A Demand-Side Perspective on Developing a Future Electricity Generation Mix: Identifying Heterogeneity in Social Preferences

Sung-Yoon Huh and Chul-Yong Lee
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Sung-Yoon Huh: Haas School of Business, University of California Berkeley, 2220 Piedmont Avenue, Berkeley, CA 94720, USA
Chul-Yong Lee: Korea Energy Economics Institute (KEEI), 405-11 Jongga-ro, Jung-gu, Ulsan 44543, Korea

Energies, 2017, vol. 10, issue 8, 1-19

Abstract: Public support is an important factor in failure or success of the government decisions with respect to the electricity generation mix, which highlights the necessity of developing an electricity mix that reflects social preferences and acceptance. This study explores heterogeneity in social preferences for power sources and develops an electricity mix from a demand-side perspective. The study utilizes the choice-based conjoint survey and latent class model, and bases its empirical analysis on South Korea’s electric power sector. Results demonstrate that preferences for power sources in Korean society consist of two classes: one that is sensitive to the environment and one that is sensitive to risk. An electricity mix for Korea that reflects social preferences is 16.5–19.8% coal-fired, 13.3–24.9% liquefied natural gas (LNG), 9.0–11.2% oil, 22.3–32.9% nuclear, and 18.5–38.9% renewables, depending on the scenario. The study confirms that renewables are the power source with the least potential to cause social conflict, compared to nuclear and coal-fired sources. Moreover, increasing the proportion of renewables (currently only 3.9%) while decreasing the proportion of coal-fired power sources (currently 39.9%) to less than half its current level will result in an electricity mix that is accordance with social preferences in the long run.

Keywords: electricity mix; public acceptance; stated preference method; discrete choice model; latent class model; South Korea (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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