Renewable electricity as a differentiated good? The case of the Republic of Korea |
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| Affiliation: | 1. Department of Energy Systems Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 151-744, Republic of Korea;2. Hanwha Chemical, Hanwha Building, 1 Jangyo-dong, Jung-gu, Seoul 100-797, Republic of Korea;3. Department of Natural Resources and Environmental Engineering, Hanyang University, 17 Haengdang, Seongdong-gu, Seoul 133-791, Republic of Korea;4. Department of Energy Systems Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 151-744, Republic of Korea;1. Research Planning and Coordination Team, Korea Energy Economics Institute, 405-11 Jonga-ro, Jung-gu, Ulsan 681-300, Korea;2. Department of Natural Resources and Environmental Engineering, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 133-791, Korea;3. Department of Energy Systems Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 151-744, Korea;1. School of Civil & Architecture Engineering, Graduate School, SungKyunKwan University, 2066, Seobu-Ro, Jangan-Gu, Suwon, Gyeonggi-Do 16419, Republic of Korea;2. School of Architecture & Building Science, Chung-Ang University, 84 Heukseok-Ro, Dongjak-Gu, Seoul 06974, Republic of Korea;1. Department of Economics, Hong Kong Baptist University, Kowloon Tong, Hong Kong;2. Department of Asian and Policy Studies, Education University of Hong Kong, Tai Po, Hong Kong;3. Department of Economics, University of Toronto, Ontario, Canada M5S 3G7 |
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| Abstract: | This paper examines the willingness for Korean consumers to pay a premium for renewable electricity under a differentiated good framework by applying the contingent valuation method. Korean consumers have been required to pay for their use of renewable electricity as of 2012. First, we find that Korean consumers recognise renewable electricity as a differentiated good from traditional electricity generated from fossil fuels or nuclear energy. The mean willingness to pay to use renewable electricity is USD 1.26 per month. Second, we confirm the existence of perfect substitution relationships among variant renewable technologies, which suggests that Korean consumers do not perceive them as differentiated goods. One reason for this perception is that Korean consumers are more inclined to favour economic feasibility over sustainability or the availability of the resource stock when choosing between renewable technology types. In sum, we can say that Korean consumers recognise renewable electricity as a differentiated good but that they do not differentiate between variant renewable technologies. Thus, the imposition of the cost of renewable electricity on consumers in the form of increased electricity charges would be acceptable to consumers as long as any price rise properly reflects their preferences. |
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