Market segmentation and willingness to pay for green electricity among urban residents in China: The case of Jiangsu Province

The objective of this study is to identify market segments and estimate the residents’ willingness to pay (WTP) for green electricity (green-e) in China for the large-scale promotion of energy projects from renewable sources that do not rely solely on energy policies. Based on an analysis of non-use values of green-e as well as the application of the contingent valuation (CV) method and payment card (PC) introduction technology, the average WTP ranges from RMB 7.91 yuan/month to 10.30 yuan/month (approximately US$ 1.15–1.51/month with an exchange rate of 6.83 yuan/US$ yuan/US$) for urban residents in Jiangsu Province. The current work also explores the differences in demographic variables across varying WTP amounts and the different marginal effects of demographic variables at the same level of WTP. The findings reveal that there are significant differences in demographic variables, such as level of education, household income and location of residence, across the population segments. Moreover, the finding that some respondents with high income and higher education prefer higher WTP amounts to lower WTP amounts suggests that green-e is a luxury product, and consequently, a Veblen effect exists in certain Chinese market segments.

► The value of green electricity manifests itself primarily in the form of non-use value.
► The average WTP for green-e ranges from RMB 7.91 yuan/month to 10.30 yuan/month.
► The differences in demographic variables across varying WTP are significant.
► The marginal effects of demographic variables at the same WTP are different.
► Green-e is still a luxury product and Veblen effect exits in particular segment.