Leaderless S Korea faces energy policy uncertainty

Any significant shift in nuclear policy may be detrimental to South Korea's power balance, regardless of who wins the upcoming election, writes Evelyn Lee

South Korea's constitutional court has upheld president Yoon Suk-Yeol's impeachment over his short-lived imposition of martial law last year. The immediate impact of Yoon's removal on the energy market is limited, but the ensuing snap election could see a change in nuclear policy that may strengthen demand for thermal generation, particularly less carbon-intensive gas-fired power.

Yoon's impeachment was upheld by a unanimous decision in the country's constitutional court on 4 April, essentially ending his presidency on account of the six-hour martial law he enacted on 3 December. The country will hold a snap election on 3 June to decide its 21st president, under a constitutional requirement for a successor to be elected within 60 days of the presidential office becoming vacant.

The confirmation of Yoon's departure raises questions about the energy policies he had pursued. Yoon put an end to former president Moon Jae-In's nuclear phase-out policy and resumed construction of the 1.4GW Shin-Hanul 3 and 4 reactors, which are currently scheduled to be completed in October 2032 and October 2033, respectively, according to operator Korea Hydro and Nuclear Power. Progress on the two facilities means construction is likely to continue even after Yoon's departure, but his efforts to extend operating licences for reactors that are nearing their designed life span may not get any further.

But any significant shift in nuclear policy may be detrimental to South Korea's power balance in the coming years. Nuclear energy is set to account for 203.2TWh of the country's power supply by 2030, representing a 31.8pc share of the generation mix, according to Seoul's latest long-term power plan. Based on this, South Korea could have about 23GW of installed nuclear capacity in 2030, compared with 24.5GW at present. But eight reactors accounting for a combined 6.85GW of capacity are scheduled to reach their life span by 2030, according to Argus analysis, while only two 1.4GW reactors — Saeul 3 and 4 — are set to be brought on line before 2030 (see chart).

At least 4.05GW of nuclear capacity needs to be approved for permit extensions in order for the 2030 installed capacity target to be met, Argus analysis shows, in line with the power plan's stipulation for "continued operation of existing nuclear plants whose operating licences expire within eight years", although it does not specify which units fall into this category. For comparison, South Korea's nuclear fleet was scheduled to have 20.4GW of capacity in 2030 under former president Moon's last power plan, released in December 2020, which assumed all expired reactors would be retired.

Short on change

South Korea may not be able to afford to phase out its nuclear fleet, at least for the next five years, regardless of who becomes the new president.

Liberal opposition Democratic Party leader Lee Jae-Myung is regarded as the top contender to win the presidential election, with a double-digit lead in recent polls. It remains unclear whether Lee supports extending the life span of reactors that have expired, but he has previously shown support for maintaining nuclear plants that are in operation or under construction, instead of a complete phase-out of nuclear power.

If Lee wins the election and decides to retire nuclear reactors when they reach their current life span, the role of LNG is likely to strengthen in the South Korean energy mix. Lee is well-known for his support of renewable power generation and building an "energy highway" by decentralising the country's power grid and expanding transmission lines, the latter of which could be more likely since the recent approval of South Korea's power grid revision bill.