The energy pie dilemma

The relentless push to phase out nuclear plants under the Moon Jae-in administration is badly affecting our public energy companies’ investment in renewable energy overseas. Public utilities companies such as Korea Electric Power Corporation (Kepco) started to invest in the field aggressively, in tandem with the direction of the past government. But their performance has been quite poor over the past five years.

According to Rep. Yang Kum-hee, a People Power Party (PPP) lawmaker, 11 out of the 22 overseas renewable energy investments by Kepco, the Korea Hydro & Nuclear Power (KHNP) and their five subsidiaries showed a deficit in their net profits. Among the 22 investments, 15 were pushed by the Moon administration. Such fumbles in foreign countries only deepen the financial woes of public utilities, including Kepco — already struggling with 47 trillion won (34.8 billion) of debt.

Some state-run utility companies even abandoned their overseas projects. For instance, the KHNP plans to sell or has already terminated its investments in three solar panel complexes in Spain due to low profitability. Another solar power plant in the state of Colorado in the U.S. — in which Kepco invested 35 billion won — shuttered for the same reason after just five years. Those utility companies did not carefully weigh variables such as government subsidies, local weather conditions or power grids.

In Korea, the concentration of solar panels and wind mills in a specific region poses another problem. After electricity was overproduced in Jeju Island and South and North Jeolla, where most power-generation facilities are located, the authorities often had to cut their electricity transmission. Such cases increased to more than 141 by August. Regardless of sufficient electricity, local governments still permit more power generation by renewable energy.

The Yoon Suk Yeol administration is on a crusade to normalize the past administration’s reckless pursuit of renewable energy and revive the nuclear energy ecosystem. At the same time, the government has to raise its share of renewable energy in the energy pie. It plans to lift the share to 21.6 percent in 2030 from 6.2 percent in 2018. (The Moon administration aimed to escalate the share to 30.2 percent by 2030.) Though the government has moderated the pace of the energy transition, it’s still a challenging job.

The government must invest in renewable energy more efficiently, while investing more in energy storage systems and grids. It also must prepare for more energy demand than expected. Kepco says that at least 20.6 trillion won is needed to install the needed power grids by 2032. Could the debt-ridden company really afford such a large-scale investment? It is time for the government to normalize the overly cheap electricity charges.