Determinants of willingness to pay for smart meters: An empirical analysis of household customers in Germany

As part of the move toward renewable energy sources in Germany it is expected that an increasing number of residential households will be equipped with communication-capable electricity metering systems (=“smart meters” [SM]). SM cause considerable investment and operating expenses. For providers of such systems one avenue to recoup SM costs is to explicitly invoice various SM price components to end customers. The feasibility of this strategy heavily depends on residential electricity customers' willingness to pay (WTP) for SM and, furthermore, an understanding of factors that have an impact on WTP. Therefore, the present article develops hypotheses on associations between three perceived SM benefit facets, one perceived intangible SM cost type as well as environmental awareness in general on the one hand, and WTP for SM on the other. The hypotheses are tested in a sample of 453 German-speaking residential electricity customers who filled in an online questionnaire. PLS analysis of the survey data reveals that trust in the protection of personal SM data and the intention to change one's electricity consumption behaviors after SM deployment are the constructs most strongly related to WTP for SM. Expectations regarding SM-triggered electricity volume saving and environmental awareness contributed less toward explaining WTP. Overall, the considered WTP antecedents left 72% of the criterion variance unaccounted for. Implications of the findings are discussed for electricity suppliers planning large-scale SM deployments and future research in the field of energy policy.