Estimating Economic Values for a Sustainable Energy Supply: A case study in Northern Cyprus

Mrs Mehrshad Radmehr, Newcastle University

The aim of this thesis is to explore the use of different stated preferences methods to estimate willingness to pay for adopting micro-generation solar systems. It uses a case study in North Cyprus.  Households’ preferences and choice for generating electricity on their premises were assessed by contingent valuation (CV) and choice experiments (CEs).

CV was employed to estimate individuals’ willingness to pay (WTP) for micro-generation solar technology, and also willingness to accept (WTA) compensation for loss of amenity and feed-in tariff.  The data comprised a survey of 369 individuals through the face-to-face interviews.  The survey was split between two separate CV experiments, one using open-ended questions, and another with the double-bounded format. A Becker-DeGroot-Marschak (BDM) incentive compatible experimental approach was adopted with a cheap-talk to reduce the strategic behaviour and hypothetical biases.

Additionally, a CE survey of 205 respondents was carried out to evaluate the attributes that influence respondents’ choice for adopting micro-generation solar panels. The attributes comprised a government subsidy, feed-in tariff, investment cost, saving energy, and space required for installation.  Respondents were asked to choose between their most preferred alternative, from two hypothetical scenarios of attributes and the status quo (do nothing).

One of the important findings of this thesis is the significance of the suggested experimental approach, which enabled the convergence of WTA/WTP values. The contribution of this thesis relies on the use of BDM with CV, as well as the CE, to value preferences for micro-generation solar panel adoption. This is the first application of the BDM and CE methods to evaluate solar technology in Northern Cyprus.

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