KEEI
Mid-Term Korea Energy Demand Outlook
(2012~2017)
May 2013
Korea Energy Economic Institute
132 Naesonsunhwan-ro, Uiwang-si, Gyeonggi-do Phone: (031)420-2114
May 2013
KEEI
Mid-Term Korea
Energy Demand Outlook
(2012~2017)
·Director of research Kim, Tae-heon([email protected])
·Primary energy/Transformation Kim, Tae-heon([email protected])
·Petroleum Lee, Sang-youl([email protected])
·Electricity Choi, Do-young([email protected])
·Coal Kang, Yoon-yeong([email protected])
·Town gas/Thermal energy Park, Myeong-deok([email protected])
·Material/Research support Oh, An-na([email protected])
·Material/Research support Jo, Eun-jeong([email protected])
·Statistical support Lee, Bo-hye([email protected]) Phone: +82-31-420-2148, +82-31-420-2234
Fax: +82-31-420-2164
KEEIMid-Term Korea Energy Demand Outlook (2012-2017) 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 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.
Ⅰ. Energy consumption ……… 9
Ⅱ. Outlook methodology and premise ……… 23
1. Model structure and methodology ……… 25
2. Outlook premise ……… 29
Ⅲ. Outlook on energy demand ……… 31
Ⅳ. Energy demand outlook by scenario ……… 43
1. Setting of economic growth scenarios ……… 45
2. Energy demand by scenario ……… 47
Ⅴ. Outlook characteristics and implications ……… 55
Reference Materials ……… 63
Table of Contents for Titles
<TableⅠ-1> Changes in major economic and energy consumption indicators ……… 14
<TableⅠ-2> Changes in energy consumption of different manufacturing industry types …… 18
<TableⅠ-3> Changes in primary energy consumption ……… 21
<TableⅠ-4> Changes in final energy consumption ……… 22
<TableⅡ-1> Premise on economic growth rate for mid-term outlook ……… 29
<TableⅡ-2> Temperature variable premise ……… 30
<TableⅢ-1> Outlook on major economic and energy consumption indicators ……… 34
<TableⅢ-2> Primary energy demand outlook ……… 40
<TableⅢ-3> Final energy demand outlook ……… 41
<TableⅣ-1> Economic growth scenarios ……… 46
<TableⅣ-2> Outlook on primary energy demand by scenario ……… 47
<TableⅣ-3> Outlook on energy intensity by scenario ……… 48
<TableⅣ-4> Change in demand for major energy sources by scenario compared to the baseline scenario ……… 49
<TableⅣ-5> Changes in demand in the final consumption sector by scenario compared to the baseline scenario ……… 52
Table of Contents for Tables
[FigureⅠ-1] Changes in primary energy consumption ……… 12
[FigureⅠ-2] Changes in major energy consumption indicators ……… 14
[FigureⅠ-3] Changes in primary energy consumption by energy source ……… 16
[FigureⅠ-4] Changes in consumption share by energy source ……… 17
[FigureⅠ-5] Rate of change in consumption by final energy sector ……… 19
[FigureⅠ-6] Share of consumption of each final energy sector ……… 20
[FigureⅡ-1] Outlook model structure ……… 25
[FigureⅢ-1] Outlook on primary energy demand ……… 33
[FigureⅢ-2] Outlook on major energy consumption indicators ……… 35
[FigureⅢ-3] Outlook on rate of increase in primary energy demand by energy source …… 37
[FigureⅢ-4] Outlook on consumption share of each energy source ……… 38
[FigureⅢ-5] Outlook on rate of increase in demand by final energy sector ……… 39
[FigureⅢ-6] Outlook on share of consumption of each final energy sector ……… 39
[FigureⅣ-1] Outlook on GDP by scenario ……… 46
[FigureⅣ-2] Comparison of primary energy demand outlook among scenarios ……… 48
[FigureⅣ-3] Comparison of energy intensity outlook among scenarios ……… 49
[FigureⅣ-4] Outlook on oil demand by scenario ……… 50
[FigureⅣ-5] Outlook on LNG demand by scenario ……… 51
[FigureⅣ-6] Outlook on coal demand by scenario ……… 51
[FigureⅣ-7] Outlook on energy demand in the industrial sector by scenario ………… 53
Table of Contents for Figures
[FigureⅣ-8] Outlook on energy demand in the transport sector by scenario ………… 53 [FigureⅣ-9] Outlook on energy demand in the residential/commercial/public sector
by scenario ……… 54
[FigureⅤ-1] Changes in and outlook on share of consumption by the industrial sector … 59 [FigureⅤ-2] Changes in and outlook on share of primary energy taken up by
major energy sources for power generation ……… 60 [FigureⅤ-3] Changes in and outlook on oil dependence ……… 61
(2012~2017)
Energy consumption
Primary energy consumption rose at an annual average rate of 3.1% from 2000 through 2012.
Primary energy consumption indicated a gradual increase, lower than the annual average economic growth rate of 3.9% over the same period.
- In the 1990s (1990~2000), primary energy consumption rose at an annual average rate of 7.5%, which was higher than the annual average economic growth rate of 6.5% in the same period. This was attributable to sharp growth of energy-intensive industries, including the petrochemical industries.
The lower rate of increase in primary energy consumption since 2000 is an outcome of the slowdown in economic growth, the rise in international oil prices, and the shift toward a low energy-consuming industrial structure.
- The spot price of Dubai crude oil remained persistently low in the 1990s (1990~2000), averaging only USD 17.48 per barrel. It began to rise sharply in 2005 and reached USD 109.1 a barrel in 2011.
- There was relatively rapid growth in the fabricated metal industry, which indicates a lower energy input per unit of added value in comparison with the energy-intensive industries that led economic growth in the 1990s, including the petrochemical and steel industries.
In the last five years (2007~2012), primary energy consumption rose at an annual average rate of 3.3%, which was in excess of the annual average economic growth rate of 2.9%.
- This was due to a sharp increase in demand for raw materials, an outcome of expansion of facilities in the steel and petrochemical industries as well as increases in output.
Another reason is a rapid increase in electricity consumption in the industrial sector.
- A rise in steel output after the establishment of new crude steel facilities in the steel industry (Hyundai Steel's Blast Furnace No. 1 and 2) triggered a surge in coking coal consumption in 2010 and 2011.
* Rate of increase in crude steel output from converters: (Year 2010) 23.3% →(Year 2011) 23.5%
* Rate of increase in bituminous coal consumption for steel making: (Year 2010)
31.2% →(Year 2011) 16.7%
- The establishment of new facilities and a rise in output in the petrochemical industry triggered greater demand for naphtha, which is a raw material. Naphtha demand rose 7.0% in 2011 and by 8.3% in 2012.
* Percentage of primary energy consumption accounted for by naphtha in 2012: 17.0%
- Electricity consumption in the industrial sector, mainly in the primary metal, electric and electronic device, and automotive industries, surged 12.9% in 2010 and 8.5% in 2011.
Primary energy consumption excluding energy for raw material use
Excluding naphtha in the petrochemical industry and coking coal in the steel making industry, which are energy sources used as industrial raw materials, the rate of increase in primary energy consumption from 2000 through 2012 was an annual average of only 2.7%.
Consumption of petroleum products, excluding naphtha, fell at an annual average rate of 1.5% in the same period, owing to continued substitution of oil by other energy sources such as town gas.
[FigureⅠ-1] Changes in primary energy consumption
The share of primary energy accounted for by energy for raw material use (naphtha, coking coal) steadily inched upward from 21.7% in 2000 to 24.9% in 2012.
Key indicators related to energy consumption
Energy intensity (toe/KRW 1 million), which is a measure of national energy efficiency, improved at an annual average rate of 0.8%, declining from 0.278 in 2000 to 0.251 in 2012.
- The annual average improvement rate from 2000 through 2008 reached 1.5%.
However, energy intensity deteriorated for three consecutive years afterwards, resulting in a slower improvement in energy intensity for the entire period.
The deterioration in energy intensity from 2009 through 2011 was a result of a rise in consumption of electricity and energy for raw material use (naphtha and coking coal), an outcome of active production in energy-intensive industries.
- The sharp rise in electricity consumption for industrial use served to increase the energy conversion loss, which further undermined energy intensity.
- The rise in production in energy-intensive industries after 2009 substantially buffered the nation against the global financial crisis, but it negatively impacted the nation's overall energy efficiency.
The change in the energy conversion factor in 2012 translated into a slight improvement in energy intensity.
- According to the previous energy conversion factor, energy intensity remained at about the same level as in the previous year.
Per-capita energy consumption rose from 4.10 toe in 2000 to 5.55 toe in 2012, indicating annual average growth of 2.6%.
Notes: 1) This reflects updated estimated population data (kosis of Statistics Korea). There was a change in per-capita consumption of 2007 and onwards.
2) The figures in parentheses are annual growth rates (%).
3) * indicates the elasticity when the same conversion factor is used.
** is the annual average increase rate in primary energy consumption÷annual average economic growth rate
[FigureⅠ-2] Changes in major energy consumption indicators
Category
’07~’12
’00~’12
2000 2008 2009 2010 2011 2012
GDP 695 978 982 1,044 1,082 1,104
3.9 2.9
(KRW trillions) (8.8) (2.3) (0.3) (6.3) (3.7) (2.0) Estimated
population 47.0 48.9 49.2 49.4 49.8 50.0 0.5 0.6
(Million persons) Primary energy
192.9 240.8 243.3 263.8 275.7 277.6
consumption 3.1 3.3
(Million toe) (6.4) (1.8) (1.1) (8.4) (4.5) (0.7) Per-capita
consumption 4.10 4.92 4.95 5.37 5.54 5.55 2.6 2.7
(toe) GDP elasticity
of energy 0.72 0.79 3.32 1.33 1.22 0.34 0.78** 1.12
consumption (1.01)*
Energy intensity
(toe/KRW 0.278 0.246 0.248 0.253 0.255 0.251 -0.8 0.3
1 million)
<TableⅠ-1> Changes in major economic and energy consumption indicators
Annual average change (%)
Primary energy consumption by source
Oil consumption recorded relatively high annual average growth of 7.6% in the 1990s. It rose at an annual average rate of only 0.9% after 2000 as a result of the high oil prices.
- Naphtha consumption for raw material use indicated sound annual average growth of 4.1% during the same period.
- Excluding non-energy oil, oil consumption actually fell at an annual average rate of 1.5% from 2000 through 2012, reflecting active substitution of oil by town gas, electricity, and other sources of energy.
From 2000 through 2012, coal consumption rose at an annual average rate of 5.6%, which was more rapid than in the 1990s, when it rose at an annual average rate of 4.4%.
- Bituminous coal consumption for power generation increased at a rapid annual average rate of 7.5%. Anthracite consumption rebounded as a result of renewed demand for both residential and commercial use, an outcome of high oil prices, as well as increased demand for industrial use.
- Consumption of coking coal indicated high growth of an annual average rate of 4.1%
from 2000 through 2012 as a result of increases in steel output of 23.3% in 2010 and 23.5% in 2011 after the establishment of new crude steel facilities in the steel industry.
LNG consumption posted a high increase rate of an annual average of 20.1% in the 1990s, and rose at the high annual average rate of 8.4% from 2000 through 2012.
- The distribution of town gas is approaching a state of saturation, resulting in a slower rise in LNG consumption for gas production.
- LNG consumption for power generation rose at an annual average rate of 11.4% in the same period, greatly exceeding the annual average increase of 6.2% in consumption for town gas production.
Consumption of nuclear energy indicated annual average growth of 7.5% in the 1990s, but grew at an annual average rate of only 2.7% from 2000 through 2012.
- From 2000 through 2012, nuclear power generation capacity increased at an annual average 3.5%, or by 7,000 MW in absolute terms by the end of the period. In the 1990s, capacity rose at an annual average rate of 6.1% for a total expansion of 6,100 MW.
- As of the end of 2012, nuclear power generation capacity totaled 20,716 MW at 23 plants.
Electricity consumption went up an annual average rate of 9.8% in the 1990s, and continued to rise steadily at an annual average rate of 5.7% from 2000 through 2012.
- Electricity consumption indicated relatively rapid growth after 2000 as well for several reasons: low charges, diversification and increased distribution of electric-powered equipment, high growth of the energy-intensive fabricated metal industry, and convenience in use.
- In the last five years, from 2007 through 2012, electricity consumption in the industrial sector (annual average increase of 6.0%) led a rise in overall consumption rather than consumption in the residential/commercial/public sector (annual average increase of 3.6%).
Primary energy consumption structure
The consumption structure by energy source from 2000 through 2012 was largely characterized by a drop in oil dependence and increasing dependence on LNG and coal.
The share accounted for by oil has continually fallen. It declined from 52.0% in 2000 to 38.2% in 2012.
[FigureⅠ-3] Changes in primary energy consumption by energy source
The share taken up by coal is indicating an upward trend as a result of a rapid rise in consumption for power generation and industrial use. It went up from 22.2% in 2000 to 29.1% in 2012.
The share accounted for by LNG was a mere 3.2% in 1990. It rose sharply to 9.8% in 2000 and to 18.1% in 2012 owing to increased supply of town gas and increased LNG consumption for power generation.
The share accounted for by nuclear power has depended on when new nuclear power plants have gone online. It rose to approximately 16% through 2005, when establishment of new facilities continued.
- The share taken up by nuclear power continually declined and reached 11.4% in 2012 since no more than three new facilities were established after 2006 (Singori Nuclear Power Plant Unit 1, Singori Nuclear Power Plant Unit 2, Sinwolseong Nuclear Power Plant Unit 1).
Energy consumption by sector
Energy consumption in the industrial sector is rising slowly compared to the 1990s, when it rose at an annual average rate of 8.8%. However, it still led the overall rise in
[FigureⅠ-4] Changes in consumption share by energy source
final energy consumption after 2000, recording annual average growth of 3.5%.
- Excluding energy for raw material use, energy consumption in the industrial sector from 2000 through 2012 went up at an annual average rate of 2.6%.
- Energy consumption in the relatively low energy-consuming fabricated metal industry rose an annual average 5.8% during the same period, indicating the most rapid growth in the entire manufacturing sector. (Its annual average increase in added value from 2000 through 2012 was 9.9%.)
- The annual average energy consumption increase rate of three major energy-intensive industries - petrochemical, primary metal (steel making), and base metal and mineral industries - from 2000 through 2012 was 3.7%, a relatively high rate of increase.
Notes: 1) Considering that the conversion factor was changed after 2007, data for before 2007 was converted based on the new conversion factor for consistency in energy consumption by industry type.
2) For anthracite and new and renewable energy/other energy, only statistics for the overall manufacturing sector are tallied. There are no statistics by industry type, so they are excluded from the target of analysis of consumption by industry type.
(Unit: Million toe)
Industry
’07~’12
’00~’12
2000 2008 2009 2010 2011 2012
Food and
1.6 1.6 1.6 1.7 1.7 1.7 0.5 0.2
tobacco Textiles and
3.5 2.1 2.0 2.1 2.1 1.9 -5.0 -2.6
clothing Lumber and
2.2 1.8 1.8 1.8 1.7 1.6 -2.6 -3.7
printing Oil and
35.9 49.2 51.0 52.7 57.4 58.5 4.2 3.6
petrochemicals Base metals and
5.4 5.6 4.9 5.2 5.5 4.9 -0.8 -2.3
minerals
Primary metals 17.4 21.4 19.2 23.5 28.2 27.8 4.0 7.3
Fabricated
5.1 7.7 7.9 8.8 9.7 10.0 5.8 7.0
metals
Others 3.4 3.0 3.0 3.4 3.3 4.3 2.0 7.2
Total for manufac-
74.7 92.4 91.3 99.1 110.7 111.8 3.4 4.2
turing sector
<TableⅠ-2> Changes in energy consumption of different manufacturing industry types
Annual average change (%)
Energy consumption in the transport sector rose at an annual average rate of 7.9% in the 1990s. It went up at a substantially lower rate of only 1.5% from 2000 through 2012.
- The slowdown in the increase in energy consumption in the transport sector is attributable to the facts that (i) the number of automobiles registered on the road nationwide has nearly reached the point of saturation and that (ii) the use of automobiles has been discouraged somewhat by the persistently high oil prices and the slowdown in economic growth.
Energy consumption in the residential/commercial/public sector rose at an annual average rate of 3.5% in the 1990s, but only at an annual average rate of 1.7% from 2000 through 2012.
- The level of increase in energy consumption in this sector rises and falls with the temperature, but is essentially on a downward trend owing to slower growth in income levels and the population.
The share of energy consumption taken up by the industrial sector remained at around 55% and 56% through the mid-2000s. Its share steadily rose to between 61% and 62%
after 2011.
- The share accounted for by the residential/commercial/public sector dropped after the [FigureⅠ-5] Rate of change in consumption by final energy sector
mid-2000s to stand at approximately 21% in 2012.
- The share of energy consumption accounted for by the transport sector remained at around 20 to 21% from 2000 through 2007, but began a downward trend afterwards and reached 18% in 2012.
[FigureⅠ-6] Share of consumption of each final energy sector
Note: The figures in parentheses are year-on-year changes (%).
Category
’07~’12
’00~’12
2000 2008 2009 2010 2011 2012
742.6 760.6 778.5 794.3 801.6 827.4
0.9 0.8
(3.2) (-4.3) (2.4) (2.0) (0.9) (3.2)
494.5 423.6 427.5 433.2 413.5 411.9
-1.5 -1.8
(3.2) (-6.2) (0.9) (1.3) (-4.5) (-0.4)
66.5 104.2 108.4 121.0 130.9 128.0
5.6 6.3
(12.5) (10.7) (4.0) (11.7) (8.1) (-2.1)
47.1 80.6 87.6 93.8 99.1 96.6
6.2 5.9
(15.8) (11.0) (8.7) (7.0) (5.6) (-2.6)
14.6 27.4 26.1 33.1 35.6 38.5
8.4 7.6
(12.3) (2.9) (-4.9) (26.8) (7.6) (8.1)
5.6 5.6 5.6 6.5 8.0 7.1
1.9 7.0
(-7.5) (10.3) (1.4) (14.7) (23.3) (-11.5)
109.0 151.0 147.8 148.6 150.2 150.3
2.7 1.0
(5.7) (5.6) (-2.1) (0.6) (1.1) (0.1)
2.1 5.2 5.5 6.1 6.6 7.2
10.6 8.2
(17.9) (7.7) (5.4) (10.7) (9.1) (8.4)
192.9 240.8 243.3 263.8 275.7 277.6
3.1 3.3
(6.4) (1.8) (1.1) (8.4) (4.5) (0.7)
148.2 180.7 183.3 198.0 203.1 203.9
(6.8) (2.1) (1.5) (8.0) (2.6) (0.4) 2.7 2.9
Oil (Million bbl) -Excluding non-energy oil
Coal (Million ton) -Excluding coking coal
LNG (Million ton)
Hydro (TWh) Nuclear power
(TWh) Other (Million toe) Primary energy
(Million toe) Primary energy
-Excluding coking coal
<TableⅠ-3> Changes in primary energy consumption
Annual average change (%)
Note: The figures in parentheses are year-on-year changes (%).
Category
’07~’12
’00~’12
2000 2008 2009 2010 2011 2012
83.9 106.5 106.1 116.9 126.9 127.2
3.5 4.0
(5.1) (2.0) (-0.3) (10.2) (8.5) (0.3)
42.0 46.4 46.1 51.1 54.3 53.5
2.6 3.6
(5.4) (3.3) (-0.5) (10.8) (6.3) (-1.6)
30.9 35.8 35.9 36.9 36.9 37.2
1.5 0.1
(8.1) (-3.4) (0.4) (2.8) (-0.2) (0.8)
35.0 40.3 40.0 41.7 42.1 42.9
1.7 1.4
(1.2) (0.7) (-0.8) (4.3) (0.8) (1.9)
149.9 182.6 182.1 195.6 205.8 207.3
2.7 2.7
(4.7) (0.6) (-0.3) (7.4) (5.2) (0.7)
105.2 122.5 122.1 129.8 133.3 133.5
(4.7) (0.4) (-0.3) (6.3) (2.7) (0.2) 2.0 1.8
698.7 740.9 752.2 767.4 778.9 796.5
1.1 0.8
(1.3) (-3.0) (1.5) (2.0) (1.5) (2.3)
450.7 403.9 401.2 406.3 390.8 381.0
-1.4 -1.9
(-0.4) (-3.9) (-0.7) (1.3) (-3.8) (-2.5)
3.3 8.3 8.4 9.3 10.6 9.8
9.4 5.4
(37.1) (9.5) (2.0) (10.1) (14.8) (-8.0)
27.0 31.2 27.5 34.3 39.3 38.5
3.0 5.9
(4.6) (7.8) (-11.8) (24.5) (14.7) (-1.9)
7.6 7.6 6.8 7.0 7.5 7.0
-0.6 -1.0
(2.9) (2.7) (-11.1) (3.9) (6.8) (-6.4)
239.5 385.1 394.5 434.2 455.1 466.6
5.7 4.8
(11.8) (4.5) (2.4) (10.1) (4.8) (2.5)
12.0 18.7 18.4 20.0 21.7 23.8
5.9 5.8
(19.5) (4.3) (-1.5) (8.3) (8.5) (9.7)
3,248 6,259 6,418 7,064 7,535 8,074
7.9 6.4
(15.8) (5.6) (2.5) (10.1) (6.7) (7.1)
Industry (Million toe) -Excluding for raw materials Transport (Million toe) Residential/
commercial/Public (Million toe)
Total (Million toe)
Total -Excluding for raw materials
Oil (Million bbl) -Non-energy oil excluded
Anthracite (Million ton) Bituminous coal
(Million ton) -Excluding coking coal Electricity
(TWh) Town gas (Billion m3) Thermal and other
(Thousand toe)
<TableⅠ-4> Changes in final energy consumption
Annual average change (%)
Outlook methodology and premise
1. Model structure and methodology 2. Outlook premise
Model structure for mid-term energy demand outlook
Primary energy demand consists of final energy demand and energy demand in the transformation sector. Forecasts are made by first breaking down final energy demand by different energy sources such as petroleum products, town gas, electricity, coal, and thermal and other energy.
Each energy source is broken down by purpose of use or demand sector, such as industry, transport, residential/commercial, and public/other. Consumption patterns and characteristics per source/sector are reflected when forecasting demand.
Model structure and methodology
1
[FigureⅡ-1] Outlook model structure
Use of econometric model for demand outlook by final energy source
A model by energy source/sector (use) is estimated by quarterly time-series data, after which input premise values (GDP, temperature variables, energy prices) are applied to forecast demand.
- The forecast results are tallied by energy source and sector to determine the total final energy forecast value.
Major explanatory variables that are used for mid-term metric model estimation and outlook are data on GDP, index of industrial product by industry type, energy prices per source/sector, and cooling degree days/heating degree days.
From among major explanatory variables, the premise values of the index of industrial product by industry type are determined within the model based on GDP.
ARDL (Autoregressive Distributed Lag) is used as a basic model for demand outlook by specific use.
The following method is adopted for forecasts in the transformation sector.
The fuel input amount is needed to produce secondary energy demand, such as electricity, town gas, and thermal energy that is forecasted in the area of final energy.
This fuel input amount is determined for each of the power generation, town gas production, and district heating thermal energy production sectors.
How forecasts are made on the amount of fuel input needed for electric power generation
- An outlook is made on the total electricity supply in consideration of total electricity demand, self-consumption, and power transmission/power distribution loss rate.
- The LP (Linear Programming) model is used to forecast the power generation amount by energy source required to satisfy total electricity supply.
- Generating efficiency forecasts are applied to the forecasted power generation amount by source to determine the fuel input amount.
- The “6th Electricity Supply and Demand Plan” is used as a major premise for forecasting energy demand in the power generation sector.
A similar method is employed to come up with forecasts on the fuel input amount in the
town gas and thermal energy production sector. The amount is determined based on reverse order of the ‘energy conversion process’.
Oil demand outlook method
Final energy consumption is categorized into three areas - transport, industry, and residential/commercial/public/other.
A forecast model is established by major product in each sector.
- Five products (gasoline, diesel, heavy oil, jet fuel, LPG) in the transport sector
- Six products (kerosene, diesel, heavy oil, LPG, naphtha, asphalt) in the industrial sector - Four products (kerosene, diesel, heavy oil, LPG) in the residential/commercial/public
and other sector
Major explanatory variables of each model include GDP (or index of industrial product), product prices, heating degree days, seasonal variables, and a lagged variable of actual consumption. Specific model settings are used for each product.
With regards to oil injected into the transformation sector (power generation, town gas production, thermal energy production), demand forecasts are determined for secondary energy sources (electricity, town gas, thermal energy), after which the input requirement is determined based on the transformation sector module.
- At this point, relations with other energy sources that can substitute for oil are simultaneously considered.
Electricity demand outlook method
Electricity demand is categorized into four sectors - for industrial use, for housing, for commercial/public use, and for transport.
Demand patterns and characteristics by sector are considered for individual model estimations, after which input premise values are used to forecast electricity demand for the forecast period.
In each model’s estimations, major explanatory variables that are used are quarterly GDP, index of industrial product, real power rates (unit cost of sales) by sector, and quarterly temperature information (cooling degree days and heating degree days).
- The index of industrial product is used as an explanatory variable instead of GDP to forecast electricity demand for industrial use.
LNG demand outlook method
For LNG demand forecasts, LNG demand is categorized into demand for town gas production and demand for power generation.
For forecasts on LNG demand for town gas production, town gas demand in the final sector is forecasted first.
- Town gas demand is categorized into different uses, such as for residential, general, and industrial use. An outlook is made for each use, using price, income, such temperature variables as CDD and HDD, and number of customers as variables from the supply perspective.
Next, an outlook is made on LNG demand for town gas production in consideration of the input ratio between LNG and LPG, which are raw materials for town gas production, as well as self-consumption and loss ratio.
LNG demand for power generation is determined through an LP model, which forecasts the amount of power generation by source in the power generation sector and the energy input amount by source.
Coal demand outlook method
For coal demand, a categorization is first made into anthracite and bituminous coal demand in the final consumption sector. Forecasts are made on demand by source and by use (industry, residential/commercial, and power generation), after which they are summed up. For coal demand for power generation, the coal input amount for power generation that is forecast in the transformation sector is used.
Anthracite demand is categorized into demand for residential/commercial use and for industrial use. The major explanatory variables that are used are GDP, a lagged variable, and seasonal variables.
Bituminous coal demand is categorized into demand for steel making, cement, and other industries to make forecasts. The major explanatory variables that are used for each
model include the pig iron production amount, cement production amount, and index of industrial product.
The major explanatory variables that are used for thermal energy and other energy demand outlook models include GDP, index of industrial product, temperature variables (CDD, HDD), a lagged variable, and seasonal variables.
Data on income, price, and temperature, which have the largest impact on energy demand, is used as major input premises for the mid-term energy demand outlook. The GDP growth rate was set for income forecasts, and international oil prices were adopted for price forecasts.
It was assumed that the GDP growth rate would go up from around 2.8% in 2013 to approximately 4.1% in 2014, which is about the potential growth rate. For economic growth rates in 2014 and onwards, the premise is that economic growth will gradually decelerate from the potential growth rate.
Notes: The economic growth rate of 2013 is a forecast by the Bank of Korea (Bank of Korea’s Economic Outlook, January 2013). The economic growth rates from 2014 through 2017 are the premise values in “2012 Long-term Korea Energy Demand Outlook” of KEEI.
For temperature variables that were used for the outlook, including CDD and HDD, the average temperature data for the last ten years was used.
It was assumed that average year temperatures would be maintained during the forecast period.
Outlook premise
2
Category 2012p 2013 2014 2015 2016 2017 average Annual
GDP growth rate (%) 2.0 2.8 4.1 3.9 3.7 3.6 3.6
<TableⅡ-1> Premise on economic growth rate for mid-term outlook
Notes: CDD (HDD) refers to the difference between the daily average temperature and baseline when the daily average temperature is higher (lower) than the baseline (18℃). Monthly CDD/HDD is the sum of the daily degree days of the corresponding month.
To consider the influence that energy prices have on energy demand, international crude oil prices were used as the outlook premise.
Base international oil prices are forecast at USD 106.23 per barrel for 2013, which is an approximately 2.6% drop from USD 109.06 per barrel in 2012.
For international oil prices for 2013, base oil prices that were forecast by KEEI (November 2012) were used. The forecast international oil prices were used to come up with forecasts for domestic petroleum product and town gas prices.
The premise for domestic petroleum product and town gas prices for 2014 and onwards is that the real price level of 2013 will be maintained.
Average
-2.5 1.0 5.5 12.2 18.3 22.6 24.6 25.9 21.5 15.3 8.0 -0.5 temperature
CDD 0 0 0 3 39 138 206 246 111 10 0 0
HDD 634 482 389 177 29 1 0 0 6 92 302 571
Category
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Year 2013 ~ Year 2017
<TableⅡ-2> Temperature variable premise
Mid-Term Energy Demand Outlook
(2012~2017)
Primary energy demand is expected to rise at an annual average rate of 2.7% from 2012 through 2017 and reach 317.8 million toe in 2017.
The rate of increase in energy demand is not expected to be high in 2013 due to the economic downturn. However, the increase in energy demand will likely begin to accelerate in 2014, when the economy is expected to enter a full recovery.
This is somewhat lower than the economic growth rate (annual average of 3.6%) of the same period.
* Economic growth rate (annual average, %): (’07~’12) 2.9 →(’12~’17) 3.6
* Primary energy increase rate (annual average, %): (’07~’12) 3.3 →(’12~’17) 2.7
Outlook on major indicators related to energy
Energy intensity is forecast to improve by an annual average rate of 0.7%, declining from 0.251 in 2012 to 0.241 in 2017.
* Energy intensity (toe/KRW 1 million): (’07) 0.247 →(’12) 0.251 →(’17) 0.241 Per-capita energy demand is expected to rise at an annual average rate of 2.3% in tandem with an increase in income levels. It will likely go up from 5.55 toe in 2012 to around 6.23 toe in 2017.
[FigureⅢ-1] Outlook on primary energy demand
* Per-capita energy consumption (toe): (’07) 4.87 →(’12) 5.55 →(’17) 6.23
- Per-capita energy consumption should remain high compared to major OECD countries.
* Comparison with other countries in per-capita energy consumption (Year 2011):
(OECD average) 4.29, (Japan) 3.61, (Germany) 3.76, (UK) 3.03, (US) 7.03
The GDP elasticity of primary energy demand from 2012 through 2017 should be around 0.8.
* GDP elasticity of energy consumption: (’07~’12) 1.1 →(’12~’17) 0.8
Notes: 1) The figures in parentheses are annual growth rates (%).
2) p indicates that the figures are preliminary. * refers to elasticity during the period between 2012 and 2017.
Category
Annual average change (%) (2012~2017)
2012p 2013 2014 2015 2016 2017
GDP 1,104 1,134 1,181 1,227 1,273 1,318
(KRW trillions) (2.0) (2.8) (4.1) (3.9) (3.7) (3.6) 3.6
Estimated
population 50.0 50.2 50.4 50.6 50.8 51.0 0.5
(Million persons) Primary energy
277.6 283.3 292.8 300.9 309.2 317.8
consumption 2.7
(Million toe) (0.7) (2.0) (3.4) (2.8) (2.8) (2.8)
Per-capita
consumption 5.55 5.64 5.81 5.94 6.09 6.23 2.3
(toe) GDP elasticity
of energy 0.34 0.74 0.82 0.71 0.75 0.77 0.76*
consumption (1.01) Energy intensity
(toe/KRW 0.251 0.250 0.248 0.245 0.243 0.241 -0.8
1 million)
<TableⅢ-1> Outlook on major economic and energy consumption indicators
Outlook by energy source
Oil demand is projected to rise at an annual average rate of 1.0% from 2012 through 2017.
- Oil demand for fuel will likely decline at an annual average rate of 0.6% during the forecast period due to the high oil prices. However, naphtha demand for raw material use in the petrochemical industry will go up at an annual average of 2.5% to lead the growth in overall oil demand.
Coal demand is projected to rise at an annual average rate of 4.7% during the forecast period.
- Bituminous coal demand is forecast to indicate annual growth of 4.8% during the forecast period as it is expected that demand for power generation will significantly rise at an annual average rate of 5.5%.
- Bituminous coal demand for power generation will likely remain stagnant through 2013 since there are no plans to build new power generation facilities. However, a substantial rise in demand is expected as a result of large-scale facility expansion1)from
[FigureⅢ-2] Outlook on major energy consumption indicators
1) New power generation facilities with total capacity of 12,520 MW (15 facilities) are planned to be built over four years. By the end of 2017, facility capacity will likely rise 53.5% from 2013's capacity of 23,409 MW.
2014 through 2017 according to the 6th Electricity Supply and Demand Plan.
- Anthracite demand is forecast to indicate an annual average increase of 4.0% during the forecast period owing to a slowdown in demand for industrial use, which recorded a two-digit annual average increase rate since 2000.
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 2007 to 2012, when demand increased at an annual average rate of 7.6%.
- LNG demand for town gas production is projected to rise at an annual average rate of 3.6% during the forecast period as a result of an increase in town gas consumption for industrial use, which should rise at an annual average rate of 6.4%.
- LNG demand for power generation, which is used to handle peak load, will likely drop in 2016 and 2017 as a result of large-scale establishment of new nuclear power and coal-fired power generation facilities.
Nuclear power generation is projected to rise at an annual average rate of 5.0% during the forecast period. New power plants will be established from 2013 through 2017 according to the power supply plan.
- New nuclear power plants with total capacity of 5,200 MW will be built during the forecast period. Accordingly, total facility capacity will rise from 20,716 MW in 2012 to 25,916 MW in 2017.
- Construction is expected to be completed for Sinwolseong Nuclear Power Plant Unit 2 (1,000 MW) and Singori Nuclear Power Plant Unit 3 (1,400 MW) in 2013; for Singori Nuclear Power Plant Unit 4 (1,400 MW) in 2014; and for Sinuljin Nuclear Power Plant Unit 1 (1,400 MW) in 2017.
Consumption of new & renewable energy is expected to rise at a relatively high annual average rate of between 5 and 6% during the forecast period.
Electricity demand will likely continue high growth of an annual average 3.7% during the forecast period, led by demand for industrial use, which should rise at an annual average rate of 4.1%.
- This is somewhat higher than the annual average economic growth rate of 3.6% during the same period.
Outlook on energy mix
The share of primary energy demand accounted for by oil peaked at 63% in 1994 and has been steadily declining ever since. It dropped to 38.2% in 2012. It is projected to continue to fall during the forecast period to between 35 and 36% by 2017.
The share accounted for by LNG went up to 18.1% in 2012, an outcome of a sharp rise in consumption. It will likely continue an upward trend through 2015 (18.7%). The share is expected to decline to 17.2% in 2017 as a result of decreased LNG demand for power generation starting in 2016.
If new nuclear power plants become operational according to the 6th Electricity Supply and Demand Plan, the total share of primary energy accounted for by nuclear power will likely go up from 11.4% in 2012 to 12.7% in 2017.
The share taken up by coal continually went up in the 2000s owing to a rapid increase in coal consumption for power generation and industrial use. It is forecast to rise from 29.1% in 2012 to 31.8% in 2017, owing to the establishment of new bituminous coal- fired power generation facilities between 2014 and 2017 and the resulting increase in demand.
[FigureⅢ-3] Outlook on rate of increase in primary energy demand by energy source
Energy demand by sector
Final energy demand is forecast to rise at an annual average rate of 2.4% from 2012 through 2017 and reach 233.0 million toe by 2017.
Energy demand in the industrial sector is expected to rise at a robust annual average rate of 2.8% on the assumption that the actual economic growth rate will match the potential growth rate (annual average of 3.6%) during the same period.
- Industrial production is expected to lead economic growth during the forecast period.
Energy demand in the industrial sector is forecast to increase relatively quickly.
- Oil accounted for 53% of energy consumption in the industrial sector in 2012. Oil demand is expected to rise at an annual average rate of 2.8% owing to a steady rise in demand for raw material use. Electricity and town gas will likely indicate relatively high annual average increases of 4.1% and 6.1% respectively.
The rate of increase in energy demand in the transport sector is expected to fall to an annual average of 1.5% as the number of registered cars should nearly reach the saturation level during the forecast period.
- Oil demand for transport will likely increase by an annual average of 1.4%, while town gas is expected to record an annual average rise of 3.6% due to increased use of CNG buses.
Energy demand in the residential/commercial/public sector is projected to rise at an annual average rate of 1.9% during the forecast period.
[FigureⅢ-4] Outlook on consumption share of each energy source
- Demand for electricity and town gas is projected to rise at annual average rates of 3.3%
and 1.7%, respectively. Oil demand is forecast to fall at an annual average rate of 2.6%
as a result of replacement of oil for fuel by other energy sources.
Demand in the industrial sector will increase relatively rapidly during the forecast period.
The share of consumption taken up by the industrial sector will likely go up by 1.2%p. In contrast, the shares accounted for by the transport sector and residential/
commercial/public sector are expected to decline 0.7%p and 0.5%p, respectively.
[FigureⅢ-5] Outlook on rate of increase in demand by final energy sector
[FigureⅢ-6] Outlook on share of consumption of each final energy sector
<Table 2>
Notes: 1) The new energy conversion factor (Article 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) p indicates that the figures are preliminary. The figures in parentheses are annual growth rates (%).
Category
Annual average change (%) (2012~2017)
2012p 2013 2014 2015 2016 2017
827.4 836.0 839.5 850.0 859.4 868.0 1.0
(3.2) (1.0) (0.4) (1.3) (1.1) (1.0)
411.9 408.1 399.8 399.3 398.9 398.9 -0.6
(-0.4) (-0.9) (-2.0) (-0.1) (-0.1) (0.0)
128.0 129.6 132.6 137.8 148.1 161.2 4.7
(-2.1) (1.2) (2.4) (3.9) (7.5) (8.9)
96.6 97.3 99.1 102.9 112.0 123.8 5.1
(-2.6) (0.8) (1.8) (3.9) (8.8) (10.5)
38.5 39.2 41.7 43.2 43.5 41.8 1.7
(8.1) (1.8) (6.3) (3.8) (0.6) (-3.8)
7.1 6.1 6.2 6.2 6.2 6.2 -2.5
(-11.5) (-14.2) (2.5) (0.0) (0.0) (0.0)
150.3 165.8 181.8 186.8 186.8 191.7 5.0
(0.1) (10.3) (9.6) (2.8) (0.0) (2.6)
7.2 7.6 8.0 8.4 8.8 9.1 5.0
(8.4) (6.4) (5.2) (4.7) (4.4) (4.1)
277.6 283.3 292.8 300.9 309.2 317.8 2.7
(0.7) (2.0) (3.4) (2.8) (2.8) (2.8)
203.9 207.5 214.6 220.4 226.1 233.2
(0.4) (1.8) (3.4) (2.7) (2.8) (2.9) 2.7
<TableⅢ-2> Primary energy demand outlook
Oil (Million bbl) -Excluding non-energy oil
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 coking coal
Notes: 1) If the previous energy 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.
Category Annual average
change (%) (2012~2017)
2012p 2013 2014 2015 2016 2017
127.2 130.0 134.3 138.3 142.1 145.8
(0.3) (2.2) (3.2) (3.0) (2.8) (2.6) 2.8
53.5 54.3 56.1 57.8 59.5 61.2
(-1.6) (1.5) (3.4) (3.1) (3.0) (2.8) 2.7
37.2 37.8 38.5 39.1 39.6 40.1
(0.8) (1.6) (1.9) (1.6) (1.4) (1.3) 1.5
42.9 43.5 44.4 45.3 46.2 47.0
1.9
(1.9) (1.4) (2.1) (2.0) (2.0) (1.7)
207.3 211.3 217.1 222.7 228.0 233.0
(0.7) (2.0) (2.8) (2.5) (2.4) (2.2) 2.4
133.5 135.5 139.0 142.2 145.3 148.3
(0.1) (1.5) (2.6) (2.3) (2.2) (2.1) 2.1
796.5 805.5 816.9 827.7 837.5 846.3
(2.3) (1.1) (1.4) (1.3) (1.2) (1.1) 1.2
381.0 377.6 377.3 376.9 376.9 377.1
(-2.5) (-0.9) (-0.1) (-0.1) (0.0) (0.0) -0.2
9.8 10.4 10.9 11.4 11.8 12.3
(-8.0) (6.6) (4.7) (4.2) (3.9) (3.6) 4.6
38.5 39.3 40.7 42.0 43.3 44.6
(-1.9) (2.1) (3.5) (3.3) (3.0) (2.9) 3.0
7.0 7.1 7.2 7.2 7.1 7.1
(-6.4) (1.1) (1.3) (-0.3) (-0.7) (-0.9) 0.1
466.6 480.7 501.2 520.7 540.3 559.9
(2.5) (3.0) (4.3) (3.9) (3.8) (3.6) 3.7
23.8 24.7 25.8 26.8 27.7 28.4
(9.7) (4.0) (4.3) (3.9) (3.4) (2.7) 3.6
8,074 8,503 8,841 9,140 9,414 9,667
(7.1) (5.3) (4.0) (3.4) (3.0) (2.7) 3.7
<TableⅢ-3> Final energy demand outlook
Industry (Million toe) -Excluding for raw materials Transport (Million toe) Residential/
commercial/Public (Million toe)
Total (Million toe)
Total -Excluding for raw materials
Oil (Million bbl) -Excluding non-energy oil
Anthracite (Million ton) Bituminous coal
(Million ton) -Excluding coking coal Electricity
(TWh) Town gas (Billion m3) Thermal and other
(Thousand toe)
Energy demand outlook by scenario
1. Setting of economic growth scenarios 2. Energy demand by scenario
Need for scenario-based outlook
Energy consumption in Korea is sensitive to shocks of every kind to the global economy, including the foreign exchange crisis in 1998, global financial crisis in 2009, and the surge in international energy prices since the mid-2000s.
- The Korean economy is heavily dependent on other countries. It is more exposed to outside factors, including business fluctuations in the US and China, the fiscal crisis in the euro zone, and sanctions imposed by the international community on Iran.
- As such, there is growing need to provide economic leaders a wider range of energy demand forecasts that take into consideration all of the uncertainties in future economic conditions.
This report presents high and low economic growth scenarios, in addition to the baseline growth scenario, and provides an energy demand outlook for each scenario in consideration of uncertainties in the energy market, including changes in the global economy and international oil prices.
Setting of economic (GDP) growth scenarios
For the baseline scenario, an outlook by the Bank of Korea (January 2013) was used as the economic growth rate (2.8%) of 2013. The premise values of the “2013 Long-Term Korea Energy Demand Outlook”2)were used for the growth rates between 2014 and 2017.
The growth rates of the high-growth and low-growth scenarios of 2013 were set within
±0.5p% of the growth rate of the baseline scenario, thus making them more practical in consideration of current economic conditions.
The economic growth scenarios for 2014 and onwards were set by applying ±1.0%p to the baseline scenario growth rate, considering that there is greater economic uncertainty.
Setting of economic growth scenarios
1
2) KEEI, 2013 Long-Term Korea Energy Demand Outlook, Planned for publication in December 2013
The economy is expected to grow at an annual average rate of 3.6% from 2012 through 2017 according to the baseline scenario. This figure is an annual average of 4.5% in the high-growth scenario and an annual average of 2.7% in the low-growth scenario.
Notes: Figures in parentheses are annual changes (%).
(Unit: KRW trillions)
Category Baseline High-growth scenario Low-growth scenario
2013 1,135 (2.8) 1,140 (3.3) 1,129 (2.3)
2014 1,181 (4.1) 1,198 (5.1) 1,164 (3.1)
2015 1,227 (3.9) 1,257 (4.9) 1,198 (2.9)
2016 1,273 (3.7) 1,316 (4.7) 1,230 (2.7)
2017 1,318 (3.6) 1,377 (4.6) 1,262 (2.6)
Annual average
growth rate (%) 3.6 4.5 2.7
(2012~2017)
<TableⅣ-1> Economic growth scenarios
[FigureⅣ-1] Outlook on GDP by scenario
Outlook on primary energy demand for each scenario
Primary energy demand is forecast to rise at an annual average rate of 2.7% during the forecast period (Year 2012~2017) and reach 317.8 million toe in 2017. Primary energy demand is expected to indicate an annual average rise of 3.2% in the case of the high- growth scenario and an annual average increase of 2.3% in the case of the low-growth scenario.
- In terms of primary energy demand in 2017, demand is 2.1% higher in the high-growth scenario compared to the baseline scenario. Demand is 2.0% lower in the low-growth scenario compared to the baseline scenario.
Notes: Figures in parentheses are annual changes (%).
(Unit: 1 million toe)
Category Baseline High-growth scenario Low-growth scenario
2013 283.3 (2.0) 283.6 (2.1) 282.8 (1.9)
2014 292.8 (3.4) 294.5 (3.8) 291.1 (2.9)
2015 300.9 (2.8) 304.0 (3.2) 297.8 (2.3)
2016 309.2 (2.8) 314.0 (3.3) 304.6 (2.3)
2017 317.8 (2.8) 324.3 (3.3) 311.5 (2.3)
Annual average
growth rate (%) 2.7 3.2 2.3
(2012~2017)
<TableⅣ-2> Outlook on primary energy demand by scenario
Energy demand by scenario
2
Outlook on energy intensity
In the case of the baseline scenario, energy intensity will likely indicate an annual average improvement rate of 0.8% during the forecast period, thus improving from 0.251 (KRW 1 million/toe) in 2012 to 0.241 (KRW 1 million/toe) in 2017.
Energy intensity is forecast to improve at an annual average of 1.3% in the case of the high-growth scenario and an annual average of 0.4% in the case of the low-growth scenario. Energy intensity is expected to further drop as the economy grows quickly.
Notes: p indicates that the figures are preliminary.
[FigureⅣ-2] Comparison of primary energy demand outlook among scenarios
(Unit: toe/KRW 1 million)
Category Baseline High-growth scenario Low-growth scenario
2013 0.250 0.249 0.250
2014 0.248 0.246 0.250
2015 0.245 0.242 0.249
2016 0.243 0.239 0.248
2017 0.241 0.236 0.247
Annual average
improvement rate (%) -0.8 -1.3 -0.4
(2012~2017)
<TableⅣ-3> Outlook on energy intensity by scenario
