Analyzing consumers' willingness to purchase energy-efficient appliances in response to energy price changes: Case study of South Korea

This study investigates how changes in energy prices and payback periods can quantitatively change the level of energy efficiency investment. Using the contingent valuation method (CVM) and survey data from 2392 respondents in South Korea, we estimate consumers' acceptable payback period when they are willing to purchase four different types of home appliances: TVs, air conditioners, dehumidifiers, and air purifiers. The average of acceptable payback periods is six to seven years, which corresponds to the probability for consumers to purchase high-efficiency appliances ranging from 47% to 48%. Based on the estimated results, we simulate the purchase probability of high-efficiency appliances in response to changes in energy prices and payback periods. Overall, our findings indicate that consumers are highly sensitive to energy prices in adopting high-efficiency appliances. Therefore, incentive or rebate levels of energy efficiency programs needs to be adjusted according to changes in energy prices.