Energy plan to boost renewables to 35% of total

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Energy plan to boost renewables to 35% of total

The government gave a final stamp of approval to an energy plan that would boost renewable energy to 35 percent of all power generated in Korea by 2040, up from the current 7.6 percent.

The latest plan did not provide details about nuclear and coal-fueled reactors, which are supposed to be phased out. Yet the government plan raised concerns about higher electricity bills, especially as the nation’s power supplier, Korea Electric Power Corp. (Kepco), suffers from increasing operating losses.

The master plan with a 20-year goal, which is renewed every five years, was passed in a cabinet meeting that was presided over by Prime Minister Lee Nak-yon on Tuesday.

It is more aggressive than the previous plan, which called for a raising of the renewable energy contribution to 11 percent by 2035.

The government said it maintained the basic direction and rationals of the energy road maps created by previous governments and reflected the public’s demand for clean and safer energies. This includes the public worries after the 2011 Fukushima nuclear plant meltdown and the 2017 earthquake in Pohang.

The government said the key to the latest energy plan was to change the structure of Korea’s industry to be more aligned with advanced economies.

One specific goal is to improve energy efficiency by 38 percent by 2040 with the help of various changes such as capping carbon emissions, more active carbon trading and installing systems with the latest technologies like Internet-of-Things (IoT) and energy storage systems.

The government hopes to lower energy demand by 2040 to 171.8 million tonnage of oil equivalent (TOE) per year, an 18.6-percent reduction from current levels. Without changes, energy demand is expected to grow 0.8 percent annually to reach 211 million TOE by 2040. As of 2017, energy consumption amounted to 176 TOE.

The government wants to reduce industrial use of energy by 56.1 percent, to 96.3 million TOE, by 2040. It is also hoping to reduce energy consumption in transportation by 19 percent to 32.7 million. Household consumption is expected to be lowered 10.3 percent to 17.7 million TOE by 2040.

Yet the energy plan did not included detailed plans for nuclear or coal reactors. It only stated that the contribution of nuclear power will be gradually reduced by not extending the operational lives of nuclear reactors and not building new reactors.

In the previous plan, nuclear’s contribution was to amount to 29 percent by 2035. Nuclear power, which accounted for as much as 30 percent of all power in 2016, has fallen to 20 percent since the current government took over.

The downside is the cost of generating power in the future. According to Kepco, the unit cost of generating 1 kilowatt hour from nuclear power was 62.18 won ($0.05) last year. For coal it was 83.19 won. The cost of more environmentally friendly energy sources is more than double.

The unit cost of the same energy from liquefied natural gas is 122.62 won and from renewable energy (including solar and wind) is 179.42 won.

That could increase Kepco’s losses.

Last year, the state-owned power supplier suffered an operating loss of 208 billion won.

In the first three months of this year, it reported a 629.9 billion won operating loss. That was 42 billion won more than what analysts expected.

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