Households’ preference and willingness to pay for alternative energy sources: a discrete choice experiment

Abstract

AbstractAs consumers play an increasingly active role in the energy market, understanding their preferences for renewable and non-renewable energy is essential for achieving Sustainable Development Goal 7. This study employs a labelled discrete choice experiment to investigate consumers' preferences and willingness to pay for solar PV panels, power generators, and biomass, considering service provider, service quality, and purchasing price. The survey was administered to 250 households in Kumasi, Ghana. This study finds that solar PV panels are the most preferred energy source, with the highest willingness to pay estimate. However, in cases where solar panels are not easily accessible, households turn to biomass as an alternative. Although there are similarities in choices, variations in preferences among consumers were identified. Furthermore, consumers value product or service quality but remain indifferent between foreign and domestic service providers. Based on these findings, policymakers are advised to engage in awareness campaigns and provide incentives such as subsidies and low-interest loans, to drive solar PV panel adoption among households. Energy developers should consider customized payment plans based on income levels to facilitate affordability. Additionally, recognizing the heterogeneity in preferences necessitates an inclusive policy approach that considers diverse consumer needs and addresses the energy access challenges faced by low-income households.