Willingness to Pay for Renewable Energy: Implications for UK Green Tariff Offerings

Abstract

Although financial support for renewable electricity sources has existed via the non-fossil fuel obligation since 1990, the UK ‘green power’ market is still in its infancy. This paper looks at attitudes to tariffs for ‘green power’ in light of the proposed phase-out of the non-fossil fuel obligation. The hypothesis tested was the consumers’ willingness to pay for electricity generated from renewable energy sources and to see if this was related to income and attitude. Data for analysis were taken from replies to a questionnaire sent to an energy-aware sub-population of Leicester which were analysed by a variety of statistical tests. Results of multiple regression analysis indicated that whether someone was willing to pay more was significantly correlated with attitude, experience (whether they had visited an environmental centre) and the purchasing power placed on £5. This finding has implications for the methods by which support for green tariffs can be increased. Education and raising people’s awareness through experience should be able to change attitudes and so increase their willingness to pay.