WILLINGNESS TO BUY GREEN ELECTRICITY: DO CONSUMERS RESPOND DIFFERENTLY?
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Deregulation of electricity market has brought new business opportunities for electricity suppliers. As of 2011, there are around 60 electricity retailers in the Danish market competing against each other (Yang, 2013). Thus, Danish households have the opportunities to choose different electricity services, green electricity services vs. the conventional brown electricity (generated from fossil fuels) service. However, statistics have indicated that the movement of electricity market deregulation has produced little effect on Danish consumers in terms of switching among suppliers or renegotiating an existing service contract (Yang, 2014). Unfortunately, evidences from the actual market show that the penetration of green electricity remains very low (Yang, 2013). This is bad, because Denmark’s long-term energy goal is to become a fossil fuel independent nation by 2050. The study divided a sample 1022 respondents into two nearly equal sized sub-samples chosen from an Internet Panel administrated by a commercial marketing research firm. One subsample received a positive frame version of the questionnaire regarding subscribing to a green electricity contract, and the other subsample received a negative frame version of the questionnaire. The selected sample reflects the Danish population structure in terms of the major socio-economic variables such as gender and age. Contingent valuation (CV) method was used to value the households’ willingness to subscribe a green electricity service contract (Alberini & Kahn, 2006). As expected, consumers displayed stronger intention to buy green electricity when the situation was framed in a positive maner (i.e., most Danish households have already bought it), as compared to the situation was framed in a negative manaer. The theoretical explaning can be formulated in terms of the theory of social norms. The framing effect also signals the public good side of green electricity in that there seems to be a free rider problem. The relatively low intention to buy green electricity in the negative frame manner (i.e., a few Danish household has bought green electricity) indicates that the free-rider incentive is particularly powerful in large group, where an indivudal may percived that her or his behavior will have only little influence on the collective outcome (Olsen, 1970). The results confimrs the finding from (Ek & Söderholm, 2008).