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South Korea LNG demand set to rise on new leader moving against coal

Seoul — South Korea's new President Moon Jae-in Monday ordered a temporary shutdown of aged coal-fired power plants in an urgent move to address worsening air pollution, which will likely boost LNG demand for power production.

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Under the order, eight coal-fired power plants aged 30 years or older will be closed for 30 days starting June 1, the presidential office said in a statement.

The plants include Yeongdong 1 with a capacity of 125 MW, Yeongdong 2 with 200 MW, Seocheon 1 and 2 each with 200 MW, Samcheonpo 1 and 2 each with 560 MW, and Boryeong 1 and 2 each with 450 MW. They are all owned by the country's state-run electricity monopoly, Korea Electric Power Corporation, or KEPCO.

The one-month shutdown of the aged power plants will have little impact on the country's overall power supplies because they could easily be replaced by more costly but less polluting LNG power plants largely run by private companies, the presidential office said.

"Furthermore, the capacity of the coal-fired power plants is small and June is off-peak season, so we think there would be little impact on the country's power supplies," a presidential official said.

The combined capacity of the eight coal-fired power plants is 2.75 GW, accounting for 8.4% of the country's total coal-fired power production capacity of 32.7 GW, and 2.5% of the country's total power generation capacity of 109.5 GW which includes nuclear reactors and natural gas-fired power plants, according to KEPCO.

The eight coal-fired power plants will be closed again for four months during off-peak spring season from March to June each year from 2018, the presidential office said.

South Korea currently runs 10 coal-fired power plants aged 30 years or older, but two of them -- Homan 1, 2 each with 250 MW -- have been excluded from the temporary shutdown this year due to a possible shortage of power supplies to an industrial zone in which they are located, the presidential office said.

However, all of the 10 aged coal-fired power plants will be permanently shut by early May 2022 when Moon leaves office, the presidential office said.

The shutdown of the 10 coal-fired power plants is expected to reduce the output of fine dust, the main cause of air pollution, by up to 2%, the presidential office said, noting there were 59 coal power plants said to account for about 14% of all fine dust emissions in the country.

South Korea runs 59 coal-fired power plants that supply about 40% of the country's total electricity, followed by nuclear about (30%), LNG (about 25%), oil (3%), and renewable sources, such as hydropower, solar, wind and fuel cells (2%).

Moon, a former human rights lawyer, was inaugurated as South Korea's president on May 10 after winning the presidential election on May 9.

During the campaign, Moon vowed to shut down aged coal-fired power plants and scrap plans for nine new coal-fired power plants, where construction is still less than 10% completed as part of efforts to tackle worsening air pollution.

The fine dust pollution has emerged as a top issue at the May 9 presidential election to replace former President Park Geun-hye, who was impeached in March over a corruption scandal involving large family-run business conglomerates, or chaebol.

"The planned shutdown of the coal-fired power plants would increase demand of the main alternative source of LNG," an official at the Ministry of Trade, Industry and Energy said.

Given Moon has also vowed to reduce power production from nuclear reactors, LNG is the sole alternative to meet the country's power demand, the official said.

During the campaign, Moon pledged to close down the aged Wolsong-1 nuclear reactor, and halt construction of two large nuclear reactors -- Shin Kori 5 and 6 -- to address public concerns about nuclear safety.

--Charles Lee, newsdesk@spglobal,com
--Edited by Maurice Geller,