Nuclear Engineering and Technology

Korean Nuclear Society (한국원자력학회)
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Elasticity of substitution of renewable energy for nuclear power: Evidence from the Korean electricity industry

  • Kim, Kwangil (Graduate School of Economics, Nagoya University)
  • Received : 2019.01.15
  • Accepted : 2019.04.05
  • Published : 2019.09.25
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Abstract

This study suggests a simple economic model to analyze electricity grid that consists of different power sources. The substitutability of renewable energy for nuclear power in Korean electricity transmission network is investigated by suggested model. The monthly data from January 2006 to December 2013 reported by Electricity Power Statistics Information System (EPSIS) of Korea Power EXchange (KPX) are used. To estimate the elasticities of substitution among four power sources (i.e. coal, natural gas, nuclear power, and renewable energy), this paper uses the trans-log cost function model on which local concavity restrictions are imposed. The estimated Hicks-Allen and Morishima elasticity of substitution shows that renewable electricity and nuclear power are complementary. The results also evidenced that renewable electricity and fossil fueled thermal power generation are substitutes.

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