Households’ Willingness to Pay for Interactive Charging Stations for Vehicle to Grid System in South Korea

Abstract

The South Korean government intends to construct interactive charging stations (ICSs) for a vehicle to grid (V2G) system that uses electric vehicles as a type of energy storage system. This article employs contingent valuation (CV) to examine households’ willingness to pay (WTP) to construct the ICSs. To this end, a CV survey of 1000 people was performed using the one-and-one-half-bound dichotomous choice questioning as the elicitation method for the WTP. To check if the response effect incurred by the questioning exists, a single-bound model, which partly uses the responses from the questioning, was also applied. Furthermore, a spike model which can model WTP observations with lots of zeros was adopted. The single-bound spike model, finally chosen for further analysis, produced some results securing statistical significance. The average household WTP is estimated as KRW 4017 (USD 3.51) per annum. A national version of the yearly WTP is derived as KRW 85.48 billion (USD 74.65 million). Considering that the occurrence period of the annual WTP is 10 years, the total present value as of the end of 2022 is computed as KRW 676.4 billion (USD 590.7 million). This study has significance in two aspects. First, quantitative information on household WTP is explicitly provided. Second, to the best of the authors’ knowledge, the household WTP is empirically dealt with for the first time in the literature. In addition, the implications of this value from a policy perspective, as well as four challenges to be solved for constructing ICSs for a V2G system, are discussed.