Using a large-scale pilot test on time-of-use (TOU) pricing for residential customers, this study analyzes the effects of TOU pricing on the load patterns of residential customers and on producer surplus in South Korea. We estimate the difference in the electricity demand functions of residential customers across peak, intermediate, and off-peak periods before and after TOU pricing. In addition, we assess the supply curve in the wholesale electricity market and calculate the changes in electricity purchase costs by integrating the supply curve over the range of consumption changes across the periods. This study simulates the effects of TOU pricing on producer surplus that would be obtained if all residential customers in South Korea switch from increasing block pricing to TOU pricing. Our results show that TOU pricing can be an effective measure for load transfer and simultaneously increase producer surplus. We find that although the revenue of electric utility generally decreases, the cost savings are greater and thus producer surplus increases. The results can be a valuable reference for the South Korean government regarding the nationwide expansion of TOU for residential electricity in the future.

Using a large-scale pilot test on time-of-use (TOU) pricing for residential customers, this study analyzes the effects of TOU pricing on the load patterns of residential customers and on producer surplus in South Korea. We estimate the difference in the electricity demand functions of residential customers across peak, intermediate, and off-peak periods before and after TOU pricing. In addition, we assess the supply curve in the wholesale electricity market and calculate the changes in electricity purchase costs by integrating the supply curve over the range of consumption changes across the periods. This study simulates the effects of TOU pricing on producer surplus that would be obtained if all residential customers in South Korea switch from increasing block pricing to TOU pricing. Our results show that TOU pricing can be an effective measure for load transfer and simultaneously increase producer surplus. We find that although the revenue of electric utility generally decreases, the cost savings are greater and thus producer surplus increases. The results can be a valuable reference for the South Korean government regarding the nationwide expansion of TOU for residential electricity in the future.

The transition to cleaner energy usage is accelerating worldwide in an effort to combat the climate crisis. In Korea, there is a social consensus regarding the cause and direction of energy transition represented by an increase in the utilization of renewable energy, improvement in energy efficiency, and decentralization of control. However, no social consensus has been reached for the means and methods of implementing energy transition policies, nor the pace at which they would take effect. In fact, several issues have been subject to heated political debates. In this study, the major issues associated with Korean energy transition policies were examined in terms of the intensity, pace, and cost of energy transition and its impact on the national economy. In particular, the key points of different claims were examined through an in-depth review of the literature on each topic and quantitative data analyses. Based on this study’s findings, topics are proposed which can help facilitate furthering debates over Korean energy transition policies.