South Korea's Growing Nuclear, Coal-Fired Units Likely to Displace Gas-Fired Generators Through 2016

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Korea Electric Power Corporation (KEPCO), working through its generating subsidiaries, is scheduled to commission three nuclear power units with a combined capacity of 3,800 megawatts (MW) in 2014-15; four coal-fired units with 3,760 MW of capacity in late 2014-early 2015; and seven coal-fired units with 6,470 MW of capacity in 2016-17.

The company's plans to build more nuclear reactors will not be stymied by the shutdown of three reactors in the second half of 2013, after faulty components were discovered. These parts were replaced after an urgent government-driven inspection program seems to have prevented any incident, but raised broader safety issues for the Korean nuclear industry.

The three reactors in question are managed by KEPCO's fully owned Korea Hydro and Nuclear Power Company (KHNPC), and resumed operations in January this year.

The growth in the country's power capacity will negatively affect gas-fired generators, but will help KHNPC. "Increasing power reserve margins and new base load power plants will heighten competition among power generating companies, and will as a result reduce wholesale power prices," said Mic Kang, a Moody's vice president and senior analyst.

Pressure on profit margins will be highest for independent power producers (IPPs) during the next two or three years, as they run mainly gas-fired generators.

Reserve margins in South Korea are expected to top 15% in 2015-16, as generator-capacity additions outpace electricity demand growth. New coal and nuclear power plants probably will displace more costly natural-gas and oil-fired units during the next two to three years.

For related information, see February 3, 2014, article - South Korea Grants First New Nuclear Project Since Fake Certifications.

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