President-elect considers increasing nuclear capacity factor

Economy

Published: 22 Mar. 2022, 17:16 Updated: 22 Mar. 2022, 18:08

President-elect considers increasing nuclear capacity factor

Electricity bill meter at a residential neighborhood in Seoul, Monday. An announcement on new electricity tariffs that was supposed to be released Monday has been delayed. [YONHAP]

As the pressure for higher electricity rates builds amid soaring fuel prices, the president-elect's transition committee is weighing an increase in nuclear power output.

It is considering taking the nuclear capacity factor to 90 percent from the current 70 percent.

The capacity factor is the total amount of nuclear energy generated in a year divided by the annual maximum generation capacity.

"The electricity pricing is being forced to rise due to the natural gas cost increase and the underutilization of nuclear power plants under the Moon Jae-in administration," said a committee spokesperson.

The setting of electricity rates for the second quarter, which was supposed to be done Monday, was delayed. State-controlled Korea Electric Power Corp. (Kepco) proposed to up the rates by 3 won (0.25 cent) per kilowatt-hour in the first quarter due to cost increases, but that proposal was rejected.

Fuel costs have been soaring due to the Russian invasion of Ukraine and increasing demand. Liquefied natural gas (LNG) spot price stood at $843.32 per ton in February, up 58.7 percent year on year, according to the Ministry of Trade, Industry and Energy.

"Though there is not much we can do about the natural gas price, the current system that is forcing utility bills to rise should be changed by scaling up the nuclear capacity factor," said the spokesperson, adding that the number can reach over 90 percent like in the United States and France "if Korea revises the inefficient regulations."

Korea's nuclear power capacity factor was 74.5 percent in 2021.

The capacity factor, which was at around 90 percent at the beginning of the 21st century, dropped to the 80 percent level after the Fukushima nuclear power disaster in 2011.

The figure further declined as President Moon Jae-in took office in 2017 strengthening safety measures, and hit 65.9 percent in 2018.

As nuclear power generation costs less than other energy sources, increasing the capacity factor will lead to a reduction in overall electricity production costs.

In February, LNG power generation cost 247.1 won per kilowatt-hour, up 20 percent from the previous month.

It was over three times more expensive than 67.9 won per kilowatt-hour of nuclear energy.

The price of bituminous coal, which was considered a comparatively cheap source for electricity, also jumped in February, driving up the monthly cost for bituminous coal-to-power generation to 155.0 won per kilowatt-hour, up 14 percent from the previous month.

"If the capacity factor of nuclear power plants advances 10 percentage points, from 80 percent to 90 percent, the operating profit of Kepco is expected to increase by 3.75 trillion won," said Meritzs Securities analyst Moon Kyeong-won.

Kepco reported a record operating loss of 5.8 trillion in 2021, from the previous year's operating profit of 4.8 trillion won.

Upping the capacity factor emerged as the most realistic alternative, as construction plans for new nuclear power plants were overturned by the Moon administration.

To establish a new nuclear power plant, the government has to first get consent from local residents all over again. Construction has been suspended on the Shin-Hanul 3 and 4 reactors in Uljin, North Gyeongsang, and the approval process has to be resumed, meaning commercial operations might have to wait until 2030.

BY KIM NAM-JUN [shin.hanee@joongang.co.kr]