KEEI
KEEI
Mid-Term Korea Energy Demand Outlook
(2011~2016)
ISSN 2287-3007
May 2012
Volume 13 QUARTERLY ENERGY OUTLOOK
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
Fax: (031)422-4958
E-mail : [email protected] Hompage : http://www.keei.re.kr
ISSN 2287-3007
May 2012
Volume 13
KEEI
Mid-Term Korea
Energy Demand Outlook
(2011~2016)
·Director of research Choi, Do-young([email protected])
·Petroleum Kim, Soo-il([email protected])
·Electricity/Transformation Choi, Do-young([email protected])
·Coal Kim, Tae-heon([email protected])
·Town gas/Thermal energy Lee, Sang-youl([email protected])
·Material/Research support Oh, An-na([email protected])
·Material/Research support Jo, Eun-jeong([email protected])
·Statistical support Chung, Chang-bong([email protected]) Phone: +82-31-420-2148, +82-31-420-2234
Fax: +82-31-420-2164
KEEIMid-Term Korea Energy Demand Outlook (2011-2016) The 「KEEI Mid-Term Korea Energy Demand Outlook (2011~2016)」is a report that analyzes energy supply and demand trends in Korea and makes mid-term forecasts on energy demand.
This report analyzes changes in energy supply and demand that have occurred since 2000 and provides energy supply and demand forecast indexes for the next five years and information for government policy. It is intended to facilitate government efforts in setting and adjusting overall policy regarding 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.
1. Primary energy demand outlook……… 4
2. Outlook on final energy demand……… 8
3. Outlook by growth scenario ……… 11
4. Outlook characteristics……… 15
5. Policy implications……… 19
<Table 1> Primary energy demand outlook ……… 5
<Table 2> Final energy demand outlook (2011~2016) ……… 9
<Table 3> Economic growth scenarios……… 11
<Table 4> Outlook on primary energy demand by scenario ……… 12
<Table 5> Outlook on energy intensity by scenario ……… 13
<Table 6> Outlook on final energy demand by scenario……… 13
[Figure 1] Economic growth rate and total primary energy demand (2005~2016)……… 4
[Figure 2] Outlook on shares of primary energy demand by source (2011~2016)……… 7
[Figure 3] Outlook for annual rates of increase in demand for key final energy sources ……… 10
[Figure 4] Comparison of primary energy demand outlook among scenarios ……… 12
[Figure 5] Comparison of final energy demand outlook among scenarios ……… 14
[Figure 6] Energy intensity and GDP elasticity ……… 16
[Figure 7] Trend and outlook on share of consumption by the industrial sector ……… 18 [Figure 8] Share of primary energy accounted for by energy loss in the transformation sector … 20
Contents Contents
Table of Contents for Titles
Table of Contents for Tables
Table of Contents for Figures
Total primary energy demand is expected to rise at an annual average rate of 2.8% from 2011 to 2016 and reach 311.8 million TOE in 2016.1)
Total primary energy demand is forecast to rise a mere 1.2% in 2012. In 2013, the rate of increase is expected to accelerate to 3.7% and then gradually decline to approximately 3.0% in 2016.
When excluding naphtha and coking coal, which are industrial raw materials, primary energy consumption is forecast to rise at an annual average rate of 2.7% from 2011 to 2016.
- The energy demand for raw materials during the same period is forecast to rise at an annual average 3.1%, which is higher than the average increase rate of total primary energy (2.8%). The increase is a result of growth of certain industries.
1) Starting in 2012, the energy supply/demand balance will be based on the new energy conversion factor (December 30, 2011). This outlook(2012~2016) has also applied the new energy conversion factor.
Primary energy demand outlook
1
[Figure 1] Economic growth rate and total primary energy demand (2005~2016)
1. Primary energy demand outlook
Notes: 1) The new energy conversion factor(Article 5, Paragraph 1 of the Enforcement Regulations of the Basic Energy Act) was applied to the calculation of the forecast figures for 2012 and onwards. If the previous energy conversion factor is applied, the rate of increase in primary energy demand in 2012 is 2.6%(2.0% when excluding demand for raw material use). For 2013 and onwards, the increase rate is about the same between the previous and new energy conversion factor.
2) The figures in parentheses are annual growth rates (%); p indicates that the figures are preliminary.
Energy intensity is forecast to improve by an annual average rate of 1.1%, falling from 0.251 in 2011 to 0.238 by 2016.
There were substantial energy intensity improvement effects due to the change in the energy conversion factor (notably, there was a 2.2% improvement in 2012).2)
Category
Annual average increase rate (%) (2011~2016)
2011p 2012 2013 2014 2015 2016
801.3 806.9 828.8 842.8 856.3 868.8
(0.9) (0.7) (2.7) (1.7) (1.6) (1.5) 1.6
446.1 437.2 438.5 437.2 437.5 436.9 -0.4
(-3.5) (-2.0) (0.3) (-0.3) (0.1) (-0.1)
124.8 126.7 128.3 131.7 140.7 155.7
(4.6) (1.5) (1.3) (2.6) (6.8) (10.7) 4.5
99.1 99.8 100.4 103.0 111.3 125.8 4.9
(5.6) (0.7) (0.6) (2.6) (8.1) (13.0)
35.8 37.7 39.6 41.5 41.4 39.0
(8.3) (5.2) (5.1) (4.7) (-0.2) (-5.8) 1.7
8.0 8.4 8.5 8.6 8.7 8.8
(23.3) (5.3) (1.5) (1.3) (1.0) (0.8) 2.0
150.2 160.3 175.9 186.4 193.3 198.4
(1.1) (6.8) (9.7) (6.0) (3.7) (2.6) 5.7
6.4 6.8 7.4 7.8 8.2 8.7
(4.9) (7.2) (7.8) (6.2) (5.6) (5.0) 6.4
271.4 274.6 284.7 293.6 302.6 311.8
(3.4) (1.2) (3.7) (3.1) (3.1) (3.0) 2.8
208.0 210.4 217.3 223.8 230.7 237.9
(2.8) (1.2) (3.2) (3.0) (3.1) (3.1) 2.7
<Table 1> Primary energy demand outlook
Oil (Million bbl) -Excluding naphtha
Coal (Million ton)
-Excluding coking coal
LNG (Million ton) Hydro-electric
(TWh) Nuclear power
(TWh) Other (Million toe) Total primary energy
(Million toe) Total primary energy
-Excluding for raw materials
2) When the previous energy conversion factor is applied, the energy intensity in 2012 is forecast to fall 0.9% to 0.249.
When the previous energy conversion factor is applied, the energy intensity is forecast to fall by an annual average rate of 0.8% during the forecast period.
Per capita energy demand is forecast to rise from 5.45 TOE in 2011 to around 6.14 TOE by 2016 in tandem with rising income levels.
The GDP elasticity of primary energy demand from 2011 through 2016 is forecast at approximately 0.71.
Outlook by energy source
Oil demand is projected to rise at an annual average rate of 1.6% from 2011 to 2016.
- Oil demand for fuel in the final consumption and transformation sectors is forecast to fall at an annual average rate of 0.4%. However, naphtha demand for raw material use in the petroleum refining and petrochemical sector is forecast to rise at an annual average rate of 4.0%, thus leading an increase in overall oil demand.
Coal demand is projected to rise at an annual average rate of 4.5% from 2011 to 2016, attributable to large-scale expansion of bituminous coal-fired power generation facilities.3) - Demand will likely remain stagnant up to 2013 since there are no plans to build new power
generation facilities. However, a substantial rise in demand is expected if there is facility expansion from 2014 through 2016 according to the 5th Electricity Supply and Demand Plan.
LNG demand is forecast to rise at an annual average rate of 1.7% during the forecast period. The rate of increase is projected to decelerate considerably relative to the period of 2000 to 2011 (annual average growth of 8.5%).
- LNG demand for town gas production is projected to rise at an annual average rate of 3.5% during the forecast period as a result of an increase in town gas consumption for industrial raw material use. In contrast, demand for power generation is forecast to fall at an annual average rate of 0.6%.
3) There is a plan to expand power generation facilities by 10,090MW over a period of three years. Bituminous coal-fired power generation facility capacity is forecast to rise 43.7% by the end of 2016 from 2013 (23,080MW).
1. Primary energy demand outlook
Nuclear power demand is projected to rise at an annual average rate of 5.7% during the forecast period. A number of new power plants will become operational from 2012 to 2016 according to the power supply plan.
- Nuclear power plant capacity will rise 7,200MW from 18,716MW in 2011 to 25,916MW in 2016.
Consumption of new & renewable energy is expected to rise at a relatively high annual average rate of between 6 and 7% during the forecast period.
Outlook on energy mix
The share of primary energy demand accounted for by oil peaked at 63% in 1994 and has steadily declined ever since. It dropped to 38.7% in 2011. It is projected to continue to fall during the forecast period to between 35 and 36% by 2016.
The share accounted for by LNG is forecast to rise up to 2014 and then decline to 16.3% by 2016 in tandem with a drop in LNG demand for power generation in 2015 and onwards.
The share of primary energy taken up by nuclear power is forecast to rise from 11.9% in 2011 to 13.4% in 2016 if new power plants commence operation in accordance with the 5th Electricity Supply and Demand Plan.
[Figure 2] Outlook on shares of primary energy demand by source (2011~2016)
Final energy demand is forecast to rise at an annual average rate of 2.4% from 2011 to 2016 and reach 225.7 million TOE by 2016 (according to the new energy conversion factor).
Energy demand in the industrial sector is expected to rise at a robust annual average rate of 3.1% on the assumption that the actual economic growth rate will match the potential growth rate during the period of 2011 to 2016.
- Industrial production is expected to lead economic growth during the forecast period.
Energy demand in the industrial sector is forecast to increase relatively quickly.
The rate of increase in energy demand in the transport sector is expected to fall to an annual average of 1.0% as the number of registered cars should nearly reach the saturation level during the forecast period.
Energy demand in the residential/commercial/public sector is projected to rise gradually at an annual average rate of just under 2.0% during the forecast period.
- Demand for electricity and town gas is projected to rise at annual average rates of 3.3%
and 1.9%, respectively. Oil demand is forecast to fall at an annual average rate of 3.5%
as a result of replacement of oil for fuel by other energy sources.
Regarding final energy demand by energy source, demand for network-based energy, such as electricity and town gas, should rise at relatively high rates. Demand for oil and bituminous coal is projected to rise relatively slowly.
Oil demand is forecast to gradually rise at an annual average rate of 1.8% during the forecast period, with naphtha demand for raw material use leading the increase in demand.
- When excluding naphtha, oil demand is projected to go down by an annual average 0.3%.
Coal demand is projected to rise at a low annual average rate of 2.2% during the forecast period, attributable to a slower increase in demand in the steel industry.
Outlook on final energy demand
2
Notes: 1) If the previous energy conversion factor is applied, the rate of increase in final energy demand in 2012 is around 2.2%. For 2013 and onwards, the increase rate is roughly the same between the previous and new energy conversion factor.
2) The figures in parentheses are annual growth rates (%); p indicates that the figures are preliminary.
2. Outlook on final energy demand
Category
Annual average increase rate (2011~2016)
2011p 2012 2013 2014 2015 2016
121.5 122.7 128.2 132.8 137.0 141.2
(5.5) (1.0) (4.5) (3.6) (3.2) (3.0) 3.1
58.0 58.5 60.8 62.9 65.1 67.3
(5.8) (0.8) (3.9) (3.5) (3.5) (3.3) 3.0
36.8 36.6 37.4 37.9 38.4 38.6
(-0.5) (-0.4) (2.1) (1.4) (1.2) (0.7) 1.0
37.4 37.5 38.3 39.0 39.8 40.5
1.6
(0.4) (0.1) (2.2) (2.0) (2.0) (1.8)
4.5 4.7 4.9 5.0 5.1 5.3
(0.8) (3.7) (3.5) (3.0) (3.0) (3.0) 3.2
200.2 201.4 208.7 214.7 220.4 225.7
(3.3) (0.6) (3.6) (2.9) (2.6) (2.4) 2.4
136.7 137.3 141.3 144.9 148.5 151.8
(2.4) (0.4) (2.9) (2.5) (2.5) (2.2) 2.1
778.9 785.7 808.4 823.7 837.5 850.1
(1.5) (0.9) (2.9) (1.9) (1.7) (1.5) 1.8
423.7 416.0 418.0 418.2 418.7 418.3
(-2.7) (-1.8) (0.5) (0.0) (0.1) (-0.1) -0.3
10.6 11.1 11.8 12.5 13.3 14.2
(14.8) (3.9) (6.6) (6.5) (6.3) (6.2) 5.9
33.2 34.3 35.2 35.9 36.6 37.1
(2.1) (3.3) (2.7) (2.0) (1.7) (1.5) 2.2
7.5 7.4 7.3 7.2 7.2 7.2
(6.8) (-2.0) (-1.2) (-0.7) (-0.5) (-0.5) -1.0
455.1 473.8 497.2 519.4 540.6 560.8
(4.8) (4.1) (4.9) (4.5) (4.1) (3.7) 4.3
21.2 21.9 22.7 23.5 24.3 25.1
(6.2) (3.1) (3.9) (3.5) (3.3) (3.0) 3.4
7,351 7,781 8,303 8,739 9,156 9,549
(4.1) (5.9) (6.7) (5.2) (4.8) (4.3) 5.4
<Table 2> Final energy demand outlook (2011~2016)
Industry (Million toe) -Excluding for raw materials Transport (Million toe) Residential/
commercial (Million toe) Public/other (Million toe) Total (Million toe)
Total -Excluding for raw materials
Oil (Million bbl) -Excluding naphtha Anthracite (Million ton) Bituminous coal
(Million ton) -Excluding coking coal Electricity
(TWh) Town gas (Billion m3) Thermal and other
(Thousand TOE)
- Anthracite demand is forecast to rise rapidly at an annual average rate of 5 to 6% as a result of higher demand for industrial use.
Electricity and town gas demand is projected to rise substantially at annual average rates of 4.3% and 3.4%, respectively, attributable to higher demand for industrial use.
The share of energy consumption accounted for by oil will likely fall steadily, while the shares accounted for by electricity and town gas should continue to rise.
The share of final energy taken up by oil was 50.9% in 2011 and is expected to fall to 48.0% by 2016.
The share accounted for by coal is projected to rise slightly from 14.6% in 2011 to 14.8% by 2016.
The share taken up by electricity is forecast to rise from 19.6% in 2011 to 21.4% by 2016. The share accounted for by town gas is expected to rise from 11.2% in 2011 to 11.6% by 2016.
The share of energy consumption accounted for by thermal and other energy is only 3.7% in 2011 but continues to rise owing to sharply rising consumption of new &
renewable energy. It is forecast to reach 4.2% by 2016.
[Figure 3] Outlook for annual rates of increase in demand for key final energy sources
(%)
In consideration of uncertainties in mid-term forecasts, this report presents high and low economic growth scenarios and provides an energy demand outlook for each scenario, in addition to the baseline.
Notes: p indicates that the figures are preliminary. Figures in parentheses are annual changes (%).
Outlook on primary energy demand for each scenario
In the case of the high-growth scenario, primary energy demand is forecast to rise at an annual average rate of 3.4%. In the low-growth scenario, it is expected to rise at an annual average rate of 2.3%.
- In the case of the baseline scenario, primary energy demand in 2016 is expected to be 1.15 times the 2011 level. In the high-growth scenario, it is expected to be 1.18 times the 2011 level, and in the low-growth scenario, it is expected to be 1.12 times the 2011 level.
3. Outlook per growth scenario
Outlook by growth scenario
3
(Unit: Trillion won)
Category Baseline High-growth scenario Low-growth scenario
2011p 1,082 (3.6) 1,082 (3.6) 1,082 (3.6)
2012 1,119 (3.5) 1,125 (4.0) 1,114 (3.0)
2013 1,167 (4.2) 1,183 (5.2) 1,150 (3.2)
2014 1,214 (4.1) 1,244 (5.1) 1,185 (3.1)
2015 1,263 (4.0) 1,306 (5.0) 1,221 (3.0)
2016 1,312 (3.9) 1,370 (4.9) 1,256 (2.9)
Annual average
growth rate (%) 3.9 4.8 3.0
(2011~2016)
<Table 3> Economic growth scenarios
Notes: p indicates that the figures are preliminary. Figures in parentheses are annual changes (%).
Energy intensity is forecast to improve (fall) at an annual average rate of 1.4% in the case of the high-growth scenario and 0.8% in the case of the low-growth scenario. It is forecast that energy intensity will drop further as the economy grows more rapidly.
(Unit: 1 million TOE)
Category Baseline High-growth scenario Low-growth scenario
2011p 271.4 (3.4) 271.4 (3.4) 271.4 (3.4)
2012 274.6 (1.2) 275.1 (1.4) 274.2 (1.0)
2013 284.7 (3.7) 287.0 (4.3) 282.5 (3.0)
2014 293.6 (3.1) 298.0 (3.8) 289.5 (2.5)
2015 302.6 (3.1) 309.4 (3.8) 296.5 (2.4)
2016 311.8 (3.0) 321.2 (3.8) 303.6 (2.4)
Annual average
growth rate (%) 2.8 3.4 2.3
(2011~2016)
<Table 4> Outlook on primary energy demand by scenario
[Figure 4] Comparison of primary energy demand outlook among scenarios
(1 million TOE)
3. Outlook per growth scenario
Outlook on final energy demand by scenario
The annual average rate of increase in final energy demand is projected at 3.1% in the high-growth scenario, which is 0.7%p above the baseline. It is forecast at 1.9% in the low-growth scenario, which is 0.5%p below the baseline.
Notes: p indicates that the figures are preliminary. Figures in parentheses are annual changes(%).
(Unit: TOE/1 million won)
Category Baseline High-growth scenario Low-growth scenario
2011p 0.251 0.251 0.251
2012 0.245 0.245 0.246
2013 0.244 0.242 0.246
2014 0.242 0.240 0.244
2015 0.240 0.237 0.243
2016 0.238 0.234 0.242
Annual average
improvement rate (%) -1.1 -1.4 -0.8
(2011~2016)
<Table 5> Outlook on energy intensity by scenario
(Unit: 1 million TOE)
Category Baseline High-growth scenario Low-growth scenario
2011p 200.2 (3.3) 200.2 (3.3) 200.2 (3.3)
2012 201.4 (0.6) 202.0 (0.9) 201.0 (0.4)
2013 208.7 (3.6) 210.6 (4.3) 206.9 (3.0)
2014 214.7 (2.9) 218.3 (3.6) 211.5 (2.2)
2015 220.4 (2.6) 225.7 (3.4) 215.7 (2.0)
2016 225.7 (2.4) 232.9 (3.2) 219.5 (1.8)
Annual average
increase rate (%) 2.4 3.1 1.9
(2011~2016)
<Table 6> Outlook on final energy demand by scenario
Outlook on final energy demand by sector per scenario
The transport sector indicates the greatest variance among the demand forecasts for the three scenarios. The residential/commercial/public sector shows the least variance.
- Most of the energy used in the transport sector is from petroleum products. Demand for these products is very elastic with respect to the rate of economic growth and level of international oil prices. This is why the transport sector indicates the greatest difference among the demand forecasts.
- An essential energy requirement exists in the residential/commercial/public sector, including basic energy demand in the residential sector and the provision of public services such as national defense and administration. This is why demand in this sector is comparatively inelastic with respect to economic growth.
- There is also a fixed base level of energy demand in the industrial sector unless certain specific economic conditions occur. However, industrial activity is naturally sensitive to business fluctuations, with the result that energy demand by industry depends on the rate of economic growth.
[Figure 5] Comparison of final energy demand outlook among scenarios
(Million TOE)
The application of the new energy conversion factor meant a downward adjustment in reported primary energy demand.
Primary energy demand fell approximately 1.4% compared to demand calculated by the previous energy conversion factor. The annual average increase in primary energy demand dropped 0.3%p.
- This is because of a reduction in the assigned calorific values compared to the same quantity of major primary energy sources such as coal, oil, and nuclear power.
Change in the energy conversion factor also led to substantial energy intensity improvements.
- The energy intensity is forecast to improve (fall) at an annual average rate of 1.1%
from 0.251 in 2011 to 0.238 by 2016.
- When the previous energy conversion factor is applied, energy intensity is forecast to fall at an annual average rate of 0.8% during the forecast period.
There is an inconsistency between the energy consumption data of 2011 and 2012 with the introduction of the new conversion factor.
- Caution is required when interpreting the energy consumption increase rate and energy intensity improvement rate, etc. based on 2011.
Primary energy demand is projected to rise gradually.
Primary energy demand is forecast to rise at an annual average rate of 2.8% during the forecast period, below the forecast annual average economic growth rate of 3.9%.
- This is due to various factors, including the Korean economy's entry into a low-growth phase, slower population growth, shift to less energy-intensive industry, continued high oil prices, and continued energy efficiency improvements.
- Improvements in energy efficiency as well as a rise in domestic energy prices, triggered by the high oil prices that have been in effect since the mid-2000s, are expected to help stabilize energy demand.
4. Outlook characteristics
Outlook characteristics
4
Considering uncertainties in economic growth, primary energy demand is forecast to rise at an annual average rate of 2.3% to 3.4% (Outcome of economic growth scenario forecasts).
Energy intensity is expected to improve (fall) at an annual average rate of 1.4% in the case of the high-growth scenario and 0.8% in the case of the low-growth scenario.
Energy intensity should improve more rapidly at higher rates of economic growth.
Compared to coal and nuclear power, the forecasts for LNG and oil demand vary widely across economic growth scenarios.
Oil dependence should continue to fall.
Oil dependence regarding primary energy peaked at 63% in 1994 and has since fallen steadily. It stood at 38.7% in 2011 and is projected to fall to between 35 and 36% by 2016.
- The share of primary energy accounted for by naphtha, a raw material in the petrochemical industry, rose from 15.2% in 2005 to 16.7% in 2011. It is projected to gradually increase during the forecast period to reach 17.0% by 2016.
- Excluding naphtha, oil dependence is projected to remain at 18.6% in 2016.
The decrease in oil dependence is seen as a result of the government's diversification of energy sources to increase energy security.
[Figure 6] Energy intensity and GDP elasticity
(TOE/1 million won) (Elasticity)
In the industrial sector and residential/commercial/public sector, replacement of oil by town gas and electricity remains on-going and is forecast to continue.
The share of primary energy taken up by bituminous coal for power generation and nuclear power is projected to increase.
Assuming that power generation facilities will be expanded in accordance with the 5th Electricity Supply and Demand Plan, demand for nuclear power and bituminous coal for power generation should rise quickly.
- Demand for nuclear power and bituminous coal for power generation is projected to rise at annual average rates of 5.3% and 5.1%, respectively, from 2011 to 2016.
The shares of primary energy accounted for by bituminous coal for power generation and nuclear power are projected to rise from 26.7% and 11.9%, respectively, in 2011 to 29% and 13.4%, respectively, in 2016.
In contrast, dependence on LNG power generation, which handles peak load, is projected to rise through 2014 and begin to fall in 2015 as a result of expansion of bituminous coal-fired power plants.
The share of final energy accounted for by electricity is projected to increase.
The share of final energy taken up by electricity rose from 16.7% in 2005 to 19.6% in 2011 and is projected to reach 21.4% by 2016.
Consumption of electricity, a high-class energy source, continued to rise sharply until recently due to several factors.
- The basic metal industry and the fabricated metal industry, which consume great amounts of electricity, grew rapidly and led the rise in electricity consumption.
- Consumption of electricity for commercial use continued a rapid increase, attributable to the provision of air-conditioning services in tandem with the rise in national income and growth of the service industry.
- Electricity replaced oil in the energy market for heating, attributable to the billing of low electricity charges that do not reflect power generation costs and the persistence of high oil prices.
4. Outlook characteristics
Electricity is projected to remain the leading energy source consumed in many cases for the time being due to several factors: continued growth of industries that consume great amounts of electricity, convenience in use, and development and distribution of various electric devices resulting from technological development.
The industrial sector is expected to lead the rise in final energy consumption.
Energy demand in the industrial sector is forecast to show sound growth of an annual average rate of 3.1%. Energy demand in the industrial sector is projected to take up a higher percentage of final energy.
- The share of final energy demand accounted for by the industrial sector was steady at 55 to 56% until the mid-2000s, and reached 60.7% in 2011. It is projected to rise to 62.6% by 2016.
- This is a result of a sound increase in energy consumption in the industrial sector owing to steady growth of industries that consume great amounts of energy and a relatively rapid slowdown in demand growth in the transport and residential/commercial sectors.
[Figure 7] Trend and outlook on share of consumption by the industrial sector
(%)
The rapid increase in energy consumption by the industrial sector is a result of production activities in the economy. This is why it is unavoidable.
However, there is a need to improve the energy efficiency of the industrial sector in order to become a low-energy consuming society in the long term. This would entail promoting low-energy consuming, high added-value industries and continually developing energy efficiency technologies.
There is a need to strengthen electricity demand management and improve efficiency in electricity use.
According to the baseline of this outlook, electricity demand is projected to rise at an annual average rate of 4.3% to reach 560.8 TWh by 2016.
- The relatively rapid increase in electricity demand is an outcome of electrification of energy consumption resulting from convenience in use and the rise in income levels.
Major advanced countries also went through this process.
Unlike other final energy sources, electricity triggers energy conversion loss during the generation process. For this reason, a rise in electricity demand triggers an increase in primary energy demand that roughly amounts to the energy loss.4)
5. Policy implications
Policy implications
5
4) There is energy loss of 63.6% in the power generation sector(as of 2010), which is why there is a need for primary energy input of 2.74 TOE to produce 1 TOE of electricity.
Notes: Energy loss = Primary energy consumption - Final energy consumption Source: OECD/IEA, Energy Balances of OECD Countries (2011 ed.)
- If the same energy requirement for final energy use were to be covered by electricity and not oil or town gas, there would be an additional increase in primary energy demand.
- The share of primary energy consumption accounted for by energy conversion loss is rising more rapidly in Korea than in major advanced countries. As of 2009, it surpassed the level recorded by Japan (OECD/IEA statistics).
This points to the critical need to engage in electricity demand management and to boost efficiency in the use of electricity to ensure stability in energy supply and demand from 2012 through 2016.
- It is important to secure a maximum electricity supply capacity in such ways as timely expansion of power generation facilities and use of emergency electric power generators in the private sector by 2014 and 2015, considering that there will be no [Figure 8] Share of primary energy accounted for by energy loss in the transformation sector
5) The annual average increase in base-load power generation facilities(nuclear power, bituminous coal) as of the end of the year in the period from 2011 through 2014 is forecast at 4.1%, which would be lower than the rise in electricity demand during the same period(annual average of 4.5%).
additional spare electricity until that time.5)
- In terms of demand, there is a need to encourage greater efficiency in electricity consumption by setting electricity charges billed to end users at higher levels that reflect actual power generation costs.
- There is also a need to continually implement electricity demand management policies that are aimed at reducing peak demand in the winter and summer.
There is a need to establish measures on stable LNG supply in preparation for an additional rise in demand.
LNG for power generation, which is used to handle peak load, is expected to play an important role until 2015, according to the power generation facility construction plan of the 5th Electricity Supply and Demand Plan and this report's electricity demand outlook.6)
An additional rise in LNG demand is projected if electricity demand increases by more than the expected rate during the forecast period (2012-2016) or if difficulties occur in the construction of base-load power generation facilities stated in the 5th Electricity Supply and Demand Plan.7)
- A review of past electricity supply and demand plans indicates that there were frequent delays in the construction of base-load power generation facilities.
- A rise in LNG demand is considered unavoidable if there is a change in the government's nuclear power policy. Among the possible changes, the government may not continue to operate Gori Nuclear Power Plant Unit 1 and Wolseong Nuclear Power
5. Policy implications
6) The 6th Electricity Supply and Demand Plan is to be released at the end of 2012 and will contain new electricity demand forecasts and power generation facility construction plans.
7) There is a need for more than 1 million tons of LNG annually in order to replace base-load power generation facilities of 1,000MW(based on a utilization rate of 90%).
8) Gori Nuclear Power Plant Unit 1 resumed operation after a decision was made in January 2008 to extend its life. However, it has since been stopped for a safety check. A decision will be made on whether to extend the life of Wolseong Nuclear Power Plant Unit 1 as its design life comes to an end in November 2012.
Plant Unit 18)because of disputes over the safety of nuclear power generation.
LNG demand for power generation handles peak load. There is a possibility that LNG demand variability will increase due to unexpected changes, such as electricity demand fluctuations, during the forecast period.
There is, therefore, a need to revisit measures on the stable supply of LNG in consideration of uncertainties in the supply and demand conditions and demand in the mid-term (2012~2016).
KEEII Mid-Term Korea Energy Demand Outlook (2011~2016) (Volume 13)
Printed in May 2012 Issued in May 2012
CEO of publisher: Kim Jin-woo
Registration: No. 7 on December 7, 1992
Printed by: Beomshinsa (02)503-8737
ⓒKorea Energy Economic Institute 2012 132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114, Fax: (031)422-4958
Publisher: Korea Energy Economics Institute
KEEI
Mid-Term Korea Energy Demand Outlook
(2011~2016)
May 2012
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
Fax: (031)422-4958
E-mail : [email protected] Hompage : http://www.keei.re.kr
