Abstract:
This paper investigates the demand determinants of green power in the U.S. residential sector. The data
employed were collected by the National Renewable Energy Laboratory and consist of a cross-section of
seven utilities observed over 13 years. A series of tests are performed that resulted in estimating a demand equation using the one-way cross-section random effects model. As expected, we find that demand is highly price inelastic. More interestingly though, is that elasticity with respect to number of
customers is 0.52 leading to the conclusion that new subscribers tend to purchase less green power on
average than the existing customers. Another compelling finding is that obtaining accreditation will have
a 28.5% positive impact on consumption. Knowing that gaining green accreditation is important to the
success of programs, utilities may want to seek certification and highlight it in their advertising
campaigns.
