Consumer preferences for a green certificate program in South Korea. (1st September 2021)

• Record Type: Journal Article
• Authors: Bae, Jeong Hwan; Rishi, Meenakshi; Li, Dmitriy
• Is Part Of: Energy. Volume 230(2021)
• Publication Date: 2021-09-01
• Subjects: Green certificate program -- Renewable electricity -- Choice experiment -- Willingness to pay (WTP) -- Unobservable heterogeneity; Power resources -- Periodicals; Power (Mechanics) -- Periodicals; Energy consumption -- Periodicals; 333.7905
• DOI: 10.1016/j.energy.2021.120726
• Languages: English
• ISSNs: 0360-5442

Abstract

Abstract: This study explores whether residential consumers in South Korea are willing to participate in a hypothetical green certificate program. We employ a choice experiment to examine the heterogeneous preferences of South Korean consumers via three different estimation models— a mixed logit, a latent class, and a hybrid model that combines both the mixed logit and the latent class models. The mixed logit estimations suggest that solar power is preferred to wind or bio energy but with the greatest heterogeneity. Approximately 67% of respondents indicate a significant preference for a green certificate program in the latent class model specification. Estimates from the hybrid model reveal that respondents who are in favor of a green certificate also prefer solar power and a higher share of renewable electricity, but with significant heterogeneity. Willingness to Pay (WTP) calculations for the hypothetical green certificate range between 9.6USD/month and 10.6USD/month. Our results suggest that a tradeable green certificate program that is open to residential consumers and one that operates distinctly from the prevailing renewable energy certificate (REC) market in South Korea, has the potential of enabling the country attain its renewable energy goals while ensuring global competitiveness and the cost-efficient development of green energy. Highlights: Preferences of South Korean consumers for a hypothetical green certificate program are examined. A choice experiment is conducted, and respondent preferences are statistically analyzed. 67% of respondents indicate a significant preference for the green certificate program. Solar power is preferred to wind and bioenergy but with the greatest unobservable heterogeneity. WTP estimates for green certificates are between 9.60USD/month and 10.60USD/month.