Korean Electricity Market(Current state and perspectives)
Yeom, Myong ChunCEO & Chairman of KPX(Korea Power Exchange)
Association of Power Exchange
17-19 October 2010
Power Industry Overview
Market Status and Challenges
Restructuring and its Barriers
2
Power Industry Overview
3
Electricity Market Overview
Jeju T/P
Yangju
Seo-Incheon
Youngheung T/P
Hanrim CC
NamjejuSeogwipo
AndukSin-Jeju
Hanla
Sungsan
Jocheon
Dong-Jeju
Sanji
Seo-Incheon C/C
Incheon T/P, C/C
Sin-Incheon
Sin-Sihung
Sin-Bupyung
Sin-Dukheun
ChungbuYoungdeungpo
Youngseo
Seo-seoul
Uijeongbu
Sungdong
Hwasung
Sin-suwonPyungtaek T/P, C/C
Ansan
Sin-DangjinDangjin T/P
Taean T/P
Sin-onyang
Boryeong T/P, C/CChungyang
Gunsan
Sin-Gimje
Youngwang N/P
Sin-Gwangju
Sin-Hwasun
Sin-Gangjin
Haenam C/SYeosu N/P
Gwangyang
Hadong T/P
Sin-Namwon Euiryong
Sancheong P/P
Muju P/P
Sin-OkcheonSinkaedong
Chungwon
Sin-Jincheon
Sin-Gosung
Samcheonpo T/P
In-Masan
Sin-Gimhae
Bukbusan
Pusan C/C Nam-Pusan
Kori N/P
Sin-Onsan
Ulsan TP, C/C
Wolseong N/PSeo-Daegu
Buk-DaeguSunsan
GoryeongDaegu
Sin-Kyeongsan
Ulju
Sin-Ulsan
Sin-Youngju
Sin-Youngil
Cheongsong P/P
Uljin N/P
Donghae
Yangyang P/P
Sin-Jecheon
Sin-Gapyung
Sin-Ansung
Sin-seosan
Sin-Yangje
Sin-Ansan
Sin-Taebaek
Sin-Yangsan
Sin-Youngin
Sin-Sungnam
Dong-Seoul
Migum
Gonjiam
CHARACTERISTICS
Isolated power gridHigh growth rates of power demand- Annual average increase rate
· ‘91-’95: 10.9%, ‘96-’00: 7.4%, ‘01-’05: 6.6%, ‘06-’09: 5.6%
Highly dependent on foreign resources- 96.4% of primary energy in 2008 (232 million toe)
* Primary energy proportion- Oil: 43.1%, Coal: 27.6%, LNG: 15.3%, Nuclear: 14.0%
KEY STATISTICS (2009)
People served (million) 49
Generating capacity (MW) 73,470
Peak loads (MW) 66,800
Total transmission lines (Km) 30,257
Electricity traded annually (TWh) 406
Generation sources(above 20MW) 372
4
Sites of Generators
Bundang
Seoul
Sanchung
Hapchun
Cheongsong
IncheonPucheon
Pyungtaek
Anyang
Youngkwang
Chungju
Chuam
Yeosu
Honam Kwangyang
Sumjinkang
Yongdam
Muju
SeocheonBoryeong
POSCO
Sin-IncheonPaldnag
Chungpyung
Euiam
ChuncheonHwachun
Hadong
Samrangjin
SamcheonpoBusan
Kori
Andong
Yangyang
Kangreung
Uljin
Imha
Youngnam
Wolseong
Small Hydro (Pocheon etc)
Soyangkang
Ilsan
Youngheung
Taean
LGBugok
Ulsan
Daechung
Dangjin
Seo-Incheon Youngdong
Donghae
Yulchon
Jeju
(Unit : 10 MW)
53
180
99
120
180
50
48
45 9050
45
180180
180
90
40
33
74
50
40
400300
180
300
400
40
247
140
39
400
115
53
590
278
314590
6
60
10011
12
8
7
20
2
3
2
9
59
60
41
40
6010
70
6
5Chungpyung
* As of December, 2009
Capacity by Fuel Type
(Unit : MW)
Nuclear
17,720(24.1%)
Oil
5,840(8.0%)
Hydro
5,440(7.4%)
Renewable
1,220(1.7%) Coal
24,680
(33.6%)
LNG
18,590
(25.3%)
5
Transmission System Network
Characteristics
Direct Current Line
- Connect the main land
to Jeju Island
345kV
Main transmission system
Distribution system
- Connected to major
areas of consumption
154kV
Jeju T/P
Yangju
Seo-Incheon
Youngheung T/P
Hanrim CC
NamjejuSeogwipo
Anduk Sin-Jeju
Hanla
Sungsan
Jocheon
Dong-Jeju
Sanji
Seo-Incheon C/C
Incheon T/P, C/C
Sin-Incheon
Sin-Sihung
Sin-Bupyung
Sin-Dukheun
Chungbu
Youngdeungpo
Youngseo
Seo-seoul
Uijeongbu
Sungdong
Hwasung
Sin-suwonPyungtaek T/P, C/C
Ansan
Sin-DangjinDangjin T/P
Taean T/P
Sin-onyang
Boryeong T/P, C/CChungyang
Gunsan
Sin-Gimje
Youngwang N/P
Sin-Gwangju
Sin-Hwasun
Sin-Gangjin
Haenam C/S
Yeosu N/P
Gwangyang
Hadong T/P
Sin-Namwon Euiryong
Sancheong P/P
Muju P/P
Sin-Okcheon
Sinkaedong
Chungwon
Sin-Jincheon
Sin-Gosung
Samcheonpo T/P
In-Masan
Sin-Gimhae
Bukbusan
Pusan C/CNam-Pusan
Kori N/P
Sin-Onsan
Ulsan TP, C/C
Wolseong N/PSeo-Daegu
Buk-Daegu
Sunsan
Goryeong
Daegu
Sin-Kyeongsan
Ulju
Sin-Ulsan
Sin-Youngju
Sin-Youngil
Cheongsong P/P
Uljin N/P
Donghae
Yangyang P/P
Sin-Jecheon
Sin-Gapyung
Sin-Ansung
Sin-seosan
Sin-Yangje
Sin-Ansan
Sin-Taebaek
(Unit: c-km/ substations)
154kV : 20,700 / 613
345kV : 8,552 / 86
765kV : 755 / 5
Gwangyang Steel
Sin-Yangsan
Sin-Youngin
Sin-Sungnam
Dong-Seoul
Migum
Gonjiam
Second HVDC Line between
main land and Jeju island is
being built by 2011
( 300MW ⇒ 700MW)
765kVMass transmission system
6
Peak Demand and Reserve
A peak demand of 70GW occurred on August 20, 2010 4.6% increase compared to the last year‘s peak demand
Lower than the expected load due to the frequent rain in August
Reserve rate was just around 6.5% (the lowest since 2001) Has gradually decreased due to the low investments in generation sectors
Expected to be increased from 2012 with the growth of generator constructions
45,000
50,000
70,000
(Unit:MW)
65,000
60,000
55,000
’04 ’05 ’06 ’07 ’08 ’10
62,790(0.8%)
62,290(5.6%)
54,630(6.6%)51,260
(8.2%)
58,990(8.0%)
Reserve margin
* As of August of 2010 69,890(4.6%)
Peak demand(Growth rate)
12.2%11.3%
10.5%
7.2%
9.1%
6.5%
66,800(6.4%)
7.9%
’09
7
Market Status and Challenges
8
Trend of Electricity Trade
Trade Amount
(Unit : TWh)
Trade Volume
(Unit : Billion Dollar)
’07 ’08 ’09 ’07 ’08 ’09
18
23 23
Number of Member Companies
(Unit : No.)
’07 ’08 ’09
* As of December, 2009
104
302411
374
392406
Number of KPX members increased due to the growing renewable energy sources (104 members in 2007 ⇒ 411 members in 2009)
All generators over 1 MW capacity should participate in power market for trading
Despite global economic recession, trade amount has increased steadily
Trade amount is 406TWh (Average increase rate for the last 6 years: 5.7%)
Trade volume is $23 Billion (Average increase rate for the last 6 years: 12.6%)
* 6 Gencos, KEPCO’s subsidiaries, take 95.8% of the total trade amount
9
Market Price and Retail Price
Market Price
Steadily rising since the establishment
of electricity market
Had a big jump in market price from 2008
due to the increase of global fuel prices
Market price went up11% as of August
this year (since the end of 2009) due to
the persistent high fuel prices
Retail price
Rising due to the global fuel cost hike
Increasing rate is less than that of market
price
Retail price control policy by government
has resulted in a financial loss to
distributor, KEPCO
* All retail price is regulated by government
< Retail price by contract type >
39 42 46
52
66 70
102
88
98
39 41 41 43 44 47 57 55
63
0
20
40
60
80
100
120
'02 '03 '04 '05 '06 '07 '08 '09 '10
Market price
Purchasing Price
<Market Price/Purchasing Price>($/MWh)
10
Renewable Energy Status
0.7% (3TWh / 406TWh) of total trade amount
Coal
(33.6%)
LNG
(25.3%)
Nuclear
(24.1%)
Oil
(8.0%)
Hydro
(7.4%)
R.E.
(1.7%)
Coal
(45.9%)
Nuclear
(34.8%)
LNG
(14.2%)
Oil
(3.2%)
Hydro
(1.3%)
R.E.
(0.7%)
Waste Wind Landfill Gas Solar Hydro Fuel Cell Bio
854
(32%)
678
(26%)
418
(16%)
390
(15%)
213
(8%)
81
(3%)
8
(0.3%)
Accounts for 1.7% (1,221MW / 73,470MW) of total capacity in power industry
Solar Wind Waste HydroLandfill
Gas
Fuel
CellBio
406
(33%)
347
(28%)
272
(22%)
85
(7%)
83
(7%)
23
(2%)
5
(0.4%)
(MW)
(GWh)
Government plan for renewables in terms of primary energy 2.98% in 2010 ⇒ 6.08% in 2020 ⇒ 11.0% in 2030
11
Renewable Energy Policy – RPS
RPS (Renewable Portfolio Standard) will be operated in 2012
Imposes compulsory renewable capacity to the generation companies
To be enacted in 2012
Major details
This obligation will be applied to the companies above 500MW of total capacity
(i.e.,14 generation companies today)
RECs(Renewable Energy Certificates) will be traded in the electricity market
Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022∼
Ratio(%) 2.0 2.5 3.0 3.5 4.0 5.0 6.0 7.0 8.0 9.0 10.0
Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022∼
Generation
(GWh)158 315 486 657 841 1,038 1,248 1,472 1,708 1,958 2,221
* Solar has special target within total RPS schedule
< Renewable Energy Supply Schedule>
Extra cost by RPS will be shifted to distributor through market system12
Load Management
마스터 제목 스타일 편집
Overview : Secure system stability by cutting peak load and reimbursement
Programs in operation1. Load Reduction with one month’s Notice
KEPCO notifies the necessary period with one month’s prior to operate Reduce the consumption through a vacation and overhaul period
2. Load Reduction with one week’s Notice
KEPCO notifies the necessary period with one week’s prior to operate Reduce the consumption voluntarily during the chosen days
3. Demand resource market
①Day-ahead and ②Hourly-ahead markets are in operation
Activated in case that the reserve falls to 5,000MW or less
Main targets: consumers, easily adjustable in consuming amount, i.e.
cement, steel, and petrochemical industries
ProgramsLoad Reduction with
one month’s Notice
Load Reduction with
one week’s Notice
Demand Resource
MarketTotal
Average Load
Curtailment1,392MW Not operated 406MW 1,798MW
Reimbursement $1.13 Million - $0.4 Million $1.53 Million
Operational Results: Cut 2.5% of load in 2010 summer peak
13
Restructuring and its Barriers
14
1st stage (2001~ )Generation competition
Split the generation sector into 6 Gencos and introduce competition
KEPCO maintains Trans. and Dist. Sector
Power Industry Restructuring Plan
< The Restructuring Plan in 1999 >
2nd stage (2004~ )Wholesale competition
Introduce competition to distribution sector
The transmission system serves as a common carrier
3rd stage (2009~ )Retail competition
Distribution to be privatized.
Regional supply monopoly to be eliminated.
Gen. Bids
Market (KPX)
KEPCO(Trans/ Dist/Sales)
Consumer
6 Public Gencos IPPs
Gen. Bids
Market (KPX)
DisCo
Consumer
6 Public Gencos IPPs
Transmission
Consumer
DisCo
As
so
cia
tion
of
co
nsu
me
rs
15
Consumer
One
K
E
P
C
O
Generation
Transmi-ssion
Distribu-tion
Sales
Before restructuring
1961 – 2000
one monopoly
public company
(KEPCO)
Restructuring Process
2000
2001
The Gov’t established the master plan for restructuring of electricity industry
The Nat’l Assembly legislated for restructuring plan
Established KOREC(Korean Electricity Commission) and KPX(Korean Power Exchange)
Separated generation sector of KEPCO into 6 Gencos- 46% of labor force and 55% of assets liabilities of KEPCO were transferredto Gencos
Completion of 1st stage restructuring plan
2002
2003
2004
Set the detailed restructuring plan for the 2nd stage- Tried to privatize one of the 6 Gencos- Tried to unbundle the distribution sector from KEPCO
Stopped privatizing a Genco due to economic recession- The market value of stock estimated less than the face value
The Gov’t announced suspension of the 2nd restructuring plan
Suspension of 2nd stage restructuring plan
2008
2010
Declared not to privatize power industry by Gov’t
The Gov’t announced 「The Advanced Plan for Power Industry」- Present a direction to strengthen a competitive and open-door policy
- It will be implemented gradually considering political environment16
Barriers on Restructuring(1)
Labor Unions
In the initial stages of restructuring, labor union concentrated its
efforts on opposing privatization of a Genco
- A 38-day general strike in 2002
- Concerns over reduction of workers, dismissals, etc.
Continually demanded re-merging of 6 Gencos with KEPCO
* The political sector and the press are influenced by electricity labor
unions, who are supported by the Korean Confederation of Trade Unions
DivisionFederation of Korean Trade
Unions
Korean Confederation of Trade
Unions
Members 870,000 700,000
Foundation Aug. 1961 Nov. 1995
Members of union 3,2001,800
(includes most public utilities)
Tendency Moderate Progressive, pro-worker
< Comparison of 2 associations of Trade Unions in Korea >
17
Barriers on Restructuring(2)
The public & consumers Very satisfied with current electricity service in terms of tariff, stability
and the quality of electricity
- Concerned about the rise of electricity tariffs by privatization
- Worried about degrading of the stability and quality of electricity
NGOs
The competition will weaken public services for the lower income group
Privatized electricity company will focus only on pursuing profit
Privatized company would not much care about the damage to the
environment and the increase of CO2 emissions
Government policy Insufficient consistent drive on the policies, due to the frequent change of
the administrations (5 years of the presidential tenure, one term only)
Politicians and the press are too easily swayed by the labor unions
18
Recent Restructuring Plans(1)
Government announced「The Advanced Plan for Power Industry」 (Aug.24,2010)
Maintain the current competitive and open-door policy in power
industry
Prepare the retail competition infrastructures
• 2011 : Operating「The Fuel Cost Adjusted Tariff Mechanism」• 2012 : Operating「The Voltage Based Tariff System」• Sorting the accounts of KEPCO to transmission, distribution, and
sales parts, etc.
An introduction of the retail competition has not been definitely
decided yet
19
Recent Restructuring Plans(2)
Government announced「The Advanced Plan for Power Industry」 (Aug.24,2010)
Strengthen the competitions in the generation sectors
• Increase the autonomy and the responsibility to the management of
the Gencos
• Facilitate the competition among the 6 Gencos
• The 6 Gencos will be supervised by the government directly, not by
KEPCO
Consistently develop the electricity market along with the current
framework
Prospects Current government doesn’t want abrupt change of the industry
framework now
Restructuring will be gradually implemented in the long term
20
Recent Restructuring Plans(2)
Government announced「The Advanced Plan for Power Industry」 (Aug.24,2010)
Strengthen the competitions in the generation sectors
• Increase the autonomy and the responsibility to the management of
the Gencos
• Facilitate the competition among the 6 Gencos
• The 6 Gencos will be supervised by the government directly, not by
KEPCO
Consistently develop the electricity market along with the current
framework
Prospects Current government doesn’t want abrupt change of the industry
framework now
Restructuring will be gradually implemented in the long term
21
Thank you so very much