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Is the Korean public willing to pay for a decentralized generation source? The case of natural gas-based combined heat and power

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  • Kim, Hyo-Jin
  • Lim, Seul-Ye
  • Yoo, Seung-Hoon

Abstract

Natural gas (NG)-based combined heat and power (CHP) plants can be installed near electricity-consuming areas and do not require large-scale and long-distance power transmission facilities. This paper attempts to assess the public's additional willingness to pay (WTP) for substituting consumption of a unit of electricity generated from nuclear power plant, currently a dominant power generation source in Korea, with that produced from NG-based CHP plant in terms of decentralized generation using the contingent valuation (CV) method. To this end, a CV survey of 1,000 households was implemented. The results show that the mean additional WTP for substituting nuclear power plant by NG-based CHP plant is estimated to be KRW 55.3 (USD 0.047) per kWh of electricity, which is statistically significant at the 1% level. This value amounts to 44.7% of the average price for electricity, KRW 123.69 (USD 0.106) in 2015, which implies that the public are ready to shoulder a significant financial burden to achieve the substitution. Moreover, the value can be interpreted as an external cost of nuclear power generation relative to NG-based CHP generation, or as an external benefit of NG-based CHP generation relative to nuclear power generation with a view to decentralized generation.

Suggested Citation

  • Kim, Hyo-Jin & Lim, Seul-Ye & Yoo, Seung-Hoon, 2017. "Is the Korean public willing to pay for a decentralized generation source? The case of natural gas-based combined heat and power," Energy Policy, Elsevier, vol. 102(C), pages 125-131.
    • Handle: RePEc:eee:enepol:v:102:y:2017:i:c:p:125-131
    DOI: 10.1016/j.enpol.2016.11.044
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    Cited by:

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    2. Herbes, Carsten & Halbherr, Verena & Braun, Lorenz, 2018. "Factors influencing prices for heat from biogas plants," Applied Energy, Elsevier, vol. 221(C), pages 308-318.
    3. Seul-Ye Lim & Hyo-Jin Kim & Seung-Hoon Yoo, 2017. "South Korean Household’s Willingness to Pay for Replacing Coal with Natural Gas? A View from CO 2 Emissions Reduction," Energies, MDPI, vol. 10(12), pages 1-9, December.
    4. Ju-Hee Kim & Young-Kuk Kim & Seung-Hoon Yoo, 2023. "Does Proximity to a Power Plant Affect Housing Property Values of a City in South Korea? An Empirical Investigation," Energies, MDPI, vol. 16(4), pages 1-14, February.
    5. Hyo-Jin Kim & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households," Sustainability, MDPI, vol. 9(8), pages 1-12, August.
    6. Kim, Ju-Hee & Kim, Hee-Hoon & Yoo, Seung-Hoon, 2022. "Social acceptance toward constructing a combined heat and power plant near people's dwellings in South Korea," Energy, Elsevier, vol. 244(PB).
    7. 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.
    8. Gungor, Gorkem & Sari, Ramazan, 2022. "Nuclear power and climate policy integration in developed and developing countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
    9. Seo-Hyeon Min & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "The environmental benefits of reducing thermal discharge from nuclear power generation," Energy & Environment, , vol. 28(8), pages 885-894, December.
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    11. Hyo-Jin Kim & Jeong-Joon Yu & Seung-Hoon Yoo, 2019. "Does Combined Heat and Power Play the Role of a Bridge in Energy Transition? Evidence from a Cross-Country Analysis," Sustainability, MDPI, vol. 11(4), pages 1-8, February.
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