An experimental study of consumer attitudes and intentions in electricity markets

Abstract

Challenges posed by climate change are increasing, and residential electricity use is a major contributor. Two ways for individuals to help mitigate this issue are reducing electricity consumption and investing in renewable energy sources. A large body of research has shown that social norms are effective in encouraging various pro-environmental behaviors such as energy use conservation, but less information is available about their ability to encourage investment in renewable energies. Research on incentives and fees has also demonstrated their potential impacts on pro-environmental behaviors in general, but it is less comprehensive regarding sustainable energy behaviors specifically. The combined influence of social norms with incentives or fees on pro-environmental energy behaviors has yet to be explored in the literature. In this study, three experiments are conducted to investigate norms, incentives and fees, and their combined effect on pro-environmental energy decisions. Through surveys that exposed participants to each of these stimuli, participants' attitudes, perceptions, and intended behaviors were measured. Data were collected about various consumer energy decisions along with the consumers' willingness to pay for renewable energy. Results of the survey experiments show that exposure to incentives and fees framed to reduce consumption significantly increased participants’ perceptions of norms and willingness to pay for solar panels when compared to a control group, whereas other manipulations such as social norms and incentives and fees framed to motivate clean energy investments were not impactful on perceptions and intended behaviors. These results uncover the potential to decrease emissions resulting from residential electricity use by introducing incentives and fees on electricity bills and motivating individuals to reduce their consumption and invest in solar panel systems. These behavior changes will contribute to the sustainable development of electricity markets, reducing emissions and costs for individuals while increasing the adoption of renewable energy.