Valuing Improved Power Supply Reliability for Manufacturing Firms in South Korea: Results from a Choice Experiment Survey

• Main Authors: Doo-Chun Kim, Hyo-Jin Kim, Seung-Hoon Yoo
• Format: Article
• Language: English
• Published: MDPI AG 2018-11-01
• Series: Sustainability
• Subjects: power supply reliability; electricity; manufacturing industry; choice experiment; willingness to pay
• Online Access: https://www.mdpi.com/2071-1050/10/12/4516

An outage of electricity may cause considerable economic damage to industrial sectors. Thus, South Korea electricity authorities demand information about the value of improved power supply reliability for the manufacturing sector to implement them in planning electricity supply. This article aims to measure the value using a specific case of South Korean manufacturing firms. The choice experiment (CE) approach is adopted for this purpose. A nationwide CE survey of 1148 manufacturing firms was undertaken. The firms revealed statistically significant willingness to pay for a decrease in the duration of interruption, avoiding interruption during daytime (9 a.m. to 6 p.m.) rather than off-daytime (6 p.m. to 9 a.m.), and preventing interruption during weekdays rather than weekend. For example, they accepted a 0.02% increase in the electricity bill for reducing one minute of interruption during electricity outage, a 2.98% increase in the electricity bill to avoid interruption during the daytime rather than off-daytime, and a 1.60% increase in electricity bill for preventing interruption during weekdays rather than weekends. However, they put no importance on the season of interruption. These results can be useful for policy-making and decision-making regarding improving electricity supply reliability.