Analyzing German consumers' willingness to pay for green electricity tariff attributes: a discrete choice experiment

Background In order to achieve an environmentally friendly and sustainable energy supply, it is necessary that this goal is supported by society. In different countries worldwide it has been shown that one way consumers want to support the energy transition is by switching to green electricity. However, few people make the leap from their intention to a buying decision. This study explores parameters that influence whether German consumers would hypothetically decide to switch to a green electricity tariff. Methods A quota-representative online survey including a discrete choice experiment with 371 German private households was conducted in 2016. For the econometric analysis, a generalized multinomial logit model in willingness-to-pay space was employed, enabling the estimation of WTP values to be as realistic as possible. Results The results show that consumers' decision whether or not to make the switch to green energy is mainly influenced by the source of green energy, whether a person can outsource the switching process, and a person's attitude towards the renewable energy sources levy that currently exist in Germany. Conclusions The findings indicate that politics should focus on supporting wind and solar energy as German consumers prefer these sources over biogas. As the results suggest, the EEG levy is a reason why consumers have lower WTP for switching to a green tariff. Therefore, a switching bonus with a specifically framed bonus in the amount of the current EEG levy could be a promising strategy for the increase of green energy tariff acceptance. Furthermore, attention should be given to psychological and behavioral aspects, as the results indicate that these factors influence the consumer's choice for a green electricity tariff.

Automated summary

The study shows that the main factors influencing consumers' decision to switch to green energy include the source of green energy, whether the switching process can be outsourced, and the individual's attitude towards the renewable energy sources levy. The government should focus on supporting wind and solar energy, and introducing a switching bonus based on the current EEG levy amount could be a promising strategy to increase acceptance of green energy tariffs.