The power generation industry will grow continuously, but risks will also increase simultaneously.
Executive Director Lee Chang-ho of Power Industry Center at KERI suggested power generation companies to conduct thorough feasibility study.
The power generation industry is expected to continue growth thanks to the policy of stably maintaining power reserves, but variability and uncertainty are also anticipated to increase in carrying forward power generation business due to changes in electric power market.
Executive Director Lee Chang-ho of Power Industry Center at Korea Electrotechnology Research Institute (KERI) presented a paper to this effect at a conference on ‘power market and power generation business’ hosted by KERI on July 16 under the topic of ‘Status of power supply and demand and outlook of power generation business’ .
According to the paper of Executive Director Lee Chang-ho, interest of investors and market in power generation business remarkably increased due to recent shortage in power supply, but investors are required to conduct rigorous feasibility analysis as uncertainty and variability are expected to expand unlike the past.
Executive Director Lee Chang-ho pointed out that ‘it is too risky to blindly invest several hundred billion won ~ several trillion won based on the 6th Master Plan for Power Supply and Demand as unpredictable variables and uncertain factors increased’. Under the 6th master plan, facilities of nuclear power plants, coal-based thermal power plants and LNG combined cycle power plants will be greatly expanded.
Major variables he cited include power demand affected by climate change and economic growth, configuration of power sources depending on proportion of nuclear power and power transmission networks, changes in fuel prices based on international oil prices and world economy, and variables in policies, such as renewable energies and demand management.
Given that countries with smaller demand for power than Korea operate power generation facilities with larger capacity, such imbalance between demand and supply should be improved, he argued. And he highly evaluated growth potential of power generation business in processes of expanding power reserve margin in that context.
In capacity of power generation facilities, China, the United States and Japan ranked first, second and third with 1,146GW, 1,025GW, and 285GW, respectively. And they are followed by Germany, Italy, France, Brazil, Korea, Australia, and Saudi Arabia with 153GW, 122GW, 19GW, 106GW, 82GW, 57GW and 44GW, respectively.
As of 2012, Korea ranked 13th place in capacity of power generation facilities, and 10th place in amount of generated power. Owing to tight reserve margin, Korea’s power utilization rate was the highest among top 20 countries in facility capacity (65%).
The capacity of power generation facilities in Korea reached 81,806MW in 2012, an increase of 52.1% over 2002. The capacity of LNG-based thermal power plants increased from 25% to 27% in this period, and that of coal-based thermal power plants rose from 30% to 31%. But the capacity of nuclear power plants decreased from 29% to 25% in the same period.
The 6th Master Plan for Power Supply and Demand predicted that standard demand and targeted demand for power will reach 126,740MW and 110,886MW, respectively in 2027. But the prediction shows limitation as error span between predicted demand and actual demand gets wider.
Executive Director Lee Chang-ho said, “The power generation industry will continue growing, but demand will be varied depending on electric charges, and variability in business risks and profitability will increase due to various ecosystem environments related to power generation industry.”
He pointed, “Given that it is difficult to predict the time when demand for power increases and be saturated, companies need to examine and decide whether to invest in dealing with uncertain demand. And they need to closely examine configuration of power sources, restriction on electric power systems, and changes in method of deciding prices in power market.
Among already built power plants under the long-term power supply and demand plan and the master plan for power supply and demand, construction of LNG combined cycle power plants was delayed for 16.1 months, while that of nuclear power plants and coal-based thermal power plants was postponed for 8.3 months and 5.0 months, respectively.
Meanwhile, no nuclear power plant cancelled its construction plan, while relatively many LNG combined cycle power plants cancelled their construction plans as they were required to attract private funds. And the later plans are established, the larger number of construction plans are cancelled and completion period is more delayed.
Source : e2news