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The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households

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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)

  • Seul-Ye Lim

    (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

Koreans usually prefer the district heating system (DHS) to the individual heating system (IHS) because DHS can give them convenience and safety within their living environment. The Korean government thus plans to expand the DHS and requires information about the value that consumers place on the DHS over the IHS, which has not been dealt with in academic literature. This paper attempts to investigate Korean households’ willingness to pay (WTP) for DHS over IHS, for residential heat (RH). To this end, the authors apply the dichotomous choice contingent valuation to assessing additional WTP for DHS using a survey of 1000 randomly selected households living in buildings with IHS. A mixture model is applied to deal with the zero WTP responses. The WTP distribution is specified as a mixture of two distributions, one with a point mass at zero and the other with full support on the positive half of the real line. The results show that the mean additional WTP for DHS-based RH over IHS-based RH is estimated to be KRW 5775 (USD 5.4) per Gcal. This value can be interpreted as the consumer’s convenience benefits of DHS over IHS, and amounts to approximately 6.0% of the average price: KRW 96,510 (USD 90.4) per Gcal in 2013, for IHS-based RH. This information is useful for evaluating changes to the method used for supplying RH from IHS to DHS.

Suggested Citation

  • Hyo-Jin Kim & Seul-Ye Lim & Seung-Hoon Yoo, 2017. "The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households," Sustainability, MDPI, vol. 9(8), pages 1-12, August.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:8:p:1348-:d:106640
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    Cited by:

    1. Avi Friedman, 2017. "Sustainable and Resource—Efficient Homes and Communities," Sustainability, MDPI, vol. 9(12), pages 1-3, December.
    2. Park, Changwon & Jeong, Yoojin & Yoo, Seung Jick, 2019. "A study of consumer benefit from district heating service in Korea," Energy Policy, Elsevier, vol. 129(C), pages 958-966.
    3. Ju-Hee Kim & Byoung-Soh Hwang & Seung-Hoon Yoo, 2022. "Estimating the Demand Function for Residential City Gas in South Korea: Findings from a Price Sensitivity Measurement Experiment," Sustainability, MDPI, vol. 14(12), pages 1-13, June.
    4. Ju-Hee Kim & Younggew Kim & Seung-Hoon Yoo, 2021. "Using a choice experiment to explore the public willingness to pay for the impacts of improving energy efficiency of an apartment," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(5), pages 1775-1793, October.
    5. Min-Kyu Lee & Ju-Hee Kim & Seung-Hoon Yoo, 2018. "Public Willingness to Pay for Increasing Photovoltaic Power Generation: The Case of Korea," Sustainability, MDPI, vol. 10(4), pages 1-11, April.

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