Contents lists available at ScienceDirect Energy Policy journal homepage: www.elsevier.com/locate/enpol Determinants for the adoption of green electricity by German SMEs – An empirical examination Sebastian Rahbauer a, ⁎ , Luisa Menapace a , Klaus Menrad b , Hannes Lang a a Technische Universität München, Center of Food and Life Sciences Weihenstephan, Alte Akademie 12, 85354 Freising, Germany b University of Applied Sciences Weihenstephan-Triesdorf, Straubing Center of Science, Petersgasse 18, 94315 Straubing, Germany ARTICLE INFO Keywords: Green electricity SME Adoption Survey Logistic regression ABSTRACT In Germany, the substitution of green electricity (GE) from renewable energy sources for nuclear and fossil electricity is politically intended, yet the demand for GE remains limited. This article provides empirical insight into factors influencing the decision of German small- and medium-sized enterprises (SMEs) to adopt GE. Potentially relevant factors are identified through a review of the previous literature and investigated using logit model analyses based on a large-scale survey of German SMEs regarding GE adoption. We find that German SME decision-makers who have consciously decided to adopt GE characteristically have a high level of perceived environmental responsibility. The results also show that an SME's decision to adopt GE is influenced by decision-makers’ perceptions of the sustainability, continual availability and price premium of GE. While investigating firms’ characteristics, we found evidence that the likelihood of adoption is increased in microenterprises that have displayed pro-environmental behavior (other than GE adoption) in the past. Further, in considering an SME's sales market, customer appreciation of GE is a central determinant of adoption. Finally, our findings suggest that firms’ lack of knowledge contributes to the low level of GE adoption. Using our findings, we provide research-based policy recommendations at the end of this paper. 1. Introduction Electricity suppliers try to attract new customers not only through price but also through other forms of product differentiation (Hast et al., 2015). Many suppliers use the environmental aspects of elec- tricity generation as part of their marketing strategy and offer elec- tricity produced entirely, or in part, from renewable electricity sources like hydropower, wind power, or photovoltaics (Hast et al., 2015; Preiß, 2013). This type of electricity is marketed as green electricity (GE) (Preiß, 2013). In 2012, over 800 GE suppliers had a total of 3839 GE tariffs available for German electricity customers in their portfolios, and in 2014, around 20% of all private electricity customers in Germany purchased GE (Hast et al., 2015; Köpke, 2014). These private customers voluntarily pay a price premium above that of conventional electricity (CE) to purchase this more environmentally sustainable form. In contrast, only 5.5% of all German non-residential electricity consumers purchased GE in 2014 (Köpke, 2014). In particular, demand for GE among small- and medium-sized enterprises (SMEs) remains low (Reichmuth, 2013). By definition, SMEs are businesses with less than 250 employees and 50 million euro in sales revenues (Commission of the European Union, 2003). SMEs represent 98% of all German com- panies and consume a combined share of 52% of the country's overall electricity consumption. Therefore, SMEs not only play an important role in the German economy but also represent Germany's biggest electricity customer group (Immerschitt and Stumpf, 2014; Thamling et al., 2010). Increasing demand for GE might help the German government reach its long-term goal of environmental sustainability in the electricity sector. Even though the country has been successful in growing new renewable energy capacity more quickly than any other European country, the German government is far from achieving its goal of generating 80% of the country's electricity from renewable electricity sources by 2050 (2014: 31%) (Federal Ministry for Economy and Energy, 2014; Reichmuth, 2013; Richter, 2013). From a societal per- spective, large sections of the German population are becoming more environmentally conscious and applying pressure on companies to heighten environmental standards. Therefore, conditions are ripe for German SMEs to adopt GE. Additionally, the decision-making processes of SMEs and households are similar in many aspects, e.g., both are https://doi.org/10.1016/j.enpol.2018.09.033 Received 12 April 2018; Received in revised form 19 September 2018; Accepted 23 September 2018 ⁎ Corresponding author. E-mail addresses: sebastian.rahbauer@tum.de (S. Rahbauer), luisa.menapace@tum.de (L. Menapace), klaus.menrad@wissenschaftszentrum.de (K. Menrad), hannes.lang@tum.de (H. Lang). Energy Policy 123 (2018) 533–543 0301-4215/ © 2018 Elsevier Ltd. All rights reserved. T