It predicted that the cost of the Renewable Portfolio Standard (RPS), which Korea Electric Power Corp. (KEPCO) uses to buy electricity from small solar and wind power operators, will increase rapidly, exceeding 4 trillion won by 2023, the Korea Economic Daily reported exclusively on Oct. 6. It is affected by the government's policy to expand new and renewable energy.
In the wake of the policy on de-nuclear power plants, RPS costs will be a significant burden on KEPCO amid worsening performance, with its operating losses of 928.5 billion won in the first half of this year.
As of the first half of this year, the unit price of new and renewable energy was 100.15 won per kWh, double the 55.76 won for nuclear power plant. KEPCO will be required to purchase new and renewable energy, which is relatively expensive.
According to data obtained by Liberty Korea Party lawmaker Chung Yoo-sup on Oct. 6, KEPCO's RPS costs will reach 2.276 trillion won this year. It is also expected to nearly double in four years, with the figure rising to 2.866 trillion won next year, 3.3554 trillion won in 2021, 3.9611 trillion won in 2022 and 4.4021 trillion won in 2023.
The RPS, introduced in 2012, is a system designed to increase the use of new and renewable energy such as solar and wind power. Under the New Renewable Energy Act, large-scale power generation businesses with more than 500,000 kilowatts of power generation, including Korea East-West Power Co., will be designated as "the supplier of new and renewable energy" and will be required to fill a certain percentage of total power generation with renewable energy.
If there is a shortage of self-produced renewable energy power, the company must purchase it from small businesses to make up for its obligations. KEPCO will compensate for the cost of renewable energy purchased by the company.
KEPCO's burden from RPS continues to grow. This is because the government has steadily increased the mandatory supply ratio of renewable energy to 6 percent this year from 2 percent in 2012. The government plans to raise the ratio by 1 percentage point every year to more than 10 percent from 2023.
KEPCO's carbon emission rights costs are also surging every year. Under the government's roadmap to reduce greenhouse gas emissions, power generation subsidiaries are required to buy insufficient emission rights.
According to KEPCO's own forecast, KEPCO's cost of purchasing carbon emission rights will rise to 1.276 trillion won next year from 842.3 billion won this year. It is expected that it will have to spend more than 1 trillion won every year, including 1.39 trillion won in 2023.
"KEPCO is in a tight spot due to the reduction in the utilization rate of nuclear power plants due to the government's nuclear phase-out policy and the burden of greenhouse gas emissions," said Rep. Chung, adding, " KEPCO's debt will lead to an increase in electricity prices and eventually return to the public's burden."