for labelling policy for properties—framing energy consumption according to long-term monetary cost increases the demand for energy efficiency.



The Role of Uncertainty in Shaping Individual Preferences for Residential Energy Renovation Decisions

Salomé Bakaloglou and Fateh Belaïd

Year: 2022
Volume: Volume 43
Number: Number 4
DOI: 10.5547/01956574.43.4.sbak
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Abstract:
This article examines a crucial question that has been raised in recent years in both policy and economic literature: the role of uncertainty as a barrier to energy retrofit decisions. We develop a discrete choice experiment to elicit preferences for energy renovation measures. This methodologically innovative experiment design includes two insurance schemes covering potential sources of uncertainty as attributes of the energy retrofit alternatives. We use a mixed logit model to investigate the nature of systematic heterogeneity in household preferences for attributes of energy retrofit solutions. The article shows that uncertainties related to future energy pricing and retrofit quality are negatively perceived during energy-renovation decision making. This impact varies according to household characteristics such as risk aversion and perceptions of the economic context. The results suggest that public policies should support and accompany the development of insurance schemes to increase energy renovation rates.





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