LNG being pushed out of South Korea’s power generation market
Korea Power Exchange chairman and CEO, Yoo Sang-Hee, believes the country’s LNG demand for power generation will keep dropping due to increased switching to coal as well as the government’s pro-nuclear policies.
Yoo Sang-Hee told Platts that high prices of LNG compared to coal and nuclear push the demand for the liquefied natural gas further down in the power generation sector as more gas-fired power plants remain idle.
Operating rates of gas-fired power plants went from 61.3% in 2013 to 50.8% in 2014, and as Yoo said, it is expected that these rates will slip to 23.7% by 2019 and even lower to 16.8% in 2022.
He added that half of the gas-fired power plants were shut during 2014.
Cheaper power generating costs from coal plants mean that as soon as there is enough supply, gas-fired power plants are taken off the market. Yoo says that LNG-generated power costs around US$0.13-0-15 per kWh or 140-170 Won which is a lot more than the costs of coal or nuclear that stand at Won 35-45 and Won 3-4, respectively, which makes South Korea the country with the widest difference of power generation cost between LNG and coal in the world.