South Koreans' willingness to pay price premium for electricity generated using domestic solar power facilities over that from imported ones

South Korea seeks to increase the capacity of solar power generation from 10.5GW in 2019 to 68.8GW in 2034. In the process of promoting the increase, the government is trying to increase the use of domestic solar power generation facilities by enhancing their technological competitiveness and price competitiveness. This study attempts to estimate price premium or additional willingness to pay (WTP) for electricity generated using domestic solar power facilities over that from imported ones. As a method to do so, contingent valuation (CV) is adopted. A nationwide CV survey was conducted on 1,000 people during October 2020. A closed-ended question was used to elicit the WTP responses. Furthermore, a spike model was applied to analyzing the WTP data with many zeros. The price premium was estimated to be KRW 26.0 (USD 0.023) per kWh, with statistical significance, which comes to 24.8% of the price of electricity for 2019 (KRW 105 or USD 0.089 per kWh). Some factors related to the interviewees' characteristics or recognition were found to affect the price premium significantly.

Automated summary

The study estimated a price premium for electricity generated using domestic solar power facilities in South Korea to be KRW 26.0 per kWh, which accounts for 24.8% of the 2019 electricity price. Factors related to the interviewees' characteristics or recognition were found to significantly affect the price premium.