Document Type : Research Article


Department of Infrastructure, Symbiosis Centre for Management and Human Resource Development, Symbiosis International (Deemed University), Pune, India



Despite the falling costs of Renewable Energy (RE), RE adoption in Indian residential households is still at tepid growth rates. With the onset of retail electricity market deregulation in India, the introduction of “green tariffs” for residential households can be effective in resolving the issue of low RE adoption. This study investigates the willingness to pay for green tariffs/renewable energy-based electricity contracts using the contingent valuation method. Data collected from 476 Indian residential households are analyzed by the Double-Bounded Dichotomous Choice technique. The results of the conducted maximum Likelihood Estimation (MLE) method reveal the mean willingness to pay 308.52 Rs per household/month for consumption of green power in a premium-paying setting. Results indicate that although households hold positive perception of renewable energy, the willingness to pay is not commensurately high, indicating an attitude-action gap. The study recommends green energy defaults in residential energy contracts, direct marketing of non-use value of RE use (altruistic and bequest) by power supplying utilities, and promoting RE use through RE opinion champions/influencers as measures to enhance RE adoption amongst Indian residential energy consumers.


Main Subjects

[1] G. K. Sarangi and F. Taghizadeh-Hesary, “RoofTop Solar Development in India: Measuring Policies and Mapping Business Models,” Asian Development Bank Institute , 2021
[2] C. Parsad, S. Mittal and R. Krishnankutty, “A study on the factors affecting household solar adoption in Kerala, India,” International Journal of Productivity and Performance Management, pp. 1695-1720 , 2020 doi:10.1108/IJPPM-11-2019-0544.
[3] B. t. India, “India Solar Rooftop Map 2020,” 21 September 2021. [Online]. Available:
[4] P. Bhati, P. Sreenivasan, M. Singh, S. M. Koshy, P. Jhawar and S. Sambyal, “The State of Renewable Energy in India 2019 - A Citizen's Report,” Centre for Science and Environment, New Delhi, 2019.
[5] Y. Parag and B. K. Sovacool, “Electricity market design for the prosumer era,” Nature Energy, 2016. doi: 10.1038/NENERGY.2016.32.
[6] P. P. Jeyapaul, “A Mathematical Approach to Analyze Factors Influencing Adoption of Solar Based Power Production in Residential Buildings in Tamilnadu State of India,” International Journal of Renewable Energy Research,2020.
[7]     K. S. Quraishi and D. S. A. PhD, “Analysis of Purchase Behaviour of Residential Solar Rooftop PV Adopters,” International Journal of Management, pp. 28-37, 2019.
[8]     S. Sauthoff, M. Danne and O. Mußhoff, “To switch or not to switch? Understanding German consumers' willingness to pay for green electricity,” Georg-August-Universität Göttingen, Gottingen, 2017.
[9]     S. Chassot, R. Wustenhagen, N. Fahr and P. Graf, “Introducing Green Electricity as the Default Option,” in Marketing Renewable Energy - Concepts, Business Models and Cases, 2017, pp. 109-122. doi:10.1007/978-3-319-46427-5_6.
[10]   G. Meran and R. Schwarze, “A Theory of Optimal Green Defaults,” Sustainibility, vol. 10, no. 8, 2018. doi:10.3390/su10082902.
[11]   F. Ebeling and S. Lotz, “Domestic uptake of green energy promoted by opt-out tariffs,” Nature Climate Change, 2015. doi: 10.1038/nclimate2681 .
[12]   B. T. India, “India Corporate Renewable Brief,” Bridge to India, 2021.
[13]   M. E. R. Commission, “Green power tariff order,” MERC, Mumbai, 2021.
[14]   C. Defeuilley, “Retail competition in electricity markets,” Energy Policy, pp. 377 - 386, 2009. doi:10.1016/j.enpol.2008.07.025 .
[15]   D. Pichert and K. V. Katsikopoulos, “Green defaults: Information presentation and pro-environmental behaviour,” Journal of Environmental Psychology, no. 28, pp. 63 - 73, 2008. doi:
[16]   D. Litvine and R. Wüstenhagen, “Helping "light green" consumers walk the talk: Results of a behavioural intervention survey in the swiss electricity market,” Ecological Economics, vol. 70, pp. 462 - 474, 2011. doi: 10.1016/j.ecolecon.2010.10.005.
[17]   P. S. Koto and E. K. Yiridoe, “Expected willingness to pay for wind energy in Atlantic Canada,” Energy Policy, pp. 80 - 88, 2019. doi:10.1016/j.enpol.2019.02.009 .
[18]   B.-C. Xie and W. Zhao, “Willingness to pay for green electricity in Tianjin, China: Based on the contingent valuation method,” Energy Policy, pp. 98 - 107, 2018. doi: 10.1016/j.enpol.2017.11.067 .
[19]   R. Schubert, J. Schmitz, M. Grieder and C. Ghesla, “Green by Default - Welfare Effects of Green Default Electricity Contracts,” ETH Zurich Research Collection, Zurich, 2017.
[20]   A. Chunekar, S. Varshney and S. Dixit, “Residential Electricity Consumption in India: What do we know?,” Prayas Energy Group, Pune, 2016.
[21]   C. E. Authority, “Report on Nineteenth Electric Power Suvey of India,” Ministry of Power, New Delhi, 2020.
[22]   J. Webster and R. T. Watson, “Analyzing the Past to Prepare for the Future: Writing a Literature Review,” MIS Quarterly, pp. 13-23, 2002. doi:
[23]   R. Wustenhagen, M. Wolsink and M. J. Burer, “Social acceptance of renewable energy innovation: An introduction to the concept,” Energy Policy, pp. 2863-2691, 2007. doi: 10.1016/j.enpol.2006.12.001 .
[24]   S.-H. Yoo and S.-Y. Kwak, “Willingness to pay for green electricity in Korea: A contingen valuation study,” Energy Policy, p. 5408–5416, 2009.
[25]   S.-Y. Kwak and S.-H. Yoo, “The public’s value for developing ocean energy technology in the Republic of Korea: A Contingent Valuation Study,” Renewable and Sustainable Energy Reviews, pp. 432 - 439, 2015.
[26]   M.-K. L. S.-H. Y. Chul-Yong Lee, “Willingness to pay for replacing traditional energies with renewable energy in South Korea,” Energy, 2016. doi: 10.1016/
[27]   R. Nakano, T. Miwa and T. Morikawa, “Comparative Analysis on Citizen’s Subjective Responses Related to Their Willingness to Pay for Renewable Energy in Japan Using Latent Variables,” Sustainibility, pp. 1-14, 2018.
[28]   A. A. Goett, K. Hudson and K. E. Train, “Customers' Choice Among Retail Energy Suppliers: The Willingness-to-Pay for Service Attributes,” The Energy Journal, vol. 21, pp. 1-28, 2000.
[29]   A. M. Borchers, J. M. Duke and G. R. Parsons, “Does willingness to pay for green energy differ by source?,” Energy Policy, pp. 3327 - 3334, 2007.
[30]   G. Cicia, L. Cembalo, T. D. Giudice and A. Palladino, “Fossil energy versus nuclear, wind, solar and agricultural biomass: Insights from an Italian national survey,” Energy Policy, pp. 59-66, 2009. doi: 10.1016/j.enpol.2011.11.030.
[31]   Y. Yang, H. S. Solgaard and W. Haider, “Value seeking, price sensitive, or green? Analyzing preference heterogeneity among residential energy consumers in Denmark,” Energy Research and Social Science, vol. 6, pp. 15-28, 2015. doi: 10.1016/j.erss.2014.11.001.
[32]   K. J. Shin and S. Managi, “Liberalization of a retail electricity market: Consumer satisfaction and household switching behavior in Japan,” Energy Policy, pp. 675 - 685, 2017. doi:
[33]   Y. Yang, “Understanding household switching behavior in the retail electricity market,” Energy Policy, pp. 406 - 414, 2014. doi: 10.1016/j.enpol.2014.03.009 .
[34]   T. Ndebele, D. Marsh and R. Scarpa, “Consumer switching in retail electricity markets: Is price all that matters?,” Energy Economics, pp. 88 - 103, 2019. doi: 10.1016/j.eneco.2019.06.012 .
[35]   K. Nkansah and A. R. Collins, “Willingness to Pay for Wind versus Natural Gas Generation of Electricity,” Agricultural and Resource Economics Review, pp. 44 - 70, 2019. doi:
[36]   P. S. Koto and E. K. Yiridoe, “Expected willingness to pay for wind energy in Atlantic Canada,” Energy Policy, pp. 80 - 88, 2019. doi:
[37]   J. Rommel, J. Sagebiel and J. R. Müller, “Quality uncertainty and the market for renewable energy: Evidence from German Consumers,” Renewable Energy, vol. 94, pp. 106-113, 2016.
[38]   J. Sagebiel, J. Muller and J. Rommel, “Are consumers willing to pay more for electricity from cooperatives? Results from an online choice experiment in Germany,” Energy Research & Social Science, vol. 2, pp. 90 -101, 2014.
[39]   B. J. Kalkbrenner, K. Yonezawa and J. Roosen, “Consumer preferences for electricity tariffs: Does proximity matter?,” Energy Policy, no. 107, pp. 413-424, 2017.
[40]   C. Ghesla, M. Grieder and R. Schubert, “Nudging the poor and the rich – A field study on the distributional effects of green electricity defaults,” Energy Economics, 2020.
[41]   M. o. S. a. P. Implementation, “India in Figures,” Central Statistical Organisation, Delhi, 2018.
[42]   B. R. Entele, “Analysis of households' willingness to pay for a renewable source of electricity service connection: evidence from a double-bounded dichotomous choice survey in rural Ethiopia,” Heliyon, p. 03332, 2020.
[43]   A. I. Ugulu and C. Aigbavboa, “Assessing Urban Households’ Willingness to Pay for Standalone Solar Photovoltaic Systems: A Case Study of Lagos, Nigeria,” Journal of Sustainable Development of Energy, Water and Environment Systems, pp. 553 - 566, 2019.
[44]   T. Ayodele, A. Ogunjuyigbe, O. Ajayi, A. Yusuff and T. Mosetlhe, “Willingness to pay for green electricity derived from renewable energy sources in Nigeria,” Renewable and Sustainable Energy Reviews, vol. 148, p. 111279, 2021.
[45]   “How to get rural households out of energy poverty in Nigeria: A contingent valuation study,” Energy Policy, vol. 149, p. 112072, 2021.
[46]   S. Oluoch, P. Lal, A. Susaeta and B. Wolde, “Public preferences for renewable energy options: A choice experiment in Kenya,” Energy Economics, p. 105256, 2021.
[47]   M. Numata, M. Sugiyama, W. Swe and D. d. B. Alvarez, “Willingness to Pay for Renewable Energy in Myanmar: Energy Source Preference,” energies, 2021.
[48]   D. Krishnan, A. Thanikonda, P. Kumar and T. Mandal, “How electricity distribution companies in India can work with commercial and industrial consumers for renewable energy procurement,” Delhi, 2020.
[49]   T. Mandal, V. Sen and S. Anirudh, “Renewable Energy Procurement Perceptions among Commercial and Industrial Consumers: Current Practices and Future Possibilities,” World Resources Institute, 2022.
[50]   D. Lahiri and G. Acharjee, “Biomass gasifier electricity and study of willingness to pay,” International Journal of Renewable Energy Resources, vol. 3, pp. 16-18, 2013. doi: 10.1109/CET.2011.6041471.
[51]   R. Dossani and V. Ranganathan, “Farmers willingness to pay for power in India: Conceptual Issues, Survey results and implication for pricing,” Energy Economics, vol. 26, no. 3, pp. 359 - 369, May 2004. doi: 10.1016/j.eneco.2004.04.004.
[52] J. Urpelainen and S. Yoon, “Solar home systems for rural India: Survey evidence on awareness and willingness to pay from Uttar Pradesh,” Energy for Sustainable Development, pp. 70 - 78, 2015.
[53]   H. Gunatilake, S. Patail and J. C. Yang, “Valuing Electricity Service Attributes: A Choice Experiment Study in Madhya Pradesh, India,” Asian Development Bank, Phillipines, 2012.
[54]   B. Gill, S. Saluja and D. Palit, “Charging Power: Understanding Electricity Pricing and Willingness to Pay for Electricity in India,” Delhi, 2017.
[55]   B. t. India, “India Corporate Renewable Energy Brief,” Bridge to India, 2021.
[56]   P. Buckley, “Prices, information and nudges for residential electricity conservation: A meta analysis,” Ecological Economics, 2020.
[57]   P. W. J. Sabah Abdullaha, “Willingness to pay for renewable energy: Evidence from a contingent valuation survey in Kenya,” Renewable and Sustainable Energy Reviews, vol. 15, pp. 2974 - 2983, 2011.
[58]   J. P. H. K. a. E. H. Jihyo Kim, “Assessment of Korean customers’ willingness to pay with RPS,” Renewable and Sustainable Energy Reviews, vol. 12, pp. 695-703, 2012. doi: 10.1016/j.rser.2011.08.034.
[59]   M. Andor, M. Frondel and C. Vance, “Germany’s Energiewende: A Tale of Increasing Costs and Decreasing Willingness to Pay,” ECONSTOR, vol. 645, 2017.
[60]   M. Hanemann, J. Loomis and B. Kanninen, “Statistical Efficiency of Double-Bounded Dichotomous Choice Contingent Valuation,” American Journal of Agricultural Economics, vol. 73, no. 4, pp. 1255-1263, November 1991.
[61]   D. Whittington, “Administering Contingent Valuation Surveys in Developing Countries,” World Development, vol. 26, no. 1, pp. 21-30, 1998.
[62]   S. Bigerna and P. Polinori, “Italian households' willingness to pay for green electricity,” Renewable and Sustainable Energy Reviews, pp. 110-121, 2014.
[63]   S. Ntanos, G. Kyriakopoulos, M. Chalikias, G. Arabatzis and M. Skordoulis, “Public Perceptions and Willingness to Pay for Renewable Energy: A Case Study from Greece,” Sustainibility, 2018.
[64]   E. V. Hobman and E. R. Frederiks, “Barriers to green electricity subscription in Australia: “Love the environment, love renewable energy, but why should I pay more?,” Energy Research & Social Science, vol. 3, pp. 78 - 88, 2014.
[65]   H. Li, H. C. Jenkins-Smith, C. L. Silva, R. P. Berrens and K. G. Herron, “Public support for reducing US reliance on fossil fuels: Investigating household willingness-to-pay for energy research and development,” Ecological Economics, pp. 731 - 742, 2009. doi: 10.1016/j.ecolecon.2008.06.005.
[66]   C. Sun, X. Ouyang and X. Meng, “Public acceptance towards waste-to-energy power plants: a new quantified assessment based on "willingness to pay",” Journal of Environmental Planning and Management, 2019.
[67]   C. F. Clark, M. J. Kotchen and M. R. Moore, “Internal and external influences on pro-environmental behavior:Participation in a green electricity program,” Journal of Environmental Pyschology, pp. 237 - 246, 2003.
[68]   A. Hansla, A. Gamble, A. Juliusson and T. Garling, “Psychological determinants of attitude towards and willingness to pay for green electricity,” Energy Policy, pp. 768-774, 2008. doi: 10.1016/j.enpol.2007.10.027.
[69]   R. Ozaki, “Adopting Sustainable Innovation: What Makes Consumers Sign up to Green Electricity?,” Business Strategy and the Environment, pp. 1 - 17, 2011. doi: 10.1002/bse.650 .
[70]   D. Kahneman and J. Knetsch, “Valuing Public Goods: The Purchase of Moral Satisfaction,” Journal of Environmental Economics and Management, pp. 57 - 70, 1992. doi: 10.1016/0095-0696(92)90019-s .
[71]   G. A. Guagnano, “Altruism and Market-Like Behavior: An Analysis of Willingness to Pay for Recycled Paper Products,” Population and Environment: A Journal of Interdisciplinary Studies, vol. 22, no. 4, pp. 425 - 438, 2001.
[72]   J. E. Arana and C. J. Leon, “Willingness to pay for health risk reduction in the context of altruism,” Health Economics, pp. 623-635, 2002. doi: 10.1002/hec.687 .
[73]   O. Onwujekwe, R. Chima, E. Shu, D. Nwagbo, C. Akpala and P. Okonkwo, “Altruistic willingness to pay in community-based sales of insecticide-treated nets exists in Nigeria,” Social Science & Medicine, pp. 519 - 527, 2002. doi: 10.1016/s0277-9536(01)000.
[74]   E. Ojea and M. Loureiro, “Altruistic, egoistic and biospheric values in willingness to pay for wildlife,” Ecological Economics, pp. 807-814, 2007.
[75]   W. J. Umberger, D. D. T. McFadden and A. R. Smith, “Does Altruism Play a Role in Determining U.S.Consumer Preferences and Willingness to Pay for Natural and Regionally Produced Beef?,” Agribusiness, pp. 268-285, 2009. doi: 10.1002/agr.20194 .
[76]   C. Herbes, C. Friege, D. Baldo and K.-M. Mueller, “Willingness to pay lip service? Applying a neuroscience-based method to WTP for green electricity,” Energy Policy, pp. 562-572, 2015.
[77]   A. Hansla, “Value orientation and framing as determinants of stated willingness to pay for eco-labeled electricity,” Energy Efficiency, pp. 185 - 192, 2010. doi: 10.1007/s12053-010-9096-0 .
[78]   P. A. Champ, K. J. Boyle and T. C. Brown, A Primer on Nonmarket Valuation, Springer, 2017.
[79]   K. J. Boyle, R. C. Bishop and M. P. Welsh, “Starting Point Bias in Contingent Valuation Bidding Games,” Land Economics, vol. 61, no. 2, pp. 188 - 194, 1985.
[80]   A. Chunekar, S. Varshney and S. Dixit, “Residential electricity consumption in India,” Prayas Energy Group, Pune, 2016.
[81]   J. Loomis, “Whats to know about hypothetical bias in stated preference valuation studies,” Journal of Economic Surveys, vol. 25, no. 2, pp. 363-370, 2011.
[82]   S. Özdemir, F. R. Johnson and A. B. Hauber, “Hypothetical bias, cheap talk, and stated willingness to pay for health care,” Journal of Health Economics, vol. 28, p. 894–901, 2009. 10.1016/j.jhealeco.2009.04.004
[83]   R. G. Ethier, G. L. Poe, W. D. Schulze and J. Clark, “A Comparison of Hypothetical Phone and Mail Contingent Valuation Responses for Green-Pricing Electricity Programs,” Land Economics, pp. 54 - 67, 2000.
[84]   R. T. Carson, “Contingent Valuation: A User’s Guide,” Environmental Science and Technology, pp. 1413 - 1418, 2000.
[85]   D. Whittington, “Improving the performance of contingent valuation studies in developing countries,” Environmental and Resource Economics, vol. 22, pp. 323-367, 2002.
[86]   T. Arega and T. Tadesse, “Household willingness to pay for green electricity in urban and peri-urban Tigray, northern Ethiopia: Determinants and welfare effects,” Energy Policy, pp. 292 - 300, 2017.
[87]   D. Cook, B. Davíðsdottir and D. M. Kristofersson, “Willingness to pay for the preservation of geothermal areas in Iceland - The contingent valuation studies of Eldvorp and Hverahlíð,” Renewable Energy, pp. 97 - 108, 2018. 10.1016/j.renene.2017.09.072.
[88]   I. J. Myung, “Tutorial on maximum likelihood estimation,” Journal of Mathematical Psychology, vol. 47, pp. 90 - 100, 2003. doi: 10.1016/S0022-2496(02)00028-7.
[89]   B. Kristrom, “Spike Models in Contingent Valuation,” Journal of Agricultural Economics, vol. 79, no. 3, pp. 1013-1023, 1997. https://doi:10.2307/1244440 .
[90]   D. Dutt, “Understanding the barriers to the diffusion of rooftop solar: A case study of Delhi (India),” Energy Policy, 2020. doi: 10.1016/j.enpol.2020.111674 .
[91]   P. Bhati and R. Kalsotra, “SOLAR ROOFTOP: Replacing Diesel Generators in Residential Societies,” Centre for Science and Environment, New Delhi, 2017.
[92]   D. Jareemit and B. Limmeechokchai, “Understanding Resident’s Perception of Energy Saving Habits in Households in Bangkok,” Energy Procedia, pp. 247 - 252, 2017. doi: 10.1016/j.egypro.2017.10.048 .
[93]   V. Sen, G. Joshi and M. Kunte, “Purchasing Energy Efficient Appliances: A Qualitative Investigation Using Text Analysis,” Test Engineering and Management, vol. 82, pp. 13230 - 13241, 2020.
[94]   F. Berkhout, P. Marcotullio and T. Hanaoka, “Understanding energy transitions,” Sustainable Science, pp. 109-111, 2012. doi: 10.1007/s11625-012-0173-5.
[95]   K. S. Taber, “The Use of Cronbach’s Alpha When Developing and Reporting Research Instruments in Science Education,” Research in Science Education, pp. 1 - 24, 2017.
[96]   H. Taherdoost, S. Sahibuddin and N. Jalaiyoon, “Exploratory Factor Analysis; Concepts and Theory,” Advances in Applied and Pure Mathematics, pp. 375 - 382, 2014.
[97]   J. Neill, “Writing Up A Factor Analysis,” University of Canberra, Canberra, 2008.
[98]   K. Chan, L. Oerlemans, J. Volschenk and H. Oliver, “Objective and Subjective Willingness to Pay for Green Electricity, Do they measure the same? Evidence from South African Case,” in Technology Management in the Energy Smart World (PICMET), 2011 Proceedings of PICMET '11, Portland, USA., 2011.
[99]   M. C. Onwezen, G. Antonides and J. Bartels, “The Norm Activation Model: An exploration of the functions of anticipated pride and guilt in pro-environmental behaviour,” Journal of Economic Psychology, vol. 39, pp. 141 - 153, 2013.
[100]       H. Aizaki, T. Nakatani and Z. Sato, Stated Preference Methods Using R, Taylor and Francis, 2015.
[101]       J. Kuha, “AIC and BIC: Comparisons of Assumptions and Performance,” Sociological Methods and Research, pp. 188 - 229, 2004.
[102]       J. Loomis and E. Ekstrand, “Alternative approaches for incorporating respondent uncertainty when estimating,” Ecological Economics, vol. 27, no. 1, pp. 29-41, 1998.
[103]       H. P. P. Donfouet, P. W. Jeanty and P.-A. Mahieu, “Dealing with internal inconsistency in double-bounded dichotomous choice: an application to community-based health insurance,” Empirical Economics, pp. 317 - 328, 2014. 10.1007/s00181-012-0665-2.
[104]       X. Guo, H. Liu, X. Mao, J. Jin, D. Chen and S. Cheng, “Willingness to pay for renewable electricity:A contingent valuation study in Beijing, China,” Energy Policy, pp. 340 - 347, 2014.
[105]       L. Dagher and H. Harajli, “Willingness to pay for green power in an unreliable electricity sector: Part 1. The case of the Lebanese residential sector,” Renewable and Sustainable Energy Reviews, vol. 50, pp. 1634 - 1642, 2015. 10.1016/j.rser.2015.04.162
[106]       C.-Y. Lee and H. Heo, “Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method,” Energy Policy, no. 94, pp. 150-156, 2016. 10.1016/j.enpol.2016.03.051
[107]       Y. Cheng, K. Cao, C. Woo and A. Yatchew, “Residential willingness to pay for deep decarbonization of electricity supply: Contingent valuation evidence from Hong Kong,” Energy Policy, pp. 218 - 227, 2017.
[108]       P. Oliva, M. Alexianu and R. Nasir, “Suffocating prosperity: Air pollution and economic growth in developing countries,” 05 December 2019. [Online]. Available:
[109]       A. Hansla, A. Gamble, A. Juliusson and T. Garling, “Psychological determinants of attitude towards and willingness to pay for green electricity,” Energy Policy, vol. 36, pp. 768 - 774, 2008.
[110]       F. Ebeling and S. Lotz, “Domestic uptake of green energy promoted by opt put tariffs,” Natural climate change letters, pp. 868-871, 2015. doi:10.1038/nclimate2681 .
[111]       J. Gulia, A. Jadhav, V. Garg and D. G. Kuiper, “Financing Trends in the Rooftop Solar Commercial and Industrial Segment (C&I) in India,” IEEFA and JMK Research, New Delhi, 2021.
[112]       J. Shekhar, D. Suri, P. Somani, S. J. Lee and M. Arora, “Reduced renewable energy stability in India following COVID-19: Insights and key policy recommendations,” Renewable and Sustainable Energy Reviews, 2021.