KEPCO Suffers Snowballing Losses due to Global Fuel Price Hikes
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KEPCO Suffers Snowballing Losses due to Global Fuel Price Hikes
Experts say true cost of fuel needs to be reflected fully in electricity rates

24(Tue), May, 2022






Korea Electric Power Corp. (KEPCO) is predicted to post an estimated 30 trillion won operating loss this year as fuel cost hikes have not been reflected in electricity rates. 

Figures released by Korea Power Exchange showed that the system marginal price (SMP), a wholesale price in which the power utility company purchases from power companies, jumped to 202.11 won per kWh in April, a 4.8 percent surge over the previous month. 

It was the first time SMP surpassed the 200 won level since KPX was opened in 2001. 

SMP, which stood at 76.35 won in April 2021, jumped 2.5-fold in less than one year. SMP surged a record high of 197.32 won in February 2022 and renewed it with 202.11 in April. 

The new government disclosed a plan to abide by a fuel cost indexing system, but the government is expected to be struggling to curb soaring general price hikes, so an SMP hike is expected to not be fully reflected in electricity charges. 

KEPCO has seen its issuance of bonds in the first four months of this year surpass that for the whole of last year. 

KEPCO has room to issue bonds worth 40 trillion won. If the utility company will suffer 30 trillion won in operating losses this year, it is forecast to see its cap of issuing bonds halved next year. 








KEPCO President Chung Seung-il and POSCO Group Chairman Choi Jeong-woo look as their companies signed an MOU on building a partnership on a hydrogen and ammonia project on April 28. KEPCO President Chung Seung-il shakes hands with Lotte Chemical CEO Kim Kyo-hyun, head of Lotte Group’s chemical business unit, after they struck a similar deal on April 29. (Photos: KEPCO)


KEPCO, POSCO and Lotte Chemical to Commercialize Ammonia and Hydrogen Power Generation 

Korea Electric Power Corp. struck an MOU each with POSCO Holdings and Lotte Chemical to speed up collaboration in realizing the hydrogen economy by developing hydrogen and ammonia power generation technology and Korean and overseas hydrogen and ammonia power supply chains.

KEPCO President Chung Seung-il participated in a ceremony to sign an MOU on building a partnership on a hydrogen and ammonia project with POSCO Holdings and Lotte Chemical on April 28 and April 29, respectively. 

POSCO Group Chairman Choi Jeong-woo and Lotte Chemical CEO Kim Kyo-hyun, concurrently vice chairman of Lotte Group’s chemical unit, attended their respective contract-signing events. 

Under the agreements, KEPCO will team up with the companies to develop and commercialize core technologies of the whole cycle of hydrogen and ammonia power generation to reduce greenhouse gas emissions and invest into Korean and overseas hydrogen and ammonia supply chains and introduce them. 

They have agreed to collaborate in joint development of Korean and overseas projects to produce blue hydrogen based on coal-fired combustion with preconditions on producing green hydrogen using renewable energies and carbon capture and upgrading technologies on ammonia/hydrogen mixed power generation. 

They agreed to introduce a swap system in which if one company runs short of hydrogen and ammonia, the company will be supplied preferentially by other company and return it. 

The step is designed to minimize possible uncertainties that could take place at the early stage of the new business. 

The MOU takes on significance as KEPCO, POSCO and Lotte Chemical, major companies in the biggest carbon emitter, power, steel-making and petrochemical sectors, have concurred on effective ways of reducing greenhouse gas emissions and achieving carbon neutrality. 


   
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