Quantitative Analysis of Consumer Preferences of Windows Set in South Korea: The Role of Energy Efficiency Levels

The building sector is considered to be important for Korean energy issues as it accounts for approximately 20% of Korea’s final energy consumption. As one of Korea’s passive strategies in its emission reduction plan is reducing energy consumption through improvements in energy efficiency because the energy loss mostly occurs from window sets, this study aims to examine the preferences and role of the energy efficiency level of window sets in South Korea. Given that the lifespan of a building exceeds 20 years, a building’s energy efficiency significantly impacts accumulated energy savings. However, window sets affect not only energy efficiency, but also the interior appearance of the building; therefore, it is important to understand consumer preferences and to examine their effect on building energy reduction accordingly. Using a mixed logit model, this study analyzes window set preferences and energy savings. As a result, this study determines that consumers consider the energy efficiency level to be the second most important factor in determining window preference, following the cost of the window. In addition, this study found that the marginal willingness to pay for efficiency level 2 window sets compared to level 3 window sets is USD 1256. For level 1 window sets, this figure increases to USD 3140. Further, a scenario analysis is conducted to analyze the government incentive program’s effectiveness in encouraging consumers to purchasing higher energy efficiency more efficient products, and thus in promoting the eco-friendly consumption of in households. Taking into consideration of households’ willingness to pay and cost saving amount for using energy efficient window sets, the optimal value of government incentives of is found to be approximately USD 700 is found to be optimal.