South Korea's state-owned Kepco will limit voluntary restrictions of coal-fired generation plants to weekends this year, in a bid to reduce gas-fired generation owing to strong global LNG prices.
Limiting voluntary restrictions to weekends started from this month, sources familiar with the matter told Argus, although no official government statement has been issued. Kepco utilities will impose a maximum 80pc output cap during specified weekends in April-November on a number of units that they will select on a weekly basis.
Assuming these units maintain a flat load of 80pc during the selected dates, Kepco's coal availability is expected to increase to 18.5GW this month from 17.7GW available a year earlier, when their actual output stood at 15.2GW.
South Korea's state-owned coal-fired units were requested by the government to voluntarily reduce generation in April-December last year, in an effort to curb the country's overall greenhouse gas emissions, a move that was aided by cheaper gas prices at the time.
But persistently strong gas prices since late last year ― mostly driven by firmer demand in Europe ― have made gas-fired generation increasingly uncompetitive against coal burn in South Korea, which has propelled a reverse in fuel switching to the solid fuel. Power price data released by the Korea Power Exchange show that the electricity settlement unit price for gas-fired generation jumped to 276.3 won/kWh in March, up sharply from W99/kWh a year earlier. The settlement unit price for coal burn also increased sharply, but was still well below the gas unit price, at W149.7/kWh, up from W92.1kWh a year earlier.
This may have prompted the government to relax the voluntary restrictions this year, while generation from private-sector units is expected to increase because of higher capacity, with the commissioning of the 1.04GW Goseong unit 1 and 1.04GW unit 2 in May and October last year, respectively. The South Korean government lifted the voluntary restriction measure from mid-October and relaxed the winter restrictions during December-February to ease the cost burden on generators.
South Korea's coal-fired generation averaged 24.7GW in December-February, up from 22.1GW a year earlier, with average output from Kepco and private-sector units increasing to 20.9GW and 3.8GW from 19.3GW and 2.8GW, respectively. In contrast, average gas-fired output fell to 20.1GW from 22GW.
The relaxation of coal-fired plant restrictions comes despite firmer nuclear availability in South Korea this year, which could further weigh on gas-fired generation. Argus estimates that South Korea's nuclear availability will increase by 3.72 GW/month and by 4.48 GW/month during the second and third quarters, respectively, compared with a year earlier, based on the latest nuclear overhaul schedule.
