Willingness-to-pay promoted renewable energy diffusion: The case of Japan's electricity market

Abstract

The present work aims to simulate the willingness-to-pay (WTP) for renewable energy (RE) in Japan under various socioeconomic conditions and further analyzes penetration process of WTP-promoted RE into Japan's energy sector from 2015 to 2050. The analysis was performed by incorporating the simulated WTP for RE into a multiregional optimal generation planning model, applying Japan's mid-century CO2 emissions target. The results show that total WTP in 10 aggregated regions by 2050 would increase to varying degrees than its initial value in 2015 under Japan's unique socioeconomic circumstances of gradual economic growth yet decreasing population. These increasing WTP would create an opportunity for RE expansion into generation mix, allowing increase of share of generation by solar photovoltaic and wind power from 0.7% to 4.3–9.9% by 2050. With integrating WTP-promoted RE into the generation mix, it would promote to achieve the feasible emission reductions by up to 8% of 2015 emission levels and decrease the cost gap for shifting of generation mix from baseline to zero-carbon emission target. All these results indicated the significant roles of WTP for RE penetration into the generation mix in reaching a completely decarbonized power system.