Stated preferences of Finnish private homeowners for residential heating systems: A discrete choice experiment

Our aim is to examine how different attributes of residential heating systems affect private homeowners' choice of heating system following renovations when heterogeneity in the homeowners' preferences is considered. Utilizing the results of our choice model, we then aim to simulate the market shares of different heating systems under various policy scenarios. The data were retrieved by a questionnaire mailed to a random sample of Finnish private owners of detached houses built in the 1960s-1990s with a response rate of 52%. The labeled choice sets in the discrete choice experiment (DCE) had 6 heating system alternatives (wood pellet boiler, solid wood fired boiler, district heat, electricity, ground heat (pump) and oil boiler) with varying levels of predetermined attributes (investment cost, annual operating cost, CO2 emissions, fine particle emissions and required own work). The choice modeling results emphasized the role of the investment cost as the main attribute affecting the decisions, although nonfinancial attributes also had a considerable effect. Systematic preference heterogeneity was caused by the availability of district heat, the existing heating system and the homeowner's forest ownership. In addition, the results indicated a significant unobserved preference heterogeneity. Based on the simulation of market shares, the use of wood pellets in residential heating is projected to increase threefold during 2009-2020. (C) 2012 Elsevier Ltd. All rights reserved.