This study systematically surveys and analyzes the electric power industry in Korea, thereby identifying a number of current issues and suggesting possible solutions.
The electric power industry plays a significant role in Korea as a major contributor to the nation’s social overhead capital. Electricity is an intermediary consumer good that is indispensable to the daily lives of all Koreans and also supports Korea’s continued industrialization and economic growth. As electricity is something that cannot be stored in significant amounts, it is crucial to forecast the maximum demand for electricity with as much accuracy as possible before building or expanding power plants and related facilities.
The electric power industry is capital-intensive and equipment-dependent. Overestimating the potential demand for electricity can therefore cause significant waste of equipment and facilities, consequently raising the cost of production. Underestimating the potential demand for electricity, on the other hand, will make it necessary to occasionally limit the consumption of electricity, ultimately halting economic growth.
As such, it is extremely important to develop a highly reliable and accurate model, complete with functions and quantitative simulations, with which to analyze and forecast electricity demand. In 1973, the Korean electric power industry managed to increase its production by only 2.33 percent from the previous year. Generating electricity requires fuels, such as oil and coal, and coal is far less efficient than oil in power generation. Therefore, uninterrupted and increased supplies of oil are crucial to increasing the amount of electricity generated in Korea. Given that the price of oil is much higher than that of coal in Korea, however, the country has had difficulty increasing the amount of electricity it generates. Nevertheless, Korean power plants have managed to increase their production steadily from year to year, generating a total of 16,890 MkWh of electricity in 1975, with about 20 percent of that being reserve power. As Korea continues on its path of economic growth and industrialization, the demand for electricity will only continue to grow in the future. By 1981, the total demand for electricity will be 37,551 MkWh, 13 percent of which should be reserve power.
Given the lack of energy resources and rising demand in Korea, policymakers need to focus on minimizing the maximum demand going forward. In-depth analyses of the current electricity billing system and related problems need to be carried out as well. We also need to develop electricity demand forecast models for different types of electricity, and tailor Korea’s long-term energy policy accordingly. In particular, it is important to revisit the current billing system, which defies market principles, and readjust the price of electricity in line with market principles so as to eliminate and prevent any waste of electricity. Furthermore, the profitmaking structure of the electric power industry should be normalized. After much trial and error, policymakers and businesses will be able to attract greater investment in the Korean electric power industry and also ensure greater efficiency in electricity pricing.
한국전력수요 및 가격의 분석(An analysis of the demand and price of electricity in Korea)
|Series Title; No||연구총서|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Energy|
|Holding||KDI; KDI School|