Germany's Energiewende: A Tale of Increasing Costs and Decreasing Willingness-to-Pay

30 Pages Posted: 8 Mar 2017

See all articles by Mark Andor

Mark Andor

RWI – Leibniz Institute for Economic Research

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Date Written: March 7, 2017

Abstract

This paper presents evidence that the accumulating cost of Germany’s ambitious plan to transform its system of energy provision – the so-called Energiewende – is butting up against consumers’ willingness-to-pay (WTP) for it. Following a descriptive presentation that traces the German promotion of renewable energy technologies since 2000, we draw on two stated-preference surveys conducted in 2013 and 2015 that elicit the households’ WTP for green electricity. Two models are estimated, one based on a closed-ended question framed around Germany’s target of 35% renewable energy in electricity provision by 2020, and the other on an open-ended format that captures changes in WTP over time. To deal with the bias that typifies hypothetical responses, the models distinguish respondents according to whether they express definite certainty in their reported WTP. The results from both models reveal a strong contrast between the households’ general acceptance of supporting renewable energy technologies and their own WTP for green electricity.

Keywords: Certainty approach, Energy policy, Willingness-to-pay

JEL Classification: D12, Q21, Q41

Suggested Citation

Andor, Mark and Frondel, Manuel and Vance, Colin, Germany's Energiewende: A Tale of Increasing Costs and Decreasing Willingness-to-Pay (March 7, 2017). USAEE Working Paper No. 17-293. Available at SSRN: https://ssrn.com/abstract=2928760 or http://dx.doi.org/10.2139/ssrn.2928760

Mark Andor

RWI – Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

HOME PAGE: http://en.rwi-essen.de/mark-andor

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

HOME PAGE: http://www.rwi-essen.de

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