South Korea Power Report Q4 2009

South Korea Power Report Q4 2009

The new BMI South Korea Power Report forecasts that the country will account for 4.86% of Asia
Pacific regional power generation by 2013, with a theoretical generation surplus that should avoid the
need for a net import requirement. BMI’s Asia Pacific power generation assumption for 2008 is 7,116
terawatt hours (TWh), representing an increase of 3.2% over the previous year. We are forecasting an
increase in regional generation to 9,149TWh by 2013, representing a rise of 28.6%.
Thermal power generation in 2008 totalled an estimated 5,590TWh, accounting for 78.6% of the total
electricity supplied in the Asia Pacific region. Our forecast for 2013 is 7,046TWh, implying 26.0%
growth that reduces the market share of thermal generation to 77.0%. This is thanks largely to
environmental concerns promoting renewable sources, hydro-electricity and nuclear generation. South
Korea’s thermal generation in 2008 was 308TWh, or 5.51% of the regional total. By 2013, it is expected
to account for 4.50% of thermal generation.
For South Korea, oil is the dominant fuel, accounting for 43.0% of 2008 of primary energy demand
(PED), followed by coal at 27.5%, nuclear at 14.2% and gas with a 14.9% share of PED. Regional energy
demand is forecast to reach 4,862mn tonnes of oil equivalent (toe) by 2013, representing 25.1% growth
from the 2008 level. South Korea’s 2008 market share of 6.18% is set to fall to 5.01% by 2013. South
Korea’s 151TWh of nuclear demand in 2008 is forecast to tumble in 2009 thanks to capacity reductions,
rebounding to 120TWh in 2013, with its share of the Asia Pacific nuclear market falling from 28.5% to
18.4% over the period.
South Korea is a lowly 12th, behind Pakistan, in BMI’s enlarged and updated Power Business
Environment rating, aided by the considerable size of the market, established competitive landscape and
reasonable country risk profile but hampered by poor growth prospects. The country is just one point
ahead of Sri Lanka, but remains comfortably clear of Singapore.
BMI is now forecasting that South Korea’s real GDP growth will average 2.32% per annum between
2009 and 2013, with a decline of 1.90% predicted in 2009. Population is expected to expand from 48.6mn
to 49.0mn over the period, with GDP per capita and electricity consumption per capita forecast to
increase by 77% and 6% respectively. The country’s power consumption is expected to increase from an
estimated 378TWh in 2008 to 403TWh by the end of the forecast period, with surplus generation of an
estimated 85TWh in 2008 easing to a potential 42TWh during the forecast period, assuming just 0.3%
average annual growth in electricity generation.
Between 2008 and 2018, we are forecasting an increase in Korean electricity generation of 16.7%, which
is near the bottom of the range for the Asia Pacific region. This equates to 21.4% in the 2013-2018
period, compared with a decline of 3.9% in 2008-2013. PED growth is set to increase from 1.5% in 2008-
2013 to 5.6%, representing 7.2% for the entire forecast period. Nuclear generation is expected to rise by
19% between 2008 and 2018, with hydro generation up 267% over the same period. Thermal power
generation is forecast to rise by 12% between 2008 and 2018. More details of the long-term BMI power
forecasts can be found later in this report.

Executive Summary ....5
SWOT Analysis............7
South Korea Power Business Environment SWOT............ 7
South Korea Political SWOT ........... 7
South Korea Economic SWOT ......... 8
Industry Overview .......9
Global............. 9
Table: Global Summary, 2006-2013 9
Asia Pacific Region.......... 10
Table: Asia Pacific Power Generation, 2006-2013 (TWh) .. 11
Table: Asia Pacific Thermal Power Generation, 2006-2013 (TWh) ... 12
Table: Asia Pacific Primary Energy Demand, 2006-2013 (mn toe).... 13
Table: Asia Pacific Gas Consumption, 2006-2013 (bcm) .... 14
Table: Asia Pacific Coal Consumption, 2006-2013 (mn toe)............. 15
Table: Asia Pacific Nuclear Energy Consumption, 2006-2013 (TWh) 16
Market Overview – South Korea ..17
Primary Energy Demand . 17
Power Generation............ 17
Power Consumption......... 18
Regulation And Competition.......... 18
Pricing.......... 19
Power Transmission ........ 19
Business Environment ..20
Asia Pacific Power Business Environment Ratings......... 20
Table: Asia Pacific Power Business Environment Rating.... 20
South Korea Power Rating ............ 21
Limits Of Potential Returns............ 21
Risks To Realisation Of Returns .... 22
Legal Framework............. 22
Infrastructure 25
Labour Force 26
Foreign Investment Policy ............. 27
Tax Regime ... 29
Security Risk . 30
Industry Forecast Scenario ..........31
South Korea Power Outlook .......... 31
Generation.... 31
Gas-Fired ..... 31
Oil-Fired....... 32
Coal-Fired .... 32
Nuclear Energy.. 32
Hydro-Electric ... 33
Renewable Energy ........... 34
Power Costs.. 34
Transmission. 35
Table: South Korea’s Power Sector, 2006-2013............. 36
Table: South Korea’s Thermal Power Sector, 2006-2013.... 37
Table: South Korea’s Non-Thermal Power Sector, 2006-2013.......... 38
Table: South Korea’s Power Costs, 2006-2013 38
Assumptions And Methodology...... 39
Key Risks To BMI’s Forecast Scenario............. 39
Long-Term Power Outlook ............ 39
Macroeconomic Outlook.. 39
Table: South Korea – Economic Activity, 2006-2013 ..... 42
Power Outlook: Long-Term Forecasts......43
Global Snapshot. 43
Table: Global Summary, 2011-2018... 43
Regional Outlook............. 43
Table: Asia Pacific Electricity Generation, 2011-2018 (TWh) ........... 44
Table: Asia Pacific Primary Energy Demand, 2011-2018 (mn toe).... 45
Table: Asia Pacific Thermal Power Generation, 2011-2018 (TWh) ... 46
Table: Asia Pacific Hydro-Electric Generation, 2011-2018 (TWh).... 47
Table: Asia Pacific Nuclear Generation, 2011-2018 (TWh) 48
South Korea Overview..... 48
Methodology And Risks To Forecasts. 48
Competitive Landscape.50
Kepco............ 50
K-Power........ 50
GS EPS ......... 51
Posco Power. 51
Company Monitor......52
Kepco............ 52
Country Snapshot: South Korea Demographic Data .55
Section 1: Population....... 55
Table: Demographic Indicators, 2005-2030..... 55
Table: Rural/Urban Breakdown, 2005-2030 .... 56
Section 2: Education And Healthcare. 56
Table: Education, 2002-2005 ........ 56
Table: Vital Statistics, 2005-2030.. 56
Section 3: Labour Market And Spending Power ............. 57
Table: Employment Indicators, 2001-2006....... 57
Table: Consumer Expenditure, 2000-2012 (US$) ........... 57
Table: Average Annual Wages, 2000-2012....... 58
BMI Methodology ......59
How We Generate Our Industry Forecasts ....... 59
Power Industry .. 59
Cross Checks 60
Sources ......... 60