How consumers value improving energy efficiency policy in the electricity market: A contingent valuation experiment in South Korea

Global warming concerns have emphasized the need for carbon neutrality. Improving the efficiency of the electricity industry is one method of reducing CO₂ emissions. There is a demand response policy that trades the saved electricity through voluntary adjustment of consumption patterns. The introduction of real-time pricing (RTP) based on advanced power supply systems is a method of transitioning to a demand-oriented power system. However, as Korea's power supply system is a relatively less efficient single-rate system, it is necessary to improve the efficiency of demand management. To transition to a demand-oriented power system in Korea, consumer preference is first investigated. This study evaluates the willingness to pay (WTP) for the introduction of RTP in Korea. Based on a survey of 500 households using the contingent valuation method, the monthly average WTP was found to be 2465 Korean won per household ($2.18 per household), which is approximately 7.8% of the electricity rate. Several additional factors influencing WTP were analyzed. Further analysis indicated that it is more effective to establish infrastructure for introducing RTP in local areas with low average electricity rates. These findings are beneficial for the development of future demand response policies.