Abstract
Heat accounts for about one-third of the final energy use and it is mostly produced using fossil fuels in South Korea. Thus, heat production is an important source of greenhouse gas emissions. However, using renewable heat that is directly produced from renewable energy, such as bioenergy, geothermal, or solar heat can save energy and reduce greenhouse gas emissions, rather than transforming conventional fuel into heat. Therefore, an energy policy for renewable heat urgently needs to be established. It is such situations that this paper attempts to assess the consumers’ additional willingness to pay (WTP) or the price premium for renewable heat over heat that is produced from fossil fuels for residential heating. To that end, a nationwide contingent valuation survey of 1000 households was conducted during August 2018. Employing the model allowing for zero WTP values, the mean of the additional WTP or premium for one Gcal of heat produced using renewable energy rather than fossil fuels was estimated to be KRW 3636 (USD 3.2), which is statistically meaningful at the 1% level. This value represents the price premium for renewable heat over heat that is based on fossil fuels. Given that the heat price for residential heating was approximately KRW 73,000 (USD 65.1) per Gcal at the time of the survey, the additional WTP or the price premium corresponds to about 5% of that. When considering that the cost of producing renewable heat is still significantly higher than the cost of producing fossil fuels-based heat, more efforts to lower the production costs of renewable heat as well as financial support of the government for producing and supplying renewable heat are needed to ensure residential consumers’ acceptance of renewable heat.
Highlights
Much of the demand for final energy is for heat, which is mostly produced using fossil fuels
1000 households were surveyed, applying the contingent valuation (CV) method, during August 2018, in order to obtain an estimate of the additional willingness to pay (WTP) or the price premium
There have been many case studies where price premium has been examined for the use of renewable energy-based electricity in place of fossil fuels-based electricity, since renewable energy has been mainly used for electricity generation [15,16,17,18]
Summary
Much of the demand for final energy is for heat, which is mostly produced using fossil fuels. Fossil fuel use for heat production is the primary source of carbon dioxide and air pollutants emissions. According to International Energy Agency [1], heat globally accounted for 52% of final energy consumption in 2015. Renewable heat (RH) can be produced from renewable energy, such as bioenergy, geothermal, and solar heat directly, or renewable electricity indirectly. Heat accounts for about one-third of the final energy use in South Korea [3]. South Korea’s renewable energy policy only focuses on electricity, which accounts for only 18.9% of South Korea’s final energy consumption as of 2016. It is time for the government to expand its policy focusing on renewable electricity to RH. The focus of this research is on residential RH that is based on district heating, the shift to renewable sources of heat can contribute to the improvement in the energy efficiency of building and industrial processes that require heat, as well as a recovery of the excess heat
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
