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S Korea's 30-day shutdown of 8 coal-fired power plants set to boost gas demand

South Korea will shut eight ageing coal-fired power plants for a month Thursday as part of government-led efforts to tackle worsening air pollution, the country's energy ministry said Wednesday.

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It said there would be no power supply shortages in the period due to the availability of more costly but less polluting gas-fired power plants, which are mostly privately run.

"The eight coal-fired power plants aged 30 years or older will be closed June 1-30 as part of efforts to reduce air pollution," the Ministry of Trade, Industry and Energy said in a statement. "The temporary shutdown will be held every year in spring when electricity demand is relatively low," it added.

The eight plants are the 125 MW Yeongdong No. 1 and 200 MW Yeongdong No. 2 built in 1973 and 1979 respectively, the 200 MW Seocheon No. 1 and No. 2 built in 1983, the 560 MW Samcheonpo No. 1 and No. 2 built in 1983 and 1984 respectively and the 450 MW Boryeong No. 1 and No. 2 built in 1983 and 1984 respectively.



They are all owned by the country's state-run electricity monopoly Korea Electric Power Corporation, or KEPCO.

The same eight plants will subsequently be closed for four months over March-June during the off-peak spring season each year from 2018, the ministry said.

South Korea currently runs 10 coal-fired power plants aged 30 years or older, but two of them -- the 250 MW Homan No. 1 and No. 2 built in 1983 -- are excluded from the shutdown this year to prevent a possible power shortage at a nearby industrial zone focused on refining and petrochemical plants, the energy ministry said.

Whether tho Homan plants join the four-month shutdown from next year will hinge on prevailing power supply conditions at that industrial zone, it added.

The June shutdown of the coal-fired power plants was ordered by new President Moon Jae-In as an urgent move to address worsening fine-dust air pollution, which has emerged as one of the most pressing issues in the country amid mounting public fears about health. Burning coal is considered a key source of fine dust emissions.

All 10 ageing coal-fired power plants will be permanently shut by May 2022, when President Moon leaves office.

"The temporary shutdown and the early closure will help reduce air pollution by 18%," the ministry said Wednesday.

"Yeongdong No. 1, No. 2 and Seocheon No. 1, No. 2 will start the process to shut permanently from July this year as part of efforts to close all 10 ageing coal-fired power plants as early as possible," it added.


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The combined capacity of the 10 coal-fired power plants is 3.35 GW, accounting for 10% of the country's total coal-fired power production capacity of 32.7GW, the ministry said. It accounts for 3% of the country's total power generation capacity of 109.5 GW, which includes nuclear reactors and natural gas-fired power plants, it added.

"LNG-based fired plants will get ready to boost electricity production to respond to any power supply shortages," a ministry official said.

The power production cost using natural gas in April was Won 79.25/kWh (7 cents /kWh), higher than Won 50.22/kWh for coal, but the gap was the narrowest since 2001, which means increasing the use of natural gas will not lead to rapid hikes in electricity tariffs for consumers, the official said.

The mostly state-owned coal-fired power plants typically operate at full capacity because they are base-load generators, along with nuclear reactors, to minimize power production costs.

With demand for power rises, power plants using more expensive fuels like natural gas increase production under South Korea's power trading formula.

Operating rates at gas-fired power plants have been below 40% since the second half of 2014 due to increased capacity at coal-fired and nuclear power plants and an economic slowdown.

South Korea operates 59 coal-fired power plants that supply 39% of the country's total electricity. The balance is generated by nuclear (31%), gas (about 19%), oil (6%) and renewable sources such as hydropower, solar, wind and fuel cells (5%).

--Charles Lee, newsdesk@spglobal.com
--Edited by Wendy Wells, wendy.wells@spglobal.com

Read Michael Cooper's related blog post: Fate of South Korea’s new coal plants rests with its new president