Dynamic Economic Analysis of Subsidies for New and Renewable Energy in South Korea
Abstract
:1. Introduction
2. Literature Review
3. Housing Support Program in South Korea
4. Methodologies for Economic Evaluation and Scenarios
4.1. Economic Evaluation
4.1.1. Benefit–Cost Ratio
4.1.2. Net Present Value
4.1.3. Internal Rate of Return
4.1.4. Payback Period
4.2. Perspective of Economic Evaluation
4.2.1. Cost and Benefit: Government Perspective
4.2.2. Cost and Benefit: Consumer Perspective
4.3. Economic Evaluation and Analysis System
5. Empirical Analysis
5.1. Data
5.2. Results and Discussion
6. Summary and Conclusions
Author Contributions
Acknowledgments
Conflicts of Interest
Abbreviations
B-C Ratio | Benefit–Cost Ratio |
BIPV | Building Integrated Photovoltaic |
CO2 | Carbon Dioxide |
EIA | U.S. Energy Information Administration |
EU | European Union |
FIT | Feed-in-Tariff |
IEA | International Energy Agency |
IPCC | Intergovernmental Panel on Climate Change |
IRR | Internal Rate of Return |
KRW | South Korean Won |
LNG | Liquefied Natural Gas |
LPG | Liquefied Petroleum Gas |
METI | Ministry of Economy, Trade and Industry (Japan) |
MOTIE | Ministry of Trade, Industry and Energy (South Korea) |
NPV | Net Present Value |
OECD | The Organisation for Economic Co-operation |
PP | Payback Period |
PV | Photovoltaic |
RHI | Renewable Heat Incentive |
S1 | Scenario 1—Government’s perspective |
S2 | Scenario 2—Consumer’s perspective |
TGC | Tradable Green Certificate |
TOE | Ton of Oil Equivalent |
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Solar PV | Solar Thermal | Geothermal Heat | Fuel Cells | |
---|---|---|---|---|
No. of houses (household) | 186,580 | 24,296 | 9634 | 2249 |
Supply (TOE) | 56,653 | 14,586 | 27,636 | 2803 |
Subsidy (million KRW) | 457,767 | 110,003 | 106,808 | 53,183 |
Subsidy support ratio (max %) | 40 | 50 | 50 | 75 |
Scenario | Cost | Benefit |
---|---|---|
S1: government | Government subsidy, consumer share | Energy production, greenhouse gas reduction, air pollution reduction |
S2: consumer | Consumer share | Energy saving |
Data | Source | Note |
---|---|---|
Capacity factor | Korea New and Renewable Energy Center [29] | solar PV: 14.93% fuel cells: 74.56% |
Energy conversion factor | Korea New and Renewable Energy Center [29] | solar thermal: 0.0679 toe/m2 geothermal heat: 0.207 toe/RT (heating), 0.122 toe/RT (cooling) |
Economic life | METI of Japan [37] Korea Institute of Energy Research [38] IPCC [39] | solar PV: 20 years [37] fuel cells: 20 years [37] solar thermal: 20 years [39] geothermal heat: 20 years [39] |
LNG combined cycle generation efficiency | Korea Power Exchange [41] | Annual LNG combined cycle generation efficiency data Assumed efficiency is consistent at 48.24% since 2015 |
City gas boiler efficiency | MOTIE of Korea [41] | 80% |
Auxiliary power ratio | Korea Power Exchange [40] | Annual LNG combined cycle generation and internal consumption rate data Assumed internal consumption rate is consistent at 3.03% since 2015 For city gas boilers, internal consumption rate is assumed to be 0% |
Electric power price | Korea Electric Power Corporation [42] | Power rates for housing (low pressure) |
City gas price | Korea Energy Economics Institute [43] | Annual average price for city gas Assumed that it rises equally to the rise of LNG fuel costs, from 947 KRW/m3 in 2014 |
Emission factor | Korea Energy Agency [44] | power: 0.45 tCO2/MWh For gas boilers, it is directly calculated (2.43 tCO2/1000 m3) using the LNG carbon coefficient (0.637 tC/TOE) |
Carbon price | Korea Power Exchange [40] | 10,506 won/tCO2 |
Co-benefit | Nemet et al. [35] | Average of developed countries is US $44/tCO2 (dollar exchange rate as of 2008) |
Price index | Bank of Korea [45] | Annual average consumer price index data |
Fuel unit cost | Korea Power Exchange [40] | Annual LNG fuel cost data Assumed that it is increases along with the rate of increase in fuel cost since 2015 |
Fuel cells cost | Korea Energy Agency [28] | City gas price data Efficiency of fuel cells: 60% (MCFC) |
Rate of increase for fuel unit cost | IEA [46] | 1.88% |
Housing | Solar PV | Fuel Cells | Solar Thermal | Geothermal Heat | ||||
---|---|---|---|---|---|---|---|---|
S1 | S2 | S1 | S2 | S1 | S2 | S1 | S2 | |
2004 | 0.243 | 1.248 | - | - | - | - | - | - |
2005 | 0.288 | 1.251 | - | - | - | - | - | - |
2006 | 0.302 | 1.321 | - | - | - | - | - | - |
2007 | 0.317 | 0.974 | - | - | 1.145 | 2.325 | - | - |
2008 | 0.333 | 0.893 | - | - | 0.937 | 1.735 | - | - |
2009 | 0.432 | 1.456 | - | - | 0.910 | 1.710 | 0.796 | 2.136 |
2010 | 0.557 | 1.384 | 0.249 | 0.661 | 0.836 | 1.557 | 0.537 | 1.016 |
2011 | 0.563 | 1.365 | 0.274 | 0.639 | 0.852 | 1.771 | 0.601 | 1.114 |
2012 | 0.820 | 1.725 | 0.313 | 0.605 | 0.729 | 1.391 | 0.605 | 1.162 |
2013 | 0.864 | 1.691 | 0.313 | 0.626 | 0.792 | 1.395 | 0.673 | 1.346 |
2014 | 1.052 | 1.983 | 0.381 | 0.803 | 0.964 | 1.868 | 0.744 | 1.490 |
2015 | 1.137 | 2.132 | 0.426 | 0.841 | 0.898 | 1.852 | 0.720 | 1.520 |
Housing | Solar PV | Fuel Cells | Solar Thermal | Geothermal Heat | ||||
---|---|---|---|---|---|---|---|---|
S1 | S2 | S1 | S2 | S1 | S2 | S1 | S2 | |
2004 | −6705 | 635 | - | - | - | - | - | - |
2005 | −16,780 | 1955 | - | - | - | - | - | - |
2006 | −50,185 | 7384 | - | - | - | - | - | - |
2007 | −60,283 | −1030 | - | - | 378 | 1518 | - | - |
2008 | −65,101 | −5230 | - | - | −1430 | 8220 | - | - |
2009 | −55,331 | 17,501 | - | - | −5407 | 21,184 | −1280 | 2741 |
2010 | −56,195 | 25,758 | −9882 | −1944 | −4513 | 7900 | −11,709 | 217 |
2011 | −47,158 | 21,123 | −12,282 | −2990 | −4037 | 9915 | −10,798 | 1740 |
2012 | −25,570 | 63,002 | −8596 | −2891 | −9830 | 7423 | −15,195 | 3426 |
2013 | −10,425 | 34,868 | −8141 | −1579 | −4100 | 4525 | −16,196 | 9249 |
2014 | 3520 | 45,833 | −5355 | −916 | −614 | 7995 | −11,948 | 12,570 |
2015 | 8066 | 46,127 | −6721 | −1075 | −1245 | 5442 | −12,569 | 12,363 |
Housing | Solar PV | Fuel Cells | Solar Thermal | Geothermal Heat | ||||
---|---|---|---|---|---|---|---|---|
S1 | S2 | S1 | S2 | S1 | S2 | S1 | S2 | |
2004 | −7.9 | 8.8 | - | - | - | - | - | - |
2005 | −6.7 | 8.8 | - | - | - | - | - | - |
2006 | −6.5 | 9.7 | - | - | - | - | - | - |
2007 | −6.1 | 5.1 | - | - | 7.4 | 18.7 | - | - |
2008 | −5.8 | 4.0 | - | - | 4.6 | 13.4 | - | - |
2009 | −3.6 | 11.4 | - | - | 4.2 | 13.3 | 2.6 | 18.3 |
2010 | −1.2 | 10.5 | −8.0 | −4.9 | 3.2 | 11.8 | −1.6 | 5.7 |
2011 | −1.1 | 10.2 | −7.2 | −5.7 | 3.4 | 14.1 | −0.5 | 6.9 |
2012 | 3.0 | 14.7 | −6.2 | −6.8 | 1.6 | 10.1 | −0.4 | 7.5 |
2013 | 3.7 | 14.3 | −6.1 | −0.1 | 2.6 | 10.2 | 0.8 | 9.7 |
2014 | 6.2 | 17.8 | −4.4 | −2.1 | 5.0 | 15.4 | 2.0 | 11.4 |
2015 | 7.2 | 19.7 | −3.3 | −1.2 | 4.2 | 15.2 | 1.7 | 11.8 |
Housing | Solar PV | Fuel Cells | Solar Thermal | Geothermal Heat | ||||
---|---|---|---|---|---|---|---|---|
S1 | S2 | S1 | S2 | S1 | S2 | S1 | S2 | |
2004 | N | 14 | - | - | - | - | - | - |
2005 | N | 14 | - | - | - | - | - | - |
2006 | N | 13 | - | - | - | - | - | - |
2007 | N | N | - | - | 17 | 8 | - | - |
2008 | N | N | - | - | N | 11 | - | - |
2009 | N | 12 | - | - | N | 11 | N | 8 |
2010 | N | 13 | N | N | N | 12 | N | 20 |
2011 | N | 13 | N | N | N | 10 | N | 18 |
2012 | N | 9 | N | N | N | 13 | N | 17 |
2013 | N | 10 | N | N | N | 13 | N | 14 |
2014 | 19 | 8 | N | N | N | 9 | N | 12 |
2015 | 17 | 7 | N | N | N | 10 | N | 12 |
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Choi, G.; Heo, E.; Lee, C.-Y. Dynamic Economic Analysis of Subsidies for New and Renewable Energy in South Korea. Sustainability 2018, 10, 1832. https://doi.org/10.3390/su10061832
Choi G, Heo E, Lee C-Y. Dynamic Economic Analysis of Subsidies for New and Renewable Energy in South Korea. Sustainability. 2018; 10(6):1832. https://doi.org/10.3390/su10061832
Chicago/Turabian StyleChoi, Gobong, Eunnyeong Heo, and Chul-Yong Lee. 2018. "Dynamic Economic Analysis of Subsidies for New and Renewable Energy in South Korea" Sustainability 10, no. 6: 1832. https://doi.org/10.3390/su10061832