Value seeking, price sensitive, or green? Analyzing preference heterogeneity among residential energy consumers in Denmark

Abstract

This study examines the heterogeneous consumer preference for electricity products in the residential electricity retailing market. Based on consumers’ trade-off decision making, we identified three distinct consumer segments: the value seeking consumers (53%), the price sensitive consumers (25%), and the green consumers (22%). We concluded that consumers are willing to pay extra for the increasing share of renewable energy. Consumer socio-demographic characteristics had also influence on their choices for electricity products. The findings of this study can help explain how different consumer segment can be affected by the change of electricity product attributes. Thus, it provides insightful knowledge on how to differentiate electricity products so as to satisfy specific consumer segments’ needs. Finally, the findings of this study have implications for energy policy makers (regulators) on consumers’ preference for electricity products assuming that consumers should make a choice among various products.