Dynamic Economic Analysis of Subsidies for New and Renewable Energy in South Korea

Abstract

Many countries are increasing the supply of new and renewable energy to reduce greenhouse gas emissions and promote energy security. Subsidies for new and renewable energy are considered a useful means to increase supply, although a close assessment is needed of whether the subsidies improve the economic feasibility of new and renewable energy. Thus, this study conducted an economic analysis on South Korea’s housing support program for new and renewable energy sources from the perspectives of the government and consumers. The results showed that, in 2014, the use of solar photovoltaics (PV) led to constant improvements in economic feasibility, which benefited both the government and consumers, but fuel cell failed to do so from both perspectives. Solar thermal and geothermal heat showed improved economic feasibility throughout the program for consumers. In particular, solar PV reported high economic feasibility in 2014 and 2015 for consumers, indicating that a significant subsidy amount was provided for solar PV facilities. This also confirmed the possibility of achieving economic feasibility for other energy sources within a limited budget by distributing subsidies across the various sources.