Consumer Behaviour in Renewable Electricity : Can identity signaling increase demand for renewable electricity?

Abstract:  A higher percentage of energy from renewable resources is an important goal on many sustainable development agendas. In liberalized electricity markets, an increase in demand for renewable electricity can stimulate further investments in it, yet demand for renewable electricity has developed much slower than demand for other green products. So far, research has mainly examined the willingness to pay for renewable electricity, but limited research has been conducted to the motivations behind it. The concept of identity signaling has been proved to play a significant role in consumer behaviour for green products. However, (renewable) electricity in the Swedish residential market typically lacks two important drivers for idenity signaling: visibility and product involvement. A survey among Swedish households conducted for this study compares choices for renewable electricity under two scenarios, whereof one simulates a higher visibility of and involvement in electricity contracts. The results show that identity signaling has a positive effect on demand for renewable electricity. The results lead to implications for policy-makers, electricity suppliers and researchers.