The external benefits of expanding the micro photovoltaic power generation in Korea: A contingent valuation study

The micro photovoltaic (MPV) is a good alternative for reducing greenhouse gas (GHG) emissions in the residential areas. Therefore, the Korean government has planned to expand the MPV power generation from about 2000 households (6 MW) in 2014 to 25,000 households (61 MW) by 2017. This article aims to assess the external benefits of this expansion in terms of reducing GHG emissions. To this end, we derive the public's additional willingness to pay (WTP) for the expansion through an increase in electricity bill using a contingent valuation survey of 1000 Korean households. For the purpose of mitigating the response effect in eliciting their WTP and increasing statistical efficiency in analyzing the WTP data, we employ a one-and-one-half-bounded dichotomous choice question format. Furthermore, we use the spike model so as to model zero WTP responses. The mean additional WTP for the expansion is computed to be KRW 15.48 (USD 0.01) per kWh. This value amounts to 12.4% of the residential electricity price, KRW 125.14 (USD 0.11). We can conclude that Korean households are ready to shoulder some of the financial burden of expanding the MPV power generation.