Research on local acceptance cost of renewable energy in South Korea: A case study of photovoltaic and wind power projects

Kyung Jae Kim, Hwarang Lee and Yoonmo Koo

Energy Policy, 2020, vol. 144, issue C

Abstract: While renewable energy is an eco-friendly source of electricity, it can be difficult to garner local acceptance when securing sites for renewable energy projects. Local acceptance is an important factor in determining the success of these projects. To elicit local acceptance, governments can consider profit-sharing, in which project developers pay a subsidy to the locals to compensate for the inconvenience of a renewable energy facility. The purpose of this study is to analyze local acceptance levels for photovoltaic and wind power projects in Korea and to evaluate the impact of profit-sharing on the profitability of such projects. Contingent valuation is used to estimate willingness to accept for a baseline renewable energy project. A choice experiment is conducted to estimate a marginal willingness to accept for project attributes. These are combined to simulate the total willingness to accept needed to gain local acceptance. Total willingness to accept for baseline photovoltaic and wind power projects are, respectively, USD 13,815 and USD 27,587 per household for 5 years. Internal rate of return is employed to assess the profitability of such projects. This rate without profit-sharing ranges from 4.49% to 9.50%. Meanwhile, the rate with profit-sharing ranges from −1.67% to 7.64%.

Keywords: Local acceptance; Profit-sharing; Photovoltaic power; Wind power; Contingent valuation; Choice experiment (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:144:y:2020:i:c:s0301421520304134

DOI: 10.1016/j.enpol.2020.111684

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