Analysis of Consumer Willingness to Pay for Community Solar Business Using Contingent Valuation Method

Kyu-Won Hwang, Jaekyun Ahn () and Chul-Yong Lee ()
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Kyu-Won Hwang: Korea Institute of Ocean Science and Technology, 385, Haeyang-ro, Yeongdo-gu, Busan 49111, Republic of Korea
Jaekyun Ahn: Korea Energy Economics Institute, 405-11, Jongga-ro, Jung-Gu, Ulsan 44543, Republic of Korea
Chul-Yong Lee: School of Business, Pusan National University, 2, Busan Daehak-ro 63beon-gil, Geumjeong-gu, Busan 46241, Republic of Korea

Sustainability, 2023, vol. 15, issue 6, 1-17

Abstract: Electricity production using renewable energy instead of fossil-fuel-based energy sources has been expanding worldwide. Recently, the South Korean government has set a transition from a government and power company-led energy system to a public-participatory energy system as a basic policy direction in terms of power production. It has been actively providing budgetary and institutional support. A comprehensive understanding of the consumer (public)-oriented preferences of potential business participants is crucial for implementing a successful community solar business. This study analyzes the preferences of potential participants in the community solar business from the perspective of policymakers to derive policy implications. We used the contingent valuation method of the stated preference approach targeting potential participants (public) to create a hypothetical market for community solar businesses and measured the value by inducing survey respondents to trade for goods or services. The monthly average willingness-to-pay was estimated to be 25,572 won (USD 21.90), and gender, photovoltaic business experience, and income were the main influencing factors. Based on the results of this study, the preferences of potential consumers in South Korea were analyzed to contribute to the effectiveness of the national energy policy.

Keywords: renewable energy; contingent valuation; willingness to pay; community solar business; double-bounded dichotomous choice; greenhouse gas reduction (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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