Determining Effect of Defaults on Grid Parity

Human activities emitting greenhouse gases (e.g. carbon dioxide) are the main cause of observed warming since the mid-20th century. Because a large fraction of human emissions are from conventional power sources it will be important to adopt carbon neutral technologies such as alternative energy sources (IPCC, 2013). Grid parity is the point at which alternative energy sources reach a levelized cost of electricity that is less than or equal to conventional power sources (Ueckhardt, 2013). It is thought that once it is reached alternative energy will be adopted en masse (Yang, 2010). But this concept ignores marketplace choice and default decision making. The purpose of this study was to determine if marketplace choice in the presence of defaults would impact consumer’s decisions when grid parity exists. The study was a replicate study of previous work conducted by Pichert and Katsikopolous (2008). This was a multivariate study with two scenarios and three conditions. The study showed that defaults tend to impact consumer decisions when grid parity exists. Though grid parity will be a powerful incentive for alternative energy implementation, defaults in the presence of marketplace choice will likely be an important factor to examine to smooth any transition.