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Price sensitivity and consumers’ support for renewable energy in China

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  • Zheng, Xuemei
  • Li, Cao
  • Fang, Xingming
  • Zhang, Ning

Abstract

This paper investigates how consumers’ price sensitivity affects their support for renewable energy, from the perspective of the probability they are willing to pay a premium for the electricity generated from renewable energy (i.e., green electricity) and the amount of premium they are willing to pay for each unit of green electricity. We first construct a brief theoretical framework linking the premium a representative consumer is willing to pay for a unit of green electricity and influencing factors. Second, based on a comprehensive survey conducted in China, we empirically estimate the impacts of consumers’ price sensitivity on their support for renewable energy. Unsurprisingly, both theoretical and empirical analysis verifies that the consumers that are more price sensitive tend to pay a lower premium for each unit of green electricity. However, the more price sensitive consumers are, the more likely they are willing to pay a premium for the electricity generated from renewable energy. In addition, the analysis based on consumer heterogeneity shows that the inverse relationship is not statistically significant for some consumers with specific features. These findings, together with the findings regarding the impacts of socioeconomic factors provide substantial policy implications for the design of green electricity programs.

Suggested Citation

  • Zheng, Xuemei & Li, Cao & Fang, Xingming & Zhang, Ning, 2021. "Price sensitivity and consumers’ support for renewable energy in China," Energy, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:energy:v:222:y:2021:i:c:s0360544221001110
    DOI: 10.1016/j.energy.2021.119862
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