Utilization of early retiring coal-fired power plants as a cold reserve in South Korea: A public perspective

Abstract

With an intention to reduce greenhouse gas emissions, the South Korean government decided to retire thirty coal-fired power plants early by 2034. Rather than dismantling all of them, some of them are proposed to be used as cold reserves. This paper seeks to explore the public preference and cost bearing for utilization of early retiring coal-fired power plants as a cold reserve by adopting a contingent valuation. To this end, the public willingness to pay (WTP) for the utilization was elicited through a survey of 1000 South Korean households. The payment vehicle was set to be an increase in monthly electricity bill. The method of inducing the WTP was determined as one-and-one-half-bounded questioning. The spike model was selected to reflect the WTP observations with zeros. The average monthly household WTP was estimated as KRW 1596 (USD 1.32), which was worth 3.6% of the average monthly electricity bill (KRW 43,950 or USD 36.32) per household. If the average WTP is re-calculated for all households in the country, it will reach KRW 263.52 billion (USD 217.80 million) a year. Therefore, the utilization can be introduced to the extent that this level of cost is incurred. Several issues that need to be solved in order for the utilization to succeed are also discussed.