KEEI
Korea Energy Demand Outlook
December 2013
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
ISSN 1599-9009
December 2013
KEEI
Korea Energy Demand Outlook
·Director of research Kim, Tae-heon([email protected])
·Primary energy Kim, Tae-heon([email protected])
·Oil Lee, Seung-moon([email protected])
·Electricity Choi, Do-young([email protected])
·Town gas/Thermal energy Park, Myeong-deok([email protected])
·Coal Lee, Sang-youl([email protected])
·Material/Research support Jo, Eun-jeong([email protected])
·Material/Research support Jang, Seon-hwa([email protected])
·Statistical support Lee, Bo-hye([email protected]) Phone: +82-31-420-2264, +82-31-420-2234
Fax: +82-31-420-2164
KEEIKorea Energy Demand Outlook
This report quickly identifies recent changes in energy supply and demand and provides energy supply/demand forecast indexes and other information of great interest for formulation of government policy. It is intended to facilitate government efforts to set and adjust overall policy on energy supply and demand.
This report was written and edited by the Energy Demand and Supply Forecast Team under the Center for Energy Information and Statistics of KEEI.
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<Table 1> Rate of increase of each major energy source……… 6
<Table 2> Primary energy consumption and outlook ……… 18
<Table 3> Final energy consumption and outlook ……… 19
[Figure 1] Economic growth and primary energy consumption ……… 7
[Figure 2] Change in primary energy consumption……… 9
[Figure 3] Change in final energy consumption by sector ……… 10
[Figure 4] Economic growth rate and primary energy increase ……… 12
[Figure 5] Outlook for energy intensity and per-capita consumption ……… 13
[Figure 6] Percentage shares of energy sources ……… 15
[Figure 7] Percentage share of final energy demand of each sector ……… 17
[Figure 8] Oil dependence and forecasts ……… 21
Contents Contents
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(Primary energy)Primary energy demand for 2014 is forecast to rise 2.5% from the previous year to 286.5 million toe.
As was the case in 2013, the rate of increase in primary energy demand will likely be lower than the economic growth rate (3.7%).
* Domestic economic growth rate (%): (’12) 2.0 ⇒(’13) 2.8 ⇒(’14) 3.7
* The energy consumption growth rate exceeded the economic growth rate from 2009 through 2012.
The rise in energy demand will be led by electricity (4.2%) and town gas (7.1%) in the industrial sector.
(Key energy indicators) Energy efficiency will likely improve and per-capita energy consumption is expected to rise.
Energy intensity (toe/million won), which is an index that indicates national energy efficiency, is expected to improve by a modest 1.2% from last year’s 0.246 and fall to 0.243.
* Energy intensity (toe/million won): (’11) 0.256 →(’12) 0.252 →(’13) 0.246 →(’14) 0.243
Per-capita energy consumption is forecast to rise 2.0% to 5.73 toe and remain at a higher level than in major OECD countries.
* Per-capita energy consumption (toe): (’11) 5.54 →(’12) 5.55 →(’13) 5.63 →(’14) 5.73
* Comparison among major countries in per-capita consumption (’11): (OECD average) 4.29, (Japan) 3.61, (US) 7.03
Summary
(By energy source)Nuclear power (12.9%) and LNG (2.5%) are expected to lead the rise in demand.
Oil (0.9% increase): Naphtha (1.6%) and fuel oil for transport (0.9%) will lead the rise in oil demand.
*Percentage of oil taken up by naphtha (%): (’12) 46.5 →(’13) 46.7 →(’14) 47.0 Coal (0.9% increase): There will likely be a slight rise as a result of an increase in coal demand for power generation with the completion of construction of the new coal-fired Yeongheung Thermal Power Plant Unit 5 at the end of the year and stronger coal demand for steel making as a result of the establishment of more steel facilities.
LNG (2.5% increase): LNG demand for power generation is expected to stagnate as a result of a rise in the usage rate of nuclear power generation. In contrast, town gas demand will rise relatively substantially (4.8%) owing to continued fuel replacement.
Nuclear power (12.9% increase): Operation of some nuclear power plants was stopped last year due to cable issues. Nuclear power generation is forecast to rise substantially with the resumption of operation of these nuclear power plants early this year.
Electricity (3.2% increase): Demand for industrial use is forecast to rise 4.2% owing to a rise in industrial production spurred by the economic recovery. Demand for residential/
commercial/public use is expected to rise 2.1%.
(By consumption sector)Final energy demand is expected to rise 2.2% to 214.4 million toe as a result of the economic recovery.
Industry (2.7% increase): Town gas (7.1%), electricity (4.2%), naphtha (1.6%), etc. are expected to lead the rise in energy demand in the industrial sector.
Transport (1.3% increase): This increase is due to the increase in the average size of passenger cars and the rise in cargo volume, which have occurred even in the face of the persistently high oil prices.
Residential/commercial/public (1.4% increase): There will likely be a rise for town gas (2.1%), electricity (2.1%), thermal energy (0.7%), and anthracite (1.1%), but a 3.1%
reduction for oil owing to continued fuel replacement.
(year-on-year, %)
Category 2011 2012 2013e 2014e
Primary energy 4.5 0.7 (2.1) 0.3 2.5
Oil 0.9 3.2 -0.4 0.9
Coal 8.1 -2.1 1.4 0.9
Natural gas 7.6 8.1 4.8 2.5
Electricity 4.8 2.5 1.9 3.2
Nuclear energy 1.1 0.1 -6.9 12.9
<Table 1> Rate of increase of each major energy source
Notes: p refers to provisional values; e refers to forecasts
1. Trends on Energy Consumption
Primary energy consumption for the third quarter is tentatively tallied at 66.9 million toe, a year-on-year rise of 0.3%.
This meager rise is attributable to a slowdown in growth of the global and Korean economies and the persistently high international oil prices.
* Domestic economic growth rate (%): ('12) 2.0 (First quarter of '13) 1.5 (Second quarter of '13) 2.3 (Third quarter of '13) 3.3
* Primary energy consumption increase rate (%): ('12) 2.11 (First quarter of '13) -0.8 (Second quarter of '13) 0.8 (Third quarter of '13) 0.3
Excluding energy for raw material use (non-energy oil, coking coal), the level of increase in consumption dropped 0.4% from the previous year.
- Energy for raw material use accounted for 28% of primary energy consumption in the third quarter.
1) This is when the same energy conversion factor as that used in 2011 is applied. It indicates a rise of 0.7% if the new energy conversion factor (introduced on December 30, 2011) is applied.
[Figure 1] Economic growth and primary energy consumption
Energy consumption by source in the third quarter
Oil consumption rose 0.3% year-on-year, attributable to a slower increase in naphtha consumption for raw material use and a continued drop in petroleum product demand for heating.
- Naphtha consumption fell in the second quarter but indicated a 1.8% rise in the third quarter, year-on-year.
- Consumption of fuel oil and LPG fell 1.6% owing to continued fuel substitution in the industrial sector and the residential/commercial/public sector in response to the high oil prices.
- Oil consumption fell 8.8% in the residential/commercial/public sector owing to the substitution of oil by other energy sources such as town gas. This was also a result of the high oil prices.
- Oil consumption in the industrial sector rose 1.3% because of a rise in demand for LPG as a naphtha substitute and a slower increase in naphtha consumption.
- In the transport sector, consumption dropped slightly (1.0%) due to the economic slowdown despite the increase in the average size of passenger cars.
- Naphtha accounted for 46.1% of total oil consumption in the third quarter.
Consumption of coal for industrial use rose 2.6% and coal consumption for power generation dropped 1.0%, resulting in an overall rise of 0.5% year-on-year.
- Bituminous coal consumption for steel making went up 2.2% owing to production facility expansion by steel companies. In contrast, bituminous coal consumption for power generation dropped 0.6%, attributable to a temporary breakdown of generating plants and the resulting decrease in the usage rate.
- Anthracite consumption went up 3.7%, attributable to a rise of 42.4% in consumption for residential/commercial use as well as an increase of 4.8% in consumption for industrial use, which accounts for a high percentage of overall consumption. These increases more than offset a decrease in consumption for power generation.
Consumption of natural gas (LNG) went up 12.5% year-on-year, a result of a sharp rise in consumption for power generation owing to a decrease in the operation rate of nuclear power generation.
1. Energy Consumption
- Consumption for power generation increased 23.9%, attributable to stoppage of operation of some nuclear power plants and the resulting demand for a substitute.
- Consumption of town gas went up 8.3%, owing to sharp rises in consumption for both residential/commercial use (5.5%) and industrial use (8.6%).
Consumption of nuclear energy plummeted by 12.6% year-on-year, owing to the stoppage of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1 due to cable issues.
Electricity consumption rose only 2.3% year-on-year, attributable to the slowdown in industrial production and imposition of electricity demand management policies.
- Electricity consumption rose only 2.1% for residential use and 1.3% for commercial use, owing to the economic stagnation.
- Electricity consumption for industrial use indicated the quickest rise (2.9%) in the final consumption sector, a result of recovery in industrial production.
The percentage of primary energy consumption by source was the highest for oil at 39.2%, followed by coal at 31.3%, LNG at 14.7%, and nuclear power at 11.1%.
[Figure 2] Change in primary energy consumption
Energy consumption by sector in the third quarter Final energy consumption rose 1.2% year-on-year.
- There was a rise of a mere 1.5% in the industrial sector owing to the economic slowdown. Consumption in the residential/commercial/public sector continued to indicate a stable increase of 2.3%. There was a decline of 1.0% in the transport sector, an outcome of a 40.5% crash in consumption of heavy oil, which is ship fuel.
Energy consumption in the industrial sector rose a mere 1.5% year-on-year, attributable to the economic slowdown and the resulting slowdown in industrial activity.
- Town gas and electricity led the rise in energy consumption.
- Excluding consumption for raw material use, energy consumption in the industrial sector rose 0.6%.
- The rates of change by source were 2.3% for electricity, 8.3% for town gas, 3.2% for coal, and 0.1% for oil.
Energy consumption in the transport sector dropped 1.0% year-on-year as a result of a sharp decline in fuel consumption for marine transportation that more than offset a rise in
[Figure 3] Change in final energy consumption by sector
1. Energy Consumption
consumption in the road sector.
- By product, consumption of gasoline and diesel rose 3.5% and 3.0%, respectively, but that of heavy oil, which is ship fuel, plummeted 40.5%.
Energy consumption in the residential/commercial/public sector indicated a steady increase of 2.3% year-on-year.
- Electricity consumption went up a mere 1.7% owing to the government’s policy on electricity demand management. Consumption of town gas rose relatively significantly (5.5%). In contrast, consumption of oil dropped 8.8% owing to substitution of fuel.
Primary energy demand is forecast to rise 2.5% in 2014 to 286.5 million toe.
Primary energy demand is forecast to rise at a lower rate than the economic growth rate (3.7%), as in 2013.
* Domestic economic growth rate (%): (’12) 2.0 (’13) 2.8 (’14) 3.7
The rise in primary energy demand will be led by electricity (4.2%) and town gas (7.1%) in the industrial sector.
Forecasts for key energy indicators
Energy intensity is expected to slightly improve from 0.252 toe/million won in 2012 to 0.246 toe/million won in 2013 and to 0.243 toe/million won in 2014.
Per-capita energy consumption is forecast to rise from 5.55 toe in 2012 to 5.63 toe in 2013 and to 5.73 toe in 2014. It is expected to remain at a high level compared to major OECD countries.
- In addition to a rise in energy demand by final consumers to power electrical equipment, electronic equipment, air conditioning, heating systems, automobiles, and
[Figure 4] Economic growth rate and primary energy increase
2. Outlook for Energy demand
the like as a result of higher income levels, there was also an increase in energy input in the industrial production process. This caused a steady rise in per-capita energy consumption.
* Comparison among major countries in per-capita energy consumption ('11): (OECD average) 4.29, (Japan) 3.61, (US) 7.03
Forecasts for energy demand by source
Coal demand is forecast to rise slightly (0.9%) as a result of greater demand for power generation, an outcome of the completion of construction of a new coal-fired power plant at the end of the year, and higher demand for steel making as a result of the economic recovery.
- Coal demand for industrial use is forecast to rise somewhat as a result of an upswing in the economy. Coal demand for power generation is forecast to rise slightly with the completion of the construction of the new coal-fired Yeongheung Thermal Power Plant Unit 5 at the end of 2014.
- Bituminous coal demand is forecast to rise 0.8% as a result of a slight improvement in the economy.
[Figure 5] Outlook for energy intensity and per-capita consumption
- Anthracite demand is forecast to increase 2.7% as anthracite demand for industrial use, which accounts for a high percentage of total consumption, is expected to rise 3.2%.
Oil demand is forecast to rise 0.9% owing to an increase in demand in the transport sector and industrial sector, despite a continued drop in demand for heating.
- Oil demand for transport is forecast to increase 0.9% owing to a steady rise in automobile sales despite the persistence of high oil prices.
- Naphtha demand will rise much more slowly in the industrial sector. As a result, oil demand in the industrial sector is forecast to rise only 1.6%.
- Oil demand in the residential/commercial/public sector is forecast to fall 3.1%, attributable to the continued substitution of fuel by town gas driven by the high oil prices.
Demand for natural gas has continued to rise sharply, but demand is expected to rise much more slowly in 2014, only 2.5%.
- In 2013, natural gas demand for power generation soared owing to reduced nuclear power generation stemming from cable issues. In 2014, consumption will remain nearly unchanged.
- Town gas demand is expected to rise relatively sharply (4.3%) as a result of continued fuel replacement.
- Town gas demand for industrial use has been rising quickly. It is forecast to rise at a somewhat slower rate of 7.1% this year. Town gas demand in the residential/
commercial/public sector has recently been rising quickly. It will also likely increase at a slower rate this year.
Electricity demand is forecast to rise 3.2% this year as a result of the economic recovery.
- Electricity demand for industrial use is expected to go up 4.2% this year owing to a rise in industrial production. It will likely lead the overall rise in energy consumption.
- Electricity demand for residential use and commercial use is expected to rise 2.5% and 1.8%, respectively, this year as a result of the economic recovery.
Nuclear power generation is expected to rise considerably (12.9%) with the resumption of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1, whose operation was stopped in 2013.
2. Outlook for Energy demand
The share of energy consumption accounted for by oil and coal is expected to decline;
the share taken up by natural gas should rise.
- Oil’s share of energy consumption dropped to below 50% in 2002 and has continued to go down. It dropped to 38.1% in 2012 and is estimated at 37.8% for 2013 and forecast at 37.2% for 2014.
- The share taken up by coal consumption increased from 23.1% in 2001 to 30.3% in 2011 as a result of a steady rise in coking coal consumption for industrial use and coal consumption for power generation. The share accounted for by coal in 2013 is estimated at 29.3% and is forecast to fall to 28.9% in 2014 since there was no expansion of coal-fired power generation facilities and demand for industrial use likely increased more slowly in 2013, just as in 2012.
- The share accounted for by natural gas was 18.1% in 2012, attributable to a sharp rise in natural gas demand for power generation and town gas production. The share is estimated at 18.8% for 2013, when demand for power generation sharply rose, and is forecast to change little in 2014.
- The share accounted for by nuclear power reached 16.0% in 2005 and then declined as no facilities were expanded. It likely dropped to 10.6% in 2013 as a result of a decrease
[Figure 6] Percentage shares of energy sources
in the usage rate despite a rise in facility capacity. It should rebound slightly to 11.6%
in 2014.
Outlook for energy demand by sector
Final energy demand is forecast to rise 2.2% as a result of the economic recovery.
In the industrial sector, energy demand will likely rise 2.7% this year as a result of increased industrial activity. Electricity and town gas are expected to lead the overall rise in demand.
* Forecast for electricity demand (%): ('12) 2.9 ('13) 2.6 ('14) 4.6
* Forecast for town gas demand (%): ('12) 15.0 ('13) 12.4 ('14) 10.1 - Demand for naphtha is expected to increase at a much slower rate.
* Forecast for naphtha demand (%): ('12) 8.3 ('13) 0.6 ('14) 1.6
Energy demand in the transport sector is forecast to increase 1.3% this year, an outcome of the economic recovery, a rise in domestic demand for travel in Korea and abroad, and an increase in the number of registered vehicles.
- Demand for gasoline and diesel is forecast to increase steadily. In contrast, demand for LPG will likely continue to decline.
Energy demand in the residential/commercial/public sector is expected to rise for town gas (2.1%), electricity (2.1%), thermal energy (0.7%), and anthracite (1.1%), but drop for oil (-3.1%).
Final energy consumption by sector
- The share of energy consumption accounted for by the industrial sector remained between 55% and 56% until 2005. It is continuing to rise: it reached an estimated 61.6% in 2013 and is forecast to reach 62.0% in 2014. The increase in the share accounted for by the industrial sector is a result of steady growth of energy-intensive industries including the steel and petrochemical industries and very strong growth of the fabricated metal industry, which also consumes a great deal of electricity.
- The transport sector accounted for 21.0% of consumption in 2006, but its share steadily declined afterwards. It fell to 17.9% in 2011, and is expected to drop to 17.5% in 2014.
The drop in the share of consumption of the transport sector is a result of a substantial
2. Outlook for Energy demand
drop in the rate of increase in petroleum product consumption for transport, compared to the rate of increase in energy consumption in other sectors. This was a result of the persistently high international oil prices, which have continued since 2003.
- The percentage of consumption accounted for by the residential/commercial/public sector indicated a steady downward trend in tandem with strong energy consumption by the industrial sector since 2005. It dropped to 20.5% in 2012 and is expected to remain at a similar level in 2013 and 2014. The share of consumption accounted for by the residential/commercial/public sector, where most energy is consumed for heating and air conditioning, tends to vary with temperature changes in the summer and winter.
[Figure 7] Percentage share of final energy demand of each sector
Category
2012 2013 2014e
Annual 1/4p 2/4p 3/4p 4/4e Annual First half
Second
half Annual
128.1 32.7 30.4 33.0 33.8 129.9 64.0 67.1 131.1
(-2.1) (0.2) (3.6) (0.5) (1.4) (1.4) (1.5) (0.4) (0.9)
96.7 25.0 23.3 25.0 25.8 99.1 48.6 51.0 99.5
(-2.5) (0.7) (8.0) (0.0) (2.0) (2.5) (0.6) (0.3) (0.5)
827.7 205.3 201.2 204.8 213.3 824.6 408.9 423.1 832.0
(3.2) (-1.9) (0.0) (0.3) (0.1) (-0.4) (0.6) (1.2) (0.9)
412.2 100.9 99.8 98.1 108.2 407.0 199.5 207.8 407.4
(-0.3) (-7.1) (1.4) (-1.6) (2.6) (-1.3) (-0.6) (0.8) (0.1)
38.5 12.7 8.7 7.6 11.4 40.3 22.1 19.2 41.3
(8.1) (-0.4) (10.1) (12.5) (2.4) (4.8) (3.2) (1.6) (2.5)
7.7 1.7 2.2 2.7 2.2 8.8 3.4 4.9 8.4
(-2.3) (39.8) (16.7) (6.9) (10.3) (15.5) (-13.1) (0.7) (-5.4)
150.3 37.0 31.1 35.2 36.6 140.0 76.7 81.3 158.1
(-2.8) (-1.7) (-14.5) (-12.6) (1.7) (-6.9) (12.5) (13.3) (12.9)
8.0 1.9 1.9 1.9 2.0 7.8 4.1 4.1 8.2
(21.4) (-2.7) (-1.6) (-2.9) (-3.8) (-2.8) (5.2) (4.6) (4.9)
278.7 73.6 65.3 66.9 73.7 279.5 142.5 143.9 286.5
(0.7) (-0.8) (0.8) (0.3) (1.0) (0.3) (2.6) (2.4) (2.5)
204.9 55.3 47.7 47.9 55.0 205.9 105.7 105.8 211.5
(0.4) (-1.7) (2.4) (-0.4) (1.9) (0.5) (2.6) (2.7) (2.7)
Coal (Million ton) -Excluding coking coal
OIl (Million bbl) -Excluding non-energy
LNG (Million ton)
Hydro (TWh) Nuclear power
(TWh) Other (Million TOE) Primary energy
(Million TOE) Total energy -Excluding for raw materials
<Table 2> Primary energy consumption and outlook
Notes: 1) The figures for 2012 were calculated using the new energy conversion factor (introduced on December 30, 2011). When the previous energy conversion factor is applied, the rate of increase in primary energy demand is 2.1% (1.2% not including raw material use).
2) The figures in parentheses are year-on-year percentage changes (%), e indicates that the figures are forecasts.
2. Outlook for Energy demand
Category
2012 2013 2014e
Annual 1/4p 2/4p 3/4p 4/4e Annual First half
Second
half Annual
128.3 32.2 31.1 32.4 33.6 129.3 65.5 67.3 132.8
(1.1) (1.2) (-1.3) (1.5) (1.5) (0.7) (3.5) (2.0) (2.7)
54.6 13.8 13.5 13.4 14.9 55.7 28.7 29.1 57.8
(0.4) (0.1) (1.7) (0.6) (5.7) (2.1) (4.9) (2.7) (3.8)
37.1 8.8 9.3 9.5 9.4 37.0 18.2 19.3 37.5
(0.7) (-1.3) (0.9) (-1.0) (0.2) (-0.3) (0.4) (2.1) (1.3)
42.7 15.2 8.9 7.6 11.7 43.4 24.5 19.6 44.0
(1.3) (1.1) (8.4) (2.3) (-2.2) (1.8) (1.2) (1.7) (1.4)
208.1 56.2 49.4 49.4 54.7 209.7 108.2 106.2 214.4
(1.1) (0.8) (0.8) (1.2) (0.4) (0.8) (2.4) (2.0) (2.2)
134.4 37.9 31.7 30.5 36.0 136.2 71.3 68.0 139.4
(0.8) (0.2) (3.3) (0.5) (1.6) (1.3) (2.4) (2.3) (2.4)
23.8 9.5 5.2 3.9 6.9 25.6 15.3 11.4 26.7
(9.7) (9.6) (16.1) (8.3) (-0.5) (7.7) (3.9) (4.9) (4.3)
796.5 198.4 194.7 198.1 206.9 798.1 396.7 410.0 806.7
(2.3) (-0.4) (1.0) (0.1) (0.2) (0.2) (0.9) (1.2) (1.1)
381.0 94.0 93.4 91.4 101.8 380.6 187.3 194.7 382.0
(-2.5) (-4.6) (3.6) (-2.2) (2.9) (-0.1) (0.0) (0.8) (0.4)
466.6 125.0 113.8 118.6 117.9 475.4 246.2 244.5 490.7
(2.5) (0.2) (2.1) (2.3) (3.1) (1.9) (3.1) (3.3) (3.2)
48.4 11.9 11.1 12.2 12.9 48.1 23.9 25.2 49.1
(-3.0) (-0.6) (-5.1) (3.2) (0.0) (-0.6) (3.9) (0.5) (2.1)
16.9 4.2 4.0 4.2 4.9 17.3 8.5 9.1 17.6
(-6.8) (1.4) (1.4) (5.3) (0.8) (2.1) (3.3) (0.1) (1.6)
8,874.8 2,518.2 1,941.9 1,784.4 2,413.2 8,657.7 4,614.4 4,342.8 8,957.2
(17.8) (-2.1) (-0.6) (-3.9) (-3.3) (-2.4) (3.5) (3.5) (3.5)
Industry (Million TOE) -Excluding for raw materials
Transport (Million TOE) Residential/Comme
rcial/Public (Million TOE)
Total (Million TOE)
Total -Excluding for raw materials
Town gas (Billion ㎥)
Electricity (TWh)
Oil (Million bbl) -Non-energy
oil excluded
Coal (Million ton) -Excluding coking coal Thermal and other
(Thousand TOE)
<Table 3> Final energy consumption and outlook
Notes: 1) The figures for 2012 were calculated according to the new energy conversion factor (introduced on December 30, 2011). When the previous energy conversion factor is applied, the rate of increase in final energy demand is 2.3%.
2) e indicates that the figures are forecasts. The figures in parentheses are year-on-year percentage changes (%).
Electricity demand is expected to lead the rise in primary energy demand.
The rate of increase in electricity demand (3.2%) is expected to be somewhat lower than the economic growth rate (3.7%) in 2014. However, demand for industrial use will likely record high growth of 4.2%.
- It rose 10.1% in 2010 and 4.8% in 2011. It rose only 2.5% in 2012 and 1.9% in 2013 owing to the economic slowdown.
- Electricity demand has risen quickly for several reasons: low charges, continued strength in production in energy-intensive industries, use of more electric-powered equipment, and convenience in use.
Electricity demand for industrial use is forecast to increase 4.2%, attributable to a rise in industrial production driven by the modest recovery in the economy.
The industrial sector is expected to lead the rise in overall energy demand, but the rate of increase should be much lower.
The industrial sector accounts for around 76% of the rise in final energy demand.
- The growth in energy consumption in the industrial sector has substantially decelerated since 2012.
* Rate of increase in demand in the industrial sector (%): (’10) 10.2 (’11) 8.5 (’12) 1.1 (’13) 0.7 (’14) 2.7
Energy sources that are expected to lead energy demand in the industrial sector are town gas and electricity.
Energy intensity (toe/million won), which is an index that indicates national energy efficiency, is expected to somewhat improve. Per-capita energy consumption will likely rise continually and reach 5.73 toe in 2014.
This is a high level compared to major OECD countries.
* Comparison among major countries in per-capita consumption (’11): (OECD average) 4.29, (Japan) 3.61, (US) 7.03
In addition to a rise in energy demand by final consumers to power electrical equipment,
3. Major Characteristics
electronic equipment, air conditioning, heating systems, automobiles, and the like as a result of higher income levels, there was also an increase in energy input in the industrial production process. This caused a steady rise in per-capita energy consumption.
The percentage of primary energy accounted for by nuclear power is expected to rise.
Nuclear power generation fell in 2013 owing to the stoppage of operation of Singori Nuclear Power Plant Units 1 and 2 and Sinwolseong Nuclear Power Plant Unit 1 due to cable issues. Nuclear power generation is forecast to rise substantially (12.9%) in 2014, when operation of these nuclear power plants resumes.
* Share of primary energy accounted for by nuclear power: (’12) 11.4% (’13) 10.6%
(’14) 11.6%
The share of primary energy accounted for by oil is forecast to steadily decline.
The share accounted for by oil in primary energy fell to less than 40% in 2010 and declined to 38.2% in 2012. It is expected to go down to 37.8% in 2013 and 37.2% in 2014.
- When excluding non-energy oil for industrial use (naphtha, asphalt, etc.), the share of
[Figure 8] Oil dependence and forecasts
primary energy accounted for by oil used as an energy source is expected to fall from 19.5% in 2012 to 19.2% in 2013 and 18.7% in 2014.
- The share accounted for by oil, excluding non-energy oil, is expected to be similar to the share accounted for by LNG (18.8%).
The Korean economy’s declining dependence on oil is a result of the persistently high oil prices and the resulting change in the relative prices of energy sources.
- The rise in oil prices has led to less rapid increases in fuel consumption for transport and an ongoing decline in oil consumption for power generation. Oil is steadily being replaced by other energy sources such as town gas.
- This is because prices of oil soared and the real electric charges have changed relatively little, resulting in a sharp rise in demand that shifted to electricity.
Demand for town gas for industrial use will continue to rise sharply.
Town gas demand for industrial use rose an estimated 10.4% in 2013 and is forecast to rise 7.1% in 2014. It will continue to rise sharply but at a slightly slower rate.
- Demand has increased at an annual rate of more than 10% since 2010, an outcome of international crude oil prices remaining above USD 100/bbl. It rose 15.0% in 2012.
It is assumed that fuel, including oil, is still being steadily replaced by town gas in response to the high oil prices and rising preference for clean fuel by industry.
3. Major Characteristics
Correcting the consumption distortion between electricity and non-electricity requires bringing the electricity charges more in line with market rates and improving the energy tax system.
Electricity demand is expected to rise quickly again this year. The artificially low electricity charges are triggering an increase in demand, and this situation needs to be addressed.
- The charges do not even cover the production cost because of the rise in fuel costs.
Actual costs and other factors requiring increases in charges should be reflected in the charges.
The energy tax system should be rationalized to correct the consumption distortion between electricity and non-electricity energy sources.
- With the amendment to the Individual Consumption Tax Act, a tax of KRW 18/kg will be imposed on bituminous coal for power generation starting in July 2014, and there will be a 30% tax cut for kerosene and propane. This is expected to somewhat correct the price distortion.
Measures need to be taken on an on-going basis to stabilize winter and summer electricity supply and demand.
Electricity demand is forecast to rise 3.2% in 2014, but power generation capacity will be expanded by around 10%. As a result, electricity supply and demand conditions should begin to somewhat improve.
However, there is a possibility of an emergency situation in electricity supply in the event of a delay in the commencement of operation of new nuclear power plants, the occurrence of unusual weather, or unexpected stoppage of power generation facilities.
- Construction of Sinwolseong Nuclear Power Plant Unit 2 (1 million kW) and Singori Nuclear Power Plant Unit 3 (1.4 million kW) was slated for completion in the second half of 2013, but the commencement of operation now seems uncertain even in 2014.
This points to the need to continually implement electricity demand management
policies for stabilization of electricity supply and demand, including reduction of peak electricity use.
LNG supply and demand conditions need to be monitored in the winter.
There will be a sharp rise in demand for LNG for both power generation and town gas if there is a deep freeze in the winter. For this reason, stabilizing LNG supply and demand in the winter is extremely important.
- LNG demand to handle peak load soars when there is a stoppage of operation of nuclear power plants and the resulting drop in the usage rate, and electricity demand continues to rise.
Printed in January 2014 Issued in January 2014
CEO of publisher: Sonn Yang-hoon
Registration: No. 7 on December 7, 1992
Printed by: Bumshinsa (02)503-8737
ⓒKorea Energy Economic Institute 2013 132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114, Fax: (031)422-4958
Publisher: Korea Energy Economics Institute
KEEI
Korea Energy Demand Outlook
December 2013
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
