Projected Costs of Generating Electricity - OECD Nuclear Energy ...

BPE will be established not as a binding force but as a tool providing market participants with appropriate
information and market based solutions. The government of Korea revised the Fifth Long Term Power
Development Plan (5 th LPDP) and released the First Basic Plan of Long Term Electricity Supply and
Demand (1 st BPE) on 17 August 2002.
Electric demand forecasts
According to the 1 st BPE, the annual growth rate for electricity sales is expected to be 3.3% on average
from 2001 to 2015. The annual growth rate for peak load is expected to be 3.4% on average for the same
period. Consequently, total electricity sales are expected to be 311 056 GWh in 2005, and 391 950 GWh
in 2015. For those years, annual peak demand is expected to be 51 859 MW and 67 745 MW, respectively.
Survey result on investors’ generating capacity addition and retirement
KPX performed a survey to collect information on generating capacity addition and retirement from
generating companies and potential investors in the mid and long term period. Generating companies and
investors intend to build 97 generating units, totalling 41150 MW, prior to 2015.
The survey indicated that the capacity addition of coal fired plants increased 3 400 MW and that of
LNG fired increased 4 300 MW, while oil fired and hydro decreased 4 000 MW and 230 MW respectively,
compared with the generating capacity additions in the 5 th LPDP. Generating companies intend to retire
6 570 MW between 2002 and 2015. (With plant life extension, the retirements are 2 910 MW less than in
the 5 th LPDP).
Electric industry restructuring plan in Korea
Overview
In 1994, the Korean government carried out a two-year evaluation study of KEPCO’s organisation to
estimate the potentials of efficiency increase in the power sector. The result of this study suggested
restructuring and gradual privatisation of the company.
Accordingly, in 1997, an Electricity Industry Restructuring Committee was established within the
government, and prepared the Draft Plan for Restructuring of the Electricity Supply Industry. On
21 January 1999, taking into consideration this plan, the Ministry of Commerce, Industry and Energy
(MOCIE) announced publicly the Basic Plan for Restructuring of the Electricity Supply Industry.
According to this plan, the restructuring should:
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Implement a competitive market structure with full competition on the generation side and limited
retail competition, leading ultimately to full retail competition circa 2009.
Unbundle the existing vertically integrated utility, KEPCO, into five to seven generation companies
(GenCos), a transmission company and multiple distribution companies.
Retain nuclear generation assets in public ownership until a decision on whether or not to offer them
for sale is determined at some future point.
The restructuring plan announced by the government involved a gradual transition to wholesale competition
with the introduction of retail competition taking place after the year 2009.
The plan established that, in the initial period, KEPCO’s generation assets would be divided into a
number of companies for divestment and/or privatisation.
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