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Economic Value of Improving Natural Gas Supply Reliability for Residential Consumers in South Korea

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  • Hyo-Jin Kim

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

  • Sung-Min Kim

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

  • Seung-Hoon Yoo

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

Abstract

An interruption to residential natural gas (NG) may cause considerable economic damage of the entire country. Thus, the South Korean government requires information about the economic value of improving residential NG supply reliability for planning NG supply. This article aims to measure the value using a specific case of South Korean residential consumers. The choice experiment (CE) approach was adopted for this purpose. The selected four attributes are the duration of interruption, the season of interruption, the time of day, and the day of the week. The value trade-off works among the four attributes and price attribute were sought and completed in a nationwide CE survey of 1000 households. The respondents revealed statistically significant willingness to pay for a decrease in the duration of interruption, avoiding interruption during winter rather than non-winter, and preventing interruption during off-daytime (18:00 to 09:00) rather than daytime (09:00 to 18:00). For example, they accepted a 0.10% increase in the residential NG bill for a one-minute reduction in interruption during NG supply interruption, a 5.16% increase in residential NG bill for avoiding interruption during winter rather than non-winter, and a 2.94% increase in residential NG bill for preventing interruption during off-daytime rather than daytime. However, they placed no importance on the day of the week. These results can be useful for policy-making and decision-making to improve residential NG supply reliability. It is necessary to conduct a study at regular intervals on the value of NG supply reliability because regarding NG supply reliability, it is difficult to maintain a specific value.

Suggested Citation

  • Hyo-Jin Kim & Sung-Min Kim & Seung-Hoon Yoo, 2019. "Economic Value of Improving Natural Gas Supply Reliability for Residential Consumers in South Korea," Sustainability, MDPI, vol. 11(2), pages 1-10, January.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:2:p:515-:d:199131
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