Assessing Demand for Green Electricity Products amongst Western
Presenter(s): Chris Harrison
Venue: Room 4.29 Leslie Social Science Building,UCT
Abstract / Description:
South Africa is currently undertaking investments in electricity generation infrastructure on an unprecedented scale. The total discounted cost of the investment scenarios outlined in the Integrated Resource Plan 2010-30 range from R700 billion to R1.2trillion. Investments on this scale must be guided by a comprehensive cost-benefit analysis procedure. Since existing markets for electricity provide no information regarding consumer preferences across generation technologies, the inclusion of several benefits relevant to the choice between rival technologies requires the use of non-market valuation techniques. Towards this end, a contingent valuation study was conducted in April-May 2012, seeking to estimate the aggregate willingness to pay for green electricity products amongst upper-middle income Western Cape households, as well as to examine the characteristics of likely adopters. The survey found nearly 80% of respondent households to have some positive WTP for green electricity, as indicated by their agreement to sign up for a premium-priced green electricity product. However, many respondents indicated low confidence in these commitments. Econometric analysis of the hypothetical market responses produced an upper-bound mean WTP estimate of R227 per upper-middle income household per month, whilst a more conservative lower-bound model produced a mean monthly WTP of R68 per UMI household. These correspond to aggregate WTP values of R105 million and R31.2 million per month respectively. Characteristics found to be statistically significant positive predictors of WTP for green electricity are: household income; awareness of, and concern related to anthropogenic climate change; positive perceptions of renewable energy technologies as sources of electricity; and solar geyser ownership. Factors found to be statistically significant negative predictors of green electricity are; respondent age; respondent education; and, positive perceptions of nuclear energy.