IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v136y2020ics0301421519306378.html
   My bibliography  Save this article

Estimation of the usage fee for peer-to-peer electricity trading platform: The case of South Korea

Author

Listed:
  • Lee, Juyong
  • Cho, Youngsang

Abstract

The peer-to-peer (P2P) electricity trading platform (ETP) is an electricity-sharing system by which individuals can sell surplus electricity or purchase electricity to meet a deficit in a regional power network. South Korea has allowed energy prosumers to engage in electricity trading from 2016 and is seeking ways to vitalize the electricity trading market. This study aims to estimate the willingness to pay (WTP) of respondents for the monthly usage of P2P ETP by using the contingent valuation method. Of the 1000 Korean respondents, 639 were willing to pay a fee for using the platform. The estimated WTP is KRW 5958.86 (USD 5.50) per month. Moreover, the estimated WTP is higher in respondents who have more background knowledge of the P2P ETP and who pay higher electricity fees. The estimated WTP is lower than the usage fees of existing ETPs in other countries, which is primarily due to Korea's low electricity prices. Furthermore, the estimation results show that enhancing consumer awareness of P2P trading and introducing market strategies based on electricity usage should be considered by electricity trading companies and regulators to enhance P2P ETP usage.

Suggested Citation

  • Lee, Juyong & Cho, Youngsang, 2020. "Estimation of the usage fee for peer-to-peer electricity trading platform: The case of South Korea," Energy Policy, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:enepol:v:136:y:2020:i:c:s0301421519306378
    DOI: 10.1016/j.enpol.2019.111050
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421519306378
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2019.111050?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Xie, Bai-Chen & Zhao, Wei, 2018. "Willingness to pay for green electricity in Tianjin, China: Based on the contingent valuation method," Energy Policy, Elsevier, vol. 114(C), pages 98-107.
    2. Chien, Yu-Lan & Huang, Cliff J. & Shaw, Daigee, 2005. "A general model of starting point bias in double-bounded dichotomous contingent valuation surveys," Journal of Environmental Economics and Management, Elsevier, vol. 50(2), pages 362-377, September.
    3. Alam, Muhammad Raisul & St-Hilaire, Marc & Kunz, Thomas, 2019. "Peer-to-peer energy trading among smart homes," Applied Energy, Elsevier, vol. 238(C), pages 1434-1443.
    4. Bertsch, Valentin & Hall, Margeret & Weinhardt, Christof & Fichtner, Wolf, 2016. "Public acceptance and preferences related to renewable energy and grid expansion policy: Empirical insights for Germany," Energy, Elsevier, vol. 114(C), pages 465-477.
    5. Elisabetta Strazzera & Riccardo Scarpa & Pinuccia Calia & Guy Garrod & Kenneth Willis, 2003. "Modelling zero values and protest responses in contingent valuation surveys," Applied Economics, Taylor & Francis Journals, vol. 35(2), pages 133-138.
    6. Richard Carson & Robert Mitchell & Michael Hanemann & Raymond Kopp & Stanley Presser & Paul Ruud, 2003. "Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(3), pages 257-286, July.
    7. Kim, Kayoung & Nam, Heekoo & Cho, Youngsang, 2015. "Estimation of the inconvenience cost of a rolling blackout in the residential sector: The case of South Korea," Energy Policy, Elsevier, vol. 76(C), pages 76-86.
    8. Joseph C. Cooper & Michael Hanemann & Giovanni Signorello, 2002. "One-and-One-Half-Bound Dichotomous Choice Contingent Valuation," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 742-750, November.
    9. Woo, C.K. & Ho, T. & Shiu, A. & Cheng, Y.S. & Horowitz, I. & Wang, J., 2014. "Residential outage cost estimation: Hong Kong," Energy Policy, Elsevier, vol. 72(C), pages 204-210.
    10. Yetano Roche, María & Mourato, Susana & Fischedick, Manfred & Pietzner, Katja & Viebahn, Peter, 2010. "Public attitudes towards and demand for hydrogen and fuel cell vehicles: A review of the evidence and methodological implications," Energy Policy, Elsevier, vol. 38(10), pages 5301-5310, October.
    11. Zachariadis, Theodoros & Pashourtidou, Nicoletta, 2007. "An empirical analysis of electricity consumption in Cyprus," Energy Economics, Elsevier, vol. 29(2), pages 183-198, March.
    12. Welsh, Michael P. & Poe, Gregory L., 1998. "Elicitation Effects in Contingent Valuation: Comparisons to a Multiple Bounded Discrete Choice Approach," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 170-185, September.
    13. Nomura, Noboru & Akai, Makoto, 2004. "Willingness to pay for green electricity in Japan as estimated through contingent valuation method," Applied Energy, Elsevier, vol. 78(4), pages 453-463, August.
    14. Kim, Kayoung & Cho, Youngsang, 2017. "Estimation of power outage costs in the industrial sector of South Korea," Energy Policy, Elsevier, vol. 101(C), pages 236-245.
    15. Richard C. Ready & Dayuan Hu, 1995. "Statistical Approaches to the Fat Tail Problem for Dichotomous Choice Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 71(4), pages 491-499.
    16. Cameron Trudy Ann & Quiggin John, 1994. "Estimation Using Contingent Valuation Data from a Dichotomous Choice with Follow-Up Questionnaire," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 218-234, November.
    17. Meyerhoff, Jürgen & Liebe, Ulf, 2010. "Determinants of protest responses in environmental valuation: A meta-study," Ecological Economics, Elsevier, vol. 70(2), pages 366-374, December.
    18. Park, Hojeong & Hong, Won Kyung, 2014. "Korea׳s emission trading scheme and policy design issues to achieve market-efficiency and abatement targets," Energy Policy, Elsevier, vol. 75(C), pages 73-83.
    19. Lee, Minhyun & Hong, Taehoon & Jeong, Kwangbok & Kim, Jimin, 2018. "A bottom-up approach for estimating the economic potential of the rooftop solar photovoltaic system considering the spatial and temporal diversity," Applied Energy, Elsevier, vol. 232(C), pages 640-656.
    20. Oerlemans, Leon A.G. & Chan, Kai-Ying & Volschenk, Jako, 2016. "Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 875-885.
    21. Kevin J. Boyle & F. Reed Johnson & Daniel W. McCollum & William H. Desvousges & Richard W. Dunford & Sara P. Hudson, 1996. "Valuing Public Goods: Discrete versus Continuous Contingent-Valuation Responses," Land Economics, University of Wisconsin Press, vol. 72(3), pages 381-396.
    22. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    23. Bishop, Richard C. & Heberlein, Thomas A., 1979. "Measuring Values Of Extramarket Goods: Are Indirect Measures Biased?," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 277818, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    24. Kim, Hoseok & Shin, Eui-soon & Chung, Woo-jin, 2011. "Energy demand and supply, energy policies, and energy security in the Republic of Korea," Energy Policy, Elsevier, vol. 39(11), pages 6882-6897.
    25. Stigka, Eleni K. & Paravantis, John A. & Mihalakakou, Giouli K., 2014. "Social acceptance of renewable energy sources: A review of contingent valuation applications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 32(C), pages 100-106.
    26. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
    27. Sousa, Tiago & Soares, Tiago & Pinson, Pierre & Moret, Fabio & Baroche, Thomas & Sorin, Etienne, 2019. "Peer-to-peer and community-based markets: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 104(C), pages 367-378.
    28. Kevin J. Boyle & Richard C. Bishop, 1988. "Welfare Measurements Using Contingent Valuation: A Comparison of Techniques," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 20-28.
    29. Koli Fatai & Les Oxley & Frank G. Scrimgeour, 2003. "Modeling and Forecasting the Demand for Electricity in New Zealand: A Comparison of Alternative Approaches," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 75-102.
    30. Yoo, Seung-Hoon & Kwak, So-Yoon, 2009. "Willingness to pay for green electricity in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 37(12), pages 5408-5416, December.
    31. Zhang, Chenghua & Wu, Jianzhong & Zhou, Yue & Cheng, Meng & Long, Chao, 2018. "Peer-to-Peer energy trading in a Microgrid," Applied Energy, Elsevier, vol. 220(C), pages 1-12.
    32. Richard C. Bishop & Thomas A. Heberlein, 1979. "Measuring Values of Extramarket Goods: Are Indirect Measures Biased?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 926-930.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lee, Min-Kyu & Nam, Jungho & Kim, Miju, 2023. "Valuing the public preference for offshore wind energy: The case study in South Korea," Energy, Elsevier, vol. 263(PB).
    2. Lee, Juyong & Reiner, David M., 2023. "Determinants of public preferences on low-carbon energy sources: Evidence from the United Kingdom," Energy, Elsevier, vol. 284(C).
    3. Karami, Mahdi & Madlener, Reinhard, 2022. "Business models for peer-to-peer energy trading in Germany based on households’ beliefs and preferences," Applied Energy, Elsevier, vol. 306(PB).
    4. Min Hee Chung, 2020. "Comparison of Economic Feasibility for Efficient Peer-to-Peer Electricity Trading of PV-Equipped Residential House in Korea," Energies, MDPI, vol. 13(14), pages 1-21, July.
    5. Mika Goto & Hiroshi Kitamura & Daishi Sagawa & Taichi Obara & Kenji Tanaka, 2023. "Simulation Analysis of Electricity Demand and Supply in Japanese Communities Focusing on Solar PV, Battery Storage, and Electricity Trading," Energies, MDPI, vol. 16(13), pages 1-24, July.
    6. Dmitriy Li & Jeong-Hwan Bae & Meenakshi Rishi, 2022. "A Preference Analysis for a Peer-to-Peer (P2P) Electricity Trading Platform in South Korea," Energies, MDPI, vol. 15(21), pages 1-20, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lee, Juyong & Cho, Youngsang, 2018. "Inconvenience cost of mobile communication failure: The case of South Korea," Telecommunications Policy, Elsevier, vol. 42(3), pages 241-252.
    2. Kim, Kayoung & Nam, Heekoo & Cho, Youngsang, 2015. "Estimation of the inconvenience cost of a rolling blackout in the residential sector: The case of South Korea," Energy Policy, Elsevier, vol. 76(C), pages 76-86.
    3. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    4. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    5. Dahal, Ram P. & Grala, Robert K. & Gordon, Jason S. & Petrolia, Daniel R. & Munn, Ian A., 2018. "Estimating the willingness to pay to preserve waterfront open spaces using contingent valuation," Land Use Policy, Elsevier, vol. 78(C), pages 614-626.
    6. Lee, Min-Kyu & Nam, Jungho & Kim, Miju, 2023. "Valuing the public preference for offshore wind energy: The case study in South Korea," Energy, Elsevier, vol. 263(PB).
    7. Scarpa, Riccardo & Chilton, Susan M. & Hutchinson, W. George & Buongiorno, Joseph, 2000. "Valuing the recreational benefits from the creation of nature reserves in Irish forests," Ecological Economics, Elsevier, vol. 33(2), pages 237-250, May.
    8. Hee-Hoon Kim & Seul-Ye Lim & Seung-Hoon Yoo, 2019. "Residential Consumers’ Willingness to Pay Price Premium for Renewable Heat in South Korea," Sustainability, MDPI, vol. 11(5), pages 1-14, February.
    9. Ju-Hee Kim & Kyung-Kyu Lim & Seung-Hoon Yoo, 2019. "Evaluating Residential Consumers’ Willingness to Pay to Avoid Power Outages in South Korea," Sustainability, MDPI, vol. 11(5), pages 1-12, February.
    10. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2018. "Household willingness to pay for expanding fuel cell power generation in Korea: A view from CO2 emissions reduction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 242-249.
    11. Kim, Ju-Hee & Lim, Seul-Ye & Yoo, Seung-Hoon, 2021. "Public preferences for introducing a power-to-heat system in South Korea," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    12. Ho-Young Kim & So-Yeon Park & Seung-Hoon Yoo, 2016. "Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study," Sustainability, MDPI, vol. 8(11), pages 1-16, October.
    13. Lim, Kyoung-Min & Lim, Seul-Ye & Yoo, Seung-Hoon, 2014. "Estimating the economic value of residential electricity use in the Republic of Korea using contingent valuation," Energy, Elsevier, vol. 64(C), pages 601-606.
    14. Kim, GwanSeon & Petrolia, Daniel R. & Interis, Matthew G., 2012. "A Method for Improving Welfare Estimates from Multiple-Referendum Surveys," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), pages 1-12, August.
    15. Joseph Cooper & Giovanni Signorello, 2008. "Farmer Premiums for the Voluntary Adoption of Conservation Plans," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 51(1), pages 1-14.
    16. Miguel Ángel Tobarra-González, 2015. "A new recoding method for treating protest responses in contingent valuation studies using travel cost data," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 58(8), pages 1479-1489, August.
    17. Lee, Gunwoo & Kim, Soo-Yeob & Lee, Min-Kyu, 2015. "Economic evaluation of vessel traffic service (VTS): A contingent valuation study," Marine Policy, Elsevier, vol. 61(C), pages 149-154.
    18. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2017. "Public's willingness to pay a premium for bioethanol in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 101(C), pages 20-27.
    19. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    20. Anna Kowalska-Pyzalska, 2019. "Do Consumers Want to Pay for Green Electricity? A Case Study from Poland," Sustainability, MDPI, vol. 11(5), pages 1-20, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:136:y:2020:i:c:s0301421519306378. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.