Consumer preferences for electricity tariffs: Does proximity matter?

The introduction of renewable energy sources fosters the transformation to an energy system with distributed generation. This alters the relation between consumers and power generation sites, as generation and consumption spatially converge. It allows for new configurations within the energy sector and provides opportunities for marketing regional energy. We empirically investigate consumer preferences for electricity generation in proximity to end-users, focusing on the proximity of generation and providers, and present representative data for Germany. In a discrete choice experiment, a sample of 780 consumer households and 173 adopters of a renewable energy system (prosumers) chose from a range of different electricity tariffs. We estimate the willingness to pay for the following attributes: shares of regional generation, power providers, and electricity mixes. We find evidence in favor of regional production, but in spite of positive attitudes towards local generation from renewable sources, willingness to pay is not responsive to higher shares of regional generation. In addition, a preference for regional providers exists. The results show that renewable energy mixes are preferred, particularly a solar and hydro mix. Adopters state slightly more distinct preferences as compared to consumer households. Thus, we find there is potential for business models offering regionally generated electricity.