Valuing Smart Meters

This paper assesses to what extent consumers are willing to make use of the features and capabilities offered by smart meters. Via a choice experiment households are offered the choice between a set of smart meters, described by six attributes: impact on the comfort and privacy level, functionality, visibility, cost savings, and investment outlay. We estimate a main effects conditional logit model and a main effects random parameter logit model, including interactions with socio-demographic characteristics. The results show that households have heterogeneous preferences for some attributes but not for others. The estimates are used to assess marginal willingness to pay values. From a policy perspective, our findings suggest that sufficient effort should be devoted to designing the smart metering devices and to informing households. Without careful preparation, a mandatory or voluntary roll out of smart meters risks to be unsuccessful because device characteristics do not meet consumer needs.