The nation will cut is dependence on coal-fired power units and increase the portion of nuclear power and new/renewable energies between 2015 and 2019. The strategies are contained in the 7th Basic Plan for Electricity Supply and Demand, which the government announced on June 8. They are designed to kill two birds with one stone — cutting greenhouse gas emissions caused by coal-fired units and ensure a stable supply of electricity. The following are excerpts of an interview between NewsWorld and Deputy Minister Chung Yang-ho of the Office of Energy and Resources at the Ministry of Trade, Industry and Energy (MOTIE) in which he spoke of the ministry’s energy policies, including long-term power supply.
Question: Will you tell our readers about the characteristics of the 7th Basic Plan for Electricity Supply and Demand, and its future schedule?
Answer: The 7th Basic Plan for Electricity Supply and Demand attaches a top priority to stabilizing power supply and reducing greenhouse gas emissions. It also focuses on aggressive demand management through precise prediction of demand and new energy industries.
In order to ensure a stable power supply, the nation will build two nuclear power units with a combined capacity of 3 million kW. A low-carbon composition has been established to cope with climate change by scrapping coal-fired power units, not easy to build.
The nation will predict future demand, reflecting power demand changes of 14 advanced countries, while forecasting future power charges based on a simulation of so-called consolidated unit costs to raise preciseness. The government has a target of reducing power consumption by 14.3 percent as of 2029 through aggressive demand management, and to this end, such new energy industries as energy storage systems (ESS) and negawatt market are explored and mobilized.
The 7th Basic Plan for Electricity Supply and Demand was finalized by the Power Policy Deliberation Committee on July 22. It was submitted to a public hearing on June 18 and a report to the National Assembly on June 26 to gather public opinions.
Q: The government announced a proposal to reduce greenhouse gas emissions in 2030. What points does it contain and what is the future schedule?
A: The government has worked out four reduction scenarios through consultation of related ministries to cope with responses to the Post 2020 climate change regime. According to some scenarios, Korea is forecast to emit 782.5 million tons of carbon dioxide equivalent in 2020 and 850.6 billion tons of carbon dioxide equivalent in 2030. The government established four reduction scenarios by taking into account the nation’s capability to cut greenhouse gas emissions based on economic growth and overall consideration, responding to the movements of the international community. The first scenario calls for a reduction of 14.7 percent relative to the “business as usual (BAU)” — emitting 7.26 million tons of carbon dioxide equivalent, up 5.5 percent when compared to greenhouse gas emissions in 2012. The second scenario sets a 19.2 percent reduction relative to the BAU — giving out 6.88 million tons of carbon dioxide equivalent, freezing greenhouse gas emissions at 2012 levels. The third scenario calls for cutting greenhouse gas emissions by 15.7 percent relative to the BAU — discharging 6.32 million tons of carbon dioxide equivalent, an 8.1 percent decline when compared to greenhouse gas emissions in 2012.
The fourth scenario calls for a 31.3 percent reduction relative to the BAU — emitting 5.85 million tons of carbon dioxide equivalent, a 15 percent plunge when compared to greenhouse gas emissions in 2012.
The BAU refers to the level of greenhouse gas emissions the country is forecast to reach by a certain year if emissions grow at their current pace.
A public hearing took place on June 12 to gather views from people in several walks of life on the four scenarios.
The government finalized on June 30 a plan to cut greenhouse gas emissions by 37 percent by 2030, a higher target than previously proposed. Korea’s intended nationally determined contribution (INDC), which was submitted to the U.N. Climate Change Secretariat on the same day, calls for reductions of 25.7 percent from the BAU by 2030. The remaining 11.3 percent cut would come in the form of purchasing carbon credits to offset emissions.
Q: The government announced a plan to ease the burden of electricity charges. What benefits will it bring?
A: The step will relieve households, SMEs, and “root industries” grappling with difficulties related to high electricity bills and uncertainties in the economy and the consumption downturn.
Some 6.47 middle-class and low-income households using between 301kWh and 600kWh of power monthly between July and September will have their electricity charges reduced a combined 130 billion won.
For instance, the average four-member urban family using 366kWh per month will see electricity charges drop some 8,368 won per month.
Those in the underprivileged brackets will benefit from expanding of welfare discounts, brining additional reductions to 46 billion won each year.
The overhauling of the electricity charging system for industrial customers on Saturdays will likely ease such “root industries” and water treatment and molding of the burden of electricity charges. It will also likely divert the industries’ electricity demand from weekdays to Saturdays, thus contributing to a stable supply of electricity overall.
Such institutional revamping as a payment in installment and easing of deposit money will likely dramatically improve the difficulties and burden low-income families and SME businesspeople experience.
Q: Will you touch on the significance of the dedication of the Low- and Intermediate-Level Radioactive Waste Disposal Facility in Gyeongju and what benefits will it bring?
A: The Low- and Intermediate-Level Radioactive Waste Disposal Facility in Gyeongju is the nation’s first radwaste treatment facility built in 30 years, after the nation launched a process to select a radwaste disposal facility site in 1986. The nation underwent numerous failures like the Anmyeon case in 1990, the Guleup Islet case in 1994 and the Buan case in 2004, but the process successfully ended up at the site of the radwaste treatment facility in Gyeongju, an exemplary case of a democratic solution based on the neighborhood district’s understanding and consent.
Korean and foreign expertise institutions conducted safety certification inspections on seven occasions to attach top priority to public safety. The Korean nuclear power industry is now capable of handling the whole of the nuclear power plant life-cycle ranging from design, construction and operation of nuclear power units even to radwaste disposal.
Securing such a radwaste disposal facility capable of treating waste in a comprehensive and safe fashion will have an effect of enhancing public safety. It is also expected to be precious experiences and assets to help lead to finding alternatives in dealing with the future issue of treating spent nuclear fuel.
Q: LNG power plants built by independent power producers have had hard times. Do you have any plans to increase capacity payments (CP) the private sector demands?
A: The recent rise in the electricity reserve rate has led to a drop in the utilization of privately built LNG power plants. The industry community is demanding a rise in CP, a kind of fixed capacity cost to recoup losses incurred from the operation of LNG-fired power units. Independent power producers have seen the ratio of LNG power units’ utilization drop from 65.6 percent in 2013 to 53.6 percent in January 2015, 48.4 percent in February and 41.2 percent in April. An increase in CP will raise unit costs for power supply, which could lead to a rise in the burden of consumers, an issue that needs to be handled prudently.
The government plans to take comprehensive steps after fully looking into such constructive factors of LNG-fired power units as an effect of reducing greenhouse gas emissions compared to producers in the neighborhood districts of consumers.
Q: Will you comment on the current status of overseas exports of the Korean power generation sector and future plans?
A: Currently, KEPCO and five power companies are involved in some 40 overseas power generation projects in such areas as nuclear power, thermal power, hydro power and new/renewable energy sources.
They are engaged in the construction, operation and maintenance of power plants, more than 50 percent of which are entering a stage of commercial operation to recoup investments.
Such success stories as the nuclear power project in the United Arab Emirates, Cirebon coal-fired power project in Indonesia, the Kelar combined cycle power project in Chile, and the wind power project in China are contributing to the creation of national wealth and high-quality jobs. But some projects have suffered hard times due to changes of local conditions and insufficient scrutiny into business feasibility. The overseas projects in question are undergoing restructuring as part of the government’s efforts to normalize public entities.
The government strives to help power companies make joint inroads into foreign markets with SMEs and mid-size superstars, while strengthening oversight and inspections into energy public entities, lest they incur losses stemming from the implementation of overseas power projects.
Q: Some maintain that the portion of LPG should be raised to ensure energy security. Will you comment on this suggestion?
A: As primary energy sources, LNG and LPG accounted for 18 percent and 3.6 percent, respectively, as of the end of 2012. The reality is that the portion of LNG is on the rise, while the ratio of LPG is on the decrease. The government is well aware of the strong points of LPG and the need for splitting of roles between LPG and city gas.
Q: Will you comment on the current status of the new/renewable energies and technology development?
A: The government is implementing policies to substitute 11 percent of primary energies for new/renewable energies by 2035, according to the 4th master plan for long-term new/renewable energy demand and supply.
The government is providing financial support to those who install renewable energy equipment and IPPs to spread the supply of new/renewable energies.
We aggressively offer support for R&D activities to develop, localize and test core technologies. In this regard, the government set aside 213.1 billion won in 2015. Korea is implementing projects to develop photovoltaic power, wind power and fuel cell walls as leading future technologies and multidisciplinary convergence technologies.
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