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.
Kepco's weekly coal-fired availability GW
Estimated nuclear geneneration in South Korea GW
