'Nuclear phase out' policy generated near $7 billion loss, data shows

Industry

Published: 12 Sep. 2023, 17:34 Updated: 12 Sep. 2023, 18:31

'Nuclear phase out' policy generated near $7 billion loss, data shows

The Shin-Hanul nuclear reactors Unit 1, left, and Unit 2 in Uljin, North Gyeongsang [KOREA HYDRO & NUCLEAR POWER]

The delayed commissioning of Shin-Hanul nuclear reactors Unit 1 and 2 caused over 9 trillion won ($6.79 billion) of loss by forcing the country to source electricity from liquefied natural gas (LNG) instead, recent data analysis showed.

According to data submitted to People Power Party Rep. Han Moo-Kyung by Korea Hydro & Nuclear Power (KHNP) on Monday, the state-run nuclear power company in 2015 had planned to complete Shin-Hanul Unit 1 by April 2017 and Unit 2 by April 2018.

But their operation came 68 months and 72 months, respectively, behind schedule under the former Moon Jae-in administration’s nuclear phase out policy.

The Moon government raised the bar for nuclear energy production by adding extra safety assessment and quality enhancement steps in the reactor’s commissioning process.

Unit 1 began commercial operation in December and Unit 2 is likely to start operation around April next year following a six-month trial period.

The 1,400-megawatt Unit 2 was granted final approval for operation from the Nuclear Safety and Security Commission on Thursday.

Should the reactors have started running as initially planned, Unit 1 would have generated extra electricity of 58,377 gigawatt-hours and Unit 2 61,811 gigawatt-hours. This means that over 120,000 gigawatt-hours of electricity were rendered nil under the nuclear phase out policy.

Between 2017 and 2022, the average price of LNG required to generate a kilowatt-hour of electricity was 135.12 won, more than double that of nuclear plants which cost 58.22 won. A rough estimate of this price difference translates into 9.24 trillion won of losses.

The Shin-Hanul nuclear reactors Unit 3, left, and Unit 4 in Uljin, North Gyeongsang are currently in a land development phase. [YONHAP]

The fallout of Shin-Hanul reactors’ delayed operation snowballed in 2022 due to a global energy crisis spurred by the aftermath of the Covid-19 pandemic and Russia’s invasion of Ukraine.

LNG needed for a kilowatt-hour of electricity jumped to a yearly average of 239.17 won last year, outpacing the price of nuclear plants, at 52.48 won, by more than a factor of four.

In terms of construction fees, the budget was re-estimated to 10.3 trillion won, up 2.35 trillion won from a 2014 estimate, according to KHNP’s revised budget plan its board approved in June last year. Some 1.61 trillion won came from interests and extended contracts.

Operating loss at Korea Electric Power Corporation (Kepco) — Korea’s largest state-run utility company, parent of KHNP — mounted to over 47 trillion won after 2021 due to the absence of an adequate alternative energy source. Kepco’s total debt rose to 201 trillion won in June this year to surpass the 200 trillion mark for the first time.

KHNP’s report also hinted at environmental and industrial setbacks.

Unit 1 would have cut greenhouse gas emissions totaling 2,160 tons and Unit 2 2,287 tons if the reactors had begun running in 2017 and 2018.

“Disrupted Shin-Hanul nuclear reactor constructions pushed subcontracted companies to the brink of collapse,” said a spokesperson for the nuclear power industry.

Full commercial operation of Units 1 and 2 is expected to offer some breathing space for Korea’s electricity supply, accounting for 4 percent of the country’s annual energy production.

The nuclear regulator’s approval of Units 3 and 4, currently in the land development phase, may vitalize the nuclear power industry.

“The nuclear phase out policy incurred losses of astronomical figures,” said Rep. Han Moo-kyung, which “led to electricity bill hikes that added weight on the people’s burden.”

“Shin-Hanul Units 3 and 4 need to be completed with haste on the premise of safety.”

BY JEONG JONG-HOON [sohn.dongjoo@joongang.co.kr]