US consumers’ willingness to pay for green electricity

We analyze US consumers’ demand for environmental attributes of deregulated residential electricity services using results from a survey designed to elicit consumers’ willingness to pay for such attributes and using results from a hedonic analysis of actual price premiums charged for green electricity in several deregulated markets. Survey results suggest that many population segments are willing to pay for decreased air emissions even if there is no alteration in fuel source. Furthermore, several groups are willing to pay significantly more when emissions reductions stem from increased reliance upon renewable fuels. The hedonic analysis suggests that several product features not considered in the survey help explain real price premiums, including fuel mix from newly created renewable generation capacity, Green-e certification, brand name and state of offer. While survey and hedonic results are not easily compared due to limitations of the survey, both point to similar values for key environmental attributes, though the survey results are likely to overstate actual willingness to pay. In sum, the results suggest that consumer driven purchases can, in part, support the future of renewable generation capacity in the United States, though reliance upon other policy alternatives may be needed if energy prices spike.