Understanding the Electricity Switching Behavior of Industrial Consumers: An Empirical Study on an Emerging Market

Starting from the liberalization of the electricity market in Turkey, the annual switching rates have remained at low levels for both residential and industrial consumers. This study aims to investigate the supplier switching behavior of large scale industrial consumers in the Turkish Electricity market with an emphasis on behavioral factors. The data were collected from a total of 83 companies including Organized Industrial Zone (OIZ) and non-OIZ with the criterion of consuming more than 10,000,000 kWh. The survey includes the items for risk of switching, cost of switching, the attractiveness of switching, perceptions of the service quality, and market competition. The findings of binary logistic regression model revealed that the risk of switching and attractiveness of switching is significantly associated with the probability of switching behavior. That is, one-unit increases in the risk of switching and attractiveness of switching (higher scores denote for unattractiveness) are found to decrease the likelihood of switching the current electricity supplier. Robustness tests were conducted by utilizing binomial logistic estimations for OIZ and non-OIZ companies separately. The findings yielded that, for OIZ companies, the odds of electricity supplier switching behavior is negatively associated with risk of switching and attractiveness of switching; whereas for non-OIZ companies, the odds of switching behavior are found to be related with the risk of switching and perceptions of physical service qualities. The results of this study are particularly crucial for electricity suppliers, regulatory agencies, and policymakers.