South Korea's decades-old nuclear-focused energy strategy could undergo
a major revamp with the two top presidential candidates vowing to cut
nuclear power generation and boost the use of gas and renewables.
Both candidates have also vowed to raise electricity tariffs as part of
efforts to reduce the country's power consumption, which could lead to higher
production costs for energy-intensive manufactures such as oil refiners,
chemical companies, steelmakers and auto makers.
Park Geun-Hye, the nominee for the ruling conservative New Frontier
Party who has maintained a solid lead in the race, has promised to review the
country's long-term energy plan, which is focused on building more nuclear
reactors, if she is elected in the December 19 presidential election.
Article continues below...
|Request a free trial of: Power in Asia|
Power in Asia is a fortnightly newsletter that provides incisive comment and analysis on the policies and projects that shape the electricity market in Asia. You will receive information on corporate activity and performance, utility strategy and trends plus country-by-country news, market commentary, statistics and results.
South Korea currently has 23 nuclear power reactors, which account for
30% of the country's total power generation. The country has plans to add 11
more by 2024 to expand the contribution of nuclear power to nearly 50%. Under
the country's power blueprint, the proportion of gas-fired power generation
is expected to fall to 16.6% in 2015 and 9.7% in 2024 from 22% currently, and
oil-fired generation would slide to 1.3% in 2014 and 0.5% in 2025, from 3-4%
But Park said she would review the plan, noting that building more
nuclear reactors is "not desirable."
Her remark is a change from her predecessor President Lee Myung-Bak, who
has pushed for nuclear as the country's main energy source despite concerns
about safety in the wake of Japan's 2011 Fukushima nuclear disaster.
Moon Jae-Un, the candidate for the progressive opposition Democratic
United Party, has also taken a tough stance against nuclear energy, vowing to
scrap the plan to build more nuclear reactors and immediately close down
ageing nuclear plants. A third contender, centrist independent candidate Ahn
Cheol-Soo, had also pledged to review the nuclear plan and close down ageing
reactors before withdrawing from the race last Friday and endorsing Moon.
Polls consistently showed Park ahead in the three-way race but indicated
she would trail if Moon and Ahn settled on a single opposition candidate.
NO SUPPLY PLAN IN PLACE
Both Park and Moon have also pledged to increase the use of renewable
sources in power production, but have yet to disclose detailed plans over how
to ensure stable energy supplies with fewer nuclear reactors.
South Korea, Asia's fourth-biggest economy, consumes more than 900
million barrels of crude oil and 36 million metric tons of LNG every year,
all of which it imports.
All that the candidates have proposed is raising electricity tariffs to
address the demand side to make up for short supply from nuclear reactors.
Ahn had said that if elected, he would boost the portion of LNG in power
generation. "Natural gas would be combined with renewable sources to generate
more electricity to make up for nuclear power shortfalls," he told a recent
Yoon Hee-Do, an economist at Korea Investment and Securities, said the
policy promises of the main candidates show that power production from
gas-fired plants would be increased. This will help boost earnings of
state-run Korea Gas Corp., that has a monopoly on domestic natural gas sales,
and private gas-fired power producers, such as SK E&S and GS Power.
Since three reactors at the Yeonggwang plant on the southwest coast were
closed due to safety problems earlier this month, operation of the gas-fired
plants has been on the rise, according to Kepco.
ANALYSTS QUESTION RENEWABLES STRATEGY
But many analysts have raised questions about the candidates' pledge to
sharply boost the portion of renewables in power production.
"Increased use of renewable sources would sharply raise electricity
production costs, which would pose a bigger burden to consumers," said Park
Jong-Bae, a professor at Konkuk University in Seoul.
Sohn Yang-Hoon, a professor at Incheon University, said the presidential
candidates lacked a bigger strategy for national energy security.
"South Korea imports almost all of its energy requirements, but it has
no grand strategy to ensure stable supplies," he said. "Despite potential
energy crisis, the presidential hopefuls are just shouting about a shutdown of
nuclear reactors and expansion of renewable energy that remains
questionable," Sohn said.
The country's oil refiners are also likely to face tougher challenges as
both candidates have vowed consumer-focused policies under their "economic
democratization" platform, a big departure from Lee's business-friendly
The market dominance of the four refiners -- SK Innovation, S-Oil,
Hyundai Oilbank and GS Caltex -- which stood at 97.7% last year, has been
cited as the main reason for high domestic oil prices.
President Lee, even though he was elected five years ago on a
pro-business platform, has taken a series of steps to ease the market
dominance and twisted refiners' arms to bring down retail fuel prices.
--Charles Lee, email@example.com
--Edited by Mriganka Jaipuriyar, firstname.lastname@example.org;