Energy becomes political football

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Energy becomes political football


The government is expected to unveil its energy plan for the next 15 years in October, and interest is especially high given President Moon Jae-in’s drive to phase out Korea’s nuclear power plants.

A commission overseen by the Ministry of Trade, Industry and Energy and comprising experts from the energy sector releases a report every two years with revised projections and recommendations for energy management in the following 15 years. The government usually implements the recommendations.

In its most recent report released Friday, the commission said it expects economic growth to slow in the next 15 years and electricity consumption to fall with it. The commission lowered its recommended reserve rate, the percentage of power generators designated for backup during peak hours, from the current 22 percent to 20 percent.

Projections of a sluggish economy have not always translated to a downward revision of the reserve rate. In its previous report in 2015, the commission recommended no changes even though it expected economic growth to slide by 2027 to an average annual rate of 3.06 percent, a drop of 0.42 percentage points from its projection two years earlier.

Now, the commission believes annual growth will decelerate to 2.5 percent by 2030, a sharp 0.9 percentage point drop from its last forecast. Electricity demand, it said, will likely fall to 101.9 gigawatts per year, a difference of more than 11 gigawatts from its prediction two years earlier.

For comparison, the commission’s projection between its 2013 and 2015 reports went down by just 1.6 gigawatts.

Supplying stable electricity has long been a challenge for Korea, and part of the difficulty stems from predicting demand. Historically, the government has lowballed its estimates, leading to perennial supply problems. After blackouts swept across the country in September 2011, the government in 2013 finally decided to raise the reserve rate at power facilities and expand capacity.

But now, there are concerns that the government might have swung too much in the opposite direction and that the country is now generating more electricity than it needs, leading to the commission’s stark turnaround in its energy projections.

A political hot potato

Korea has traditionally focused on constructing nuclear-powered and coal-fired plants because they tend to last a long time, but they also take a while to build. This has made flexible management of electricity supply difficult when demand rises, so the government decided to invest in liquefied natural gas plants, which can be constructed relatively more quickly than other plants, while continuing with construction of nuclear and coal facilities.

It was always meant to be a short-term plan, and in 2004, the government estimated that energy generated from the country’s liquefied natural gas plants would drop starting from the mid-2000s. Instead, it rose continuously until 2010.

Then in 2010, the government projected power from natural gas would drop 58.6 percent through 2024 and said its dependency on natural gas would go down once it completes construction of new nuclear power plants. But the figure hasn’t dropped as expected, and the current administration plans to build more natural gas plants to lower dependence on nuclear power.

Before the government took on a major role in energy management, the job belonged to the state-owned Korea Electric Power Corporation. But the government in 1991 decided to come up with 15-year plans themselves, seeing energy as a big issue that it needed to tackle directly.

Critics say the government takeover of energy management was a way to expedite construction of power plants. The first few plans dictated the timeline for construction of nuclear-powered and coal-fired facilities.

Now, some in the industry say the latest 15-year plan is being used as an argument for Moon’s push to wean Korea off nuclear energy. The comments from commission members seem to support the administration’s policy goal of diversifying energy sources beyond nuclear.

“We believe the country needs to construct new power plants with between 5 to 10 gigawatt capacity by 2030, and I think we can do it through liquefied natural and renewable energy,” said Kim Jin-woo, a professor of economics at Yonsei University, who currently chairs the commission.

Chung Do-young, a nuclear energy professor at Dongshin University, warned against using energy management as a way to propel political interests.

“Long-term energy plans should focus on coming up with the most efficient way to manage electricity considering various factors like how stable one can supply energy and environmental issues,” Chung said. “The government shouldn’t miss out on what is most important by just debating only whether it is right to continue to push ahead with nuclear energy or not.”

Few governments in the world regulate the construction of power plants to the extent that Korea’s does. Most only project electricity demand for a near future, while supply is decided by the private sector based on demand. In Korea, the 15-year plans, which change every two years, have many stakeholders confused.

“It is time for the country to focus on developing a new energy paradigm, considering the changes in industry structure and climate accords,” said Kim Chang-sup, an energy professor at Gachon University. “The debate about weaning the country off nuclear and coal should be discussed through a long-term perspective, while changing the paradigm at the same time.”

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