Consumer behavior in renewable electricity: Can branding in accordance with identity signaling increase demand for renewable electricity and strengthen supplier brands?

• Low demand for renewable electricity contracts falls short of high market potential.
• For this study a consumer choice simulation for electricity contracts was processed.
• Higher visibility and involvement increases demand for green electricity contracts.
• Branding that enables identity signaling contributes to green energy policy goals.

A higher percentage of energy from renewable resources is an important goal on many environmental policy agendas. Yet, the demand for renewable electricity in liberalized markets has developed much more slowly than the demand for other green products. To date, research has mainly examined the willingness to pay for renewable electricity, but limited research has been conducted on the motivations behind it. The concept of identity signaling has proven to play a significant role in consumer behavior for green products. However, (renewable) electricity in the Swedish residential market typically lacks two important drivers for identity signaling: visibility and product involvement.A consumer choice simulation among 434 Swedish households compared consumer choices for renewable electricity contracts. The results show a positive effect of identity signaling on the demand for renewable electricity and yield suggestions for increasing the share of renewable electricity without market distorting measures. This leads to implications for policymakers, electricity suppliers and researchers.