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Defaults in Green Electricity Markets: Preference Match Not Guaranteed

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  • Claus Ghesla

Abstract

Green electricity defaults should steer individual choices to environmentally friendly alternatives and provide a match with individuals’ preferences for an electricity mix. It is debatable whether green electricity defaults conform to this latter intention. Using two design elements from existing electricity markets, costly opt-out of contracts and green electricity certificates, preferences for an electricity mix are elicited in an incentivized laboratory experiment. This study then assesses whether preferences in the absence of default options match with preferences in the presence of default options. It turns out that the alignment of default intentions and preferences depends on the relative price for green electricity. Green electricity defaults at low price premia, as currently applied in several electricity markets, do not match subjects’ preferences. The findings are relevant for the design of green electricity defaults.

Suggested Citation

  • Claus Ghesla, 2017. "Defaults in Green Electricity Markets: Preference Match Not Guaranteed," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 37-84.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/691977
    DOI: 10.1086/691977
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    Cited by:

    1. Lemken, Dominic, 2020. "When do defaults stick and when are they ethical? Taxonomy, sytematic review and design recommendations," DARE Discussion Papers 2005, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    2. Danuta Miłaszewicz, 2022. "Survey Results on Using Nudges for Choice of Green-Energy Supplier," Energies, MDPI, vol. 15(7), pages 1-19, April.
    3. Kaiser, Micha & Bernauer, Manuela & Sunstein, Cass R. & Reisch, Lucia A., 2020. "The power of green defaults: the impact of regional variation of opt-out tariffs on green energy demand in Germany," Ecological Economics, Elsevier, vol. 174(C).
    4. Ghesla, Claus & Grieder, Manuel & Schubert, Renate, 2020. "Nudging the poor and the rich – A field study on the distributional effects of green electricity defaults," Energy Economics, Elsevier, vol. 86(C).
    5. Lemken, Dominic, 2020. "When do defaults stick and when are they ethical? - taxonomy, systematic review and design recommendations," Key Food Choices and Climate Change Project 307568, Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development.

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