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Can renewable energy be financed with higher electricity prices? evidence from Spain

Abstract

The aim of this paper is to assess willingness to pay for renewable energy electricity. We used a choice experiment to elicit willingness-to-pay for different electricity service attributes: renewable sources (wind, solar and biomass) and the regional origin of the electricity with data from a survey conducted in Spain in 2010. Findings indicate that a majority of consumers are not willing to pay a premium for increases in the renewable component of their electricity mix. Moreover, they would only accept an increase of the renewable mix at a discount for two of the three renewable sources considered (wind and biomass). On the contrary people are willing to pay for increases in the share of solar energy in the electricity mix of their supplier and generating electricity in the region rather than importing it. However, preferences are heterogeneous and individuals are classified in two groups according to whether renewable sources are important for them. The group of individuals more willing to pay for renewable shows higher environmental concerns, positive attitudes towards renewable energy, higher intention to use renewable electricity even at higher prices, more environmental friendly behavior and higher involvement with environmental practices than the group of less willing to pay

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