South Korea's decades-old nuclear-focused energy strategy could undergoa major revamp with the two top presidential candidates vowing to cutnuclear power generation and boost the use of gas and renewables.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Both candidates have also vowed to raise electricity tariffs as part ofefforts to reduce the country's power consumption, which could lead to higherproduction costs for energy-intensive manufactures such as oil refiners,chemical companies, steelmakers and auto makers.
Park Geun-Hye, the nominee for the ruling conservative New FrontierParty who has maintained a solid lead in the race, has promised to review thecountry's long-term energy plan, which is focused on building more nuclearreactors, if she is elected in the December 19 presidential election.
South Korea currently has 23 nuclear power reactors, which account for30% of the country's total power generation. The country has plans to add 11more by 2024 to expand the contribution of nuclear power to nearly 50%. Underthe country's power blueprint, the proportion of gas-fired power generationis expected to fall to 16.6% in 2015 and 9.7% in 2024 from 22% currently, andoil-fired generation would slide to 1.3% in 2014 and 0.5% in 2025, from 3-4%currently.
But Park said she would review the plan, noting that building morenuclear reactors is "not desirable."
Her remark is a change from her predecessor President Lee Myung-Bak, whohas pushed for nuclear as the country's main energy source despite concernsabout safety in the wake of Japan's 2011 Fukushima nuclear disaster.
Moon Jae-Un, the candidate for the progressive opposition DemocraticUnited Party, has also taken a tough stance against nuclear energy, vowing toscrap the plan to build more nuclear reactors and immediately close downageing nuclear plants. A third contender, centrist independent candidate AhnCheol-Soo, had also pledged to review the nuclear plan and close down ageingreactors before withdrawing from the race last Friday and endorsing Moon.
Polls consistently showed Park ahead in the three-way race but indicatedshe would trail if Moon and Ahn settled on a single opposition candidate.
NO SUPPLY PLAN IN PLACE
Both Park and Moon have also pledged to increase the use of renewablesources in power production, but have yet to disclose detailed plans over howto ensure stable energy supplies with fewer nuclear reactors.
South Korea, Asia's fourth-biggest economy, consumes more than 900million barrels of crude oil and 36 million metric tons of LNG every year,all of which it imports.
All that the candidates have proposed is raising electricity tariffs toaddress the demand side to make up for short supply from nuclear reactors.
Ahn had said that if elected, he would boost the portion of LNG in powergeneration. "Natural gas would be combined with renewable sources to generatemore electricity to make up for nuclear power shortfalls," he told a recentforum.
Yoon Hee-Do, an economist at Korea Investment and Securities, said thepolicy promises of the main candidates show that power production fromgas-fired plants would be increased. This will help boost earnings ofstate-run Korea Gas Corp., that has a monopoly on domestic natural gas sales,and private gas-fired power producers, such as SK E&S and GS Power.
Since three reactors at the Yeonggwang plant on the southwest coast wereclosed due to safety problems earlier this month, operation of the gas-firedplants has been on the rise, according to Kepco.
ANALYSTS QUESTION RENEWABLES STRATEGY
But many analysts have raised questions about the candidates' pledge tosharply boost the portion of renewables in power production.
"Increased use of renewable sources would sharply raise electricityproduction costs, which would pose a bigger burden to consumers," said ParkJong-Bae, a professor at Konkuk University in Seoul.
Sohn Yang-Hoon, a professor at Incheon University, said the presidentialcandidates lacked a bigger strategy for national energy security.
"South Korea imports almost all of its energy requirements, but it hasno grand strategy to ensure stable supplies," he said. "Despite potentialenergy crisis, the presidential hopefuls are just shouting about a shutdown ofnuclear reactors and expansion of renewable energy that remainsquestionable," Sohn said.
The country's oil refiners are also likely to face tougher challenges asboth candidates have vowed consumer-focused policies under their "economicdemocratization" platform, a big departure from Lee's business-friendlystance.
The market dominance of the four refiners -- SK Innovation, S-Oil,Hyundai Oilbank and GS Caltex -- which stood at 97.7% last year, has beencited as the main reason for high domestic oil prices.
President Lee, even though he was elected five years ago on apro-business platform, has taken a series of steps to ease the marketdominance and twisted refiners' arms to bring down retail fuel prices.
--Charles Lee, email@example.com