Will South Korean Residential Consumers Accept the Renewable Heat Incentive Scheme? A Stated Preference Approach

Abstract

In South Korea, renewable energy policy is mainly focused on electricity and tends to neglect renewable heat (RH). However, for the purpose of reducing greenhouse gas emissions, the heating sector must sharply switch from its use of conventional fuels to renewable sources. The South Korean Government is considering an RH incentive (RHI) program with financial and policy support schemes and is thus demanding information about residential consumers’ acceptance of the RHI program to expand the use of RH. Therefore, this study looked into residential consumers’ acceptance of the introduction of the RHI program by applying contingent valuation (CV). For this purpose, a CV survey of 600 interviewees was conducted using a dichotomous choice question format that asked a respondent if she/he is willing to pay a given amount. Furthermore, among the various dichotomous choice question formats, the one-and-one-half-bounded format, which is considered desirable in terms of efficiency as well as consistency, was applied. One point to note in analyzing the CV responses was that not a few interviewees had zero willingness to pay (WTP). Thus, a spike model was employed to deal with the dichotomous choice CV data with a number of zero observations. The results revealed that the household mean WTP amounted to KRW 5753 (USD 5.35) per year. If we look at this value from a national perspective, it is worth KRW 113.63 billion (USD 105.61 million) per year. This value corresponds to the economic value or benefits that the introduction of an RHI program provides to the South Korean people each year and needs to be compared to the costs that the introduction of RHI will incur.

Households’ Preferences for a New ‘Climate-Friendly’ Heating System: Does Contribution to Reducing Greenhouse Gases Matter?

“…The literature includes several applications of such methodologies in different fields, including renewable energy and environmental policies. Several studies analyse awareness [12,13] and estimate citizens' willingness to pay (WTP) for the use of renewable energy sources (e.g., [14][15][16][17][18][19][20]). A number of studies also investigate homeowners' preferences for renewable domestic heating systems using the discrete choice experiment (DCE) approach [21][22][23][24][25][26][27][28][29][30][31][32][33][34][35] or conjoint and variance analysis [36], and most of them suggest that whilst renewable energy adoption is notably valued by households, this value is not enough to counterbalance the importance of the economic factors while purchasing a new heating [24,25,27,29].…”

Economic Valuation of Reducing Submerged Marine Debris in South Korea

“…However, it has statistical significance and can be utilized as a logical basis for the government to continue to push for reduction of SMD. In fact, the various CV empirical studies conducted in South Korea have often encountered too many zero WTP responses [22][23][24]26]. For example, Lim and Yoo [22], Kim et al [23], Kim et al [24], and Kim and Yoo [26] reported that the proportion of zero WTP responses was 56.5%, 46.5%, 61.7%, and 63.6%, respectively.…”

“…Second, from an economic point of view, the CV technique can theoretically provide an accurate estimate of the economic value or benefits from the supply of a certain good, while the revealed preference techniques have room for underestimation or overestimation. Third, since the validity and reliability of the CV approach is proven to some extent in the literature [22][23][24][25][26], the CV approach has been a widely applied one.…”

“…This study tried to apply a one-and-one-half-bounded (1.5B) model. Cooper et al [21] proposed the model, which has several advantages [22][23][24][25][26]. The procedure of applying the model can be explained in the following manner.…”

Estimated Impacts of Smart Water Meter Implementation on Domestic Hot Water Consumption and Related Greenhouse Gas Emissions from Case Studies

“…The end-use section is particularly noteworthy because it typically accounts for approximately 70% of the energy consumed in the entire water sector [27,28]. For example, energy use from the end-use section in the total water sector was estimated as 78% (UK) [29], 72% (USA) [18], 79% (AUS) [18], and 72% (KOR) [30], mainly due to water heating activities.…”