Renewable electricity as a differentiated good? The case of the Republic of Korea

Jihyo Kim, Jooyoung Park, Jinsoo Kim and Eunnyeong Heo

Energy Policy, 2013, vol. 54, issue C, 327-334

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.

Keywords: Renewable electricity; Willingness to pay; Substitution relationships (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:54:y:2013:i:c:p:327-334

DOI: 10.1016/j.enpol.2012.11.042

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