Measurement of the Benefits from Safeguarding Energy Security through Building the Integrated Gasification Combined Cycle Power Plant

Integrated gasification combined cycle (IGCC) power plants not only emit less greenhouse gases and air pollutants than conventional coal-fired power plants, but also use low-price, low-quality, and internationally easily procurable coal. Thus we can benefit from safeguarding energy security through building the IGCC power plant. This paper attempts to value the benefits of energy security enhanced by IGCC power plant. To this end, we report here the results from a contingent valuation survey of randomly selected 600 households. A combination of a double-bounded model and a spike model is applied for the purpose of increasing statistical efficiency and dealing with zero(0) willingness to pay data, respectively. The results show that the respondents are additionally willing to pay 6.05 won for 1 kWh of electricity generated from IGCC power plant. In other words, the benefits from safeguarding energy security through building the IGCC power plant are 6.05 won per kWh. Given that the expected amount of generation from the Taean IGCC power plant that is scheduled to be built in late 2015 is 2.27 TWh per year, the benefits are estimated to be 13.74 billion won per year.