Committed to curb carbon emissions, the South Korean government is enforcing the shut-down of ten ageing coal-fired power plants by 2025 – flexible gas power plants and renewables are meant to fill the capacity gap. “The government will invest as much as 10 trillion won by 2030 to reduce carbon emissions,” said energy minister Joo Hyung-hwan.
The minister underlined plans to reduce the share of coal power generation from 28% last year to 26.2% by 2029. To that end, he announced the closure of two entire coal-fired power plants in Seocheon, two units at the Boryeong coal power station and a further two units each at the Samcheonpo, Honam units and Yeongdong power stations.
These fierce policy measures are intended to reduce fine dust particles by 24%, sulfur oxides by 16% and nitrogen oxides by 57% by 2030, from last years’ levels.
Shut-downs, retrofits, stricter rules for new-builds
Retrofits are another measure to curb emissions, hence the government is backing upgrades of eight selected power plants that are over 20 years old – costs for these measures are estimated to top $85 million per power plant unit.
More stringent emission rules are being imposed on fossil power plants under construction. All eleven project that near 90% completion will be required to curb emissions by up to 40% under rules deemed three times stricter than the current emission standard.
Recycling CO2 gases
Pilot projects are underway that seek to re-use pollutants from power plants: Korea Midland Power (KOMIPO) has begun recycling CO2 gases that its power plant stores for various agricultural and industrial uses, generating additional income.
KOMIPO’s Boryeong plant is not far from large greenhouse complexes along the Korea’s western coastal area which makes it easy and less costly to transport the liquefied CO2 to them, the operator said.
Carbon price too low to favour CCGTs
South Korea is the first Asian country that has introduced a national carbon trading scheme, with prices currently at around $10/t – too low to make gas the preferred fuel for power generation.
"To make coal-to-gas displacement economic, the price of carbon would have to rise to $50/ton as this year, [assuming the cost of importing thermal coal at $2.63/mmbtu]," Dr Ho-Mu Lee, research fellow at the Korean Economic Institute told Gas to Power Journal earlier in Paris.
As for future energy demand, Mr Lee is more pessimistic due to Korea's stagnant economy and the overcapacity in the power sector. Gas demand used to rise about 8% for the last decade, with gas prices still widely linked to oil; but going forward he anticipates that sluggish economic growth will see gas demand from the power sector demand to shrink by 5.5% per year.
Gas overcapacity, if nuclear stays online
Fearing a capacity crunch in late 2014, the government in Seoul backed the construction of new gas-fired power stations near Korea's growing cities, as this can be done in a shorter lead time than any other plants. Around 6,000 MW of gas-fired capacity were added since last year.
"Though there is now substantial overcapacity in the power sector, new power plants still get built as they were commissioned before the collapse in electricity prices," ," Dr Lee said, suggesting this will lead to the phase-out of less efficient plants.
South Korea experienced a drop in power prices from very high levels as the nuclear problems got resolved. Almost all nuclear plants are now back in the market and together with coal-fired plants, they comfortably cover baseload power demand.