Consumer Preferences for Wood-Pellet-Based Green Pricing Programs in the Eastern United States

Abstract

Co-firing wood pellets with coal is an attractive alternative energy generation method with economic, social, and environmental benefits for the US energy generation sector. One way to sustainably use wood pellets for co-firing is to create consumer-supported green pricing programs (GPPs). Our study surveyed residents of five states (Alabama, New Jersey, New York, Pennsylvania, and Virginia) to investigate preferences for the attributes of a hypothetical GPP. The study applied the Best Worst Choice method, which employs the Best Worst Scaling (BWS) and binary choice (BC) task. The BWS analysis showed that residents of all five states most value the flexibility of contracts, the location of energy generation, and the reduction of carbon emissions as attributes of GPPs. The BC analysis, however, showed that residents are willing to pay a premium for length of contract, followed by reduction of carbon emissions and variability of payments. This study shows that the adoption of optimal GPP attributes can create real customer value. The success of GPPs will depend on increasing enrollment and public support; hence, the next step will be to increase awareness levels and green consciousness through sensitization in the form of public education exercises and media campaigns. Such measures will serve to inform and educate residents on the benefits of GPPs and lessen the gap between intrinsic value and willingness to pay for select attributes.