KEEI 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
KEEI
Mid-Term Korea Energy Demand Outlook
(2013~2018)
ISSN 2287-3007
May 2014
Volume 15 K
E E I
Korea Energy Economic Institute
Mid-T erm K o rea Ener gy Demand Outlook
(2013~2018)May 2014May 2014
KEEI
Mid-Term Korea
Energy Demand Outlook
(2013~2018)
·Director of research Lee, Seung-moon([email protected])
·Primary energy-Oil Lee, Seung-moon([email protected])
·Electricity Kim, Cheol-hyeon([email protected])
·Town gas/Thermal energy Park, Myeong-deok([email protected])
·Coal/Conversion Lee, Sang-youl([email protected])
·Material·Research support Lim, Deok-oh([email protected])
·Material·Research support Jang, Seon-hwa([email protected])
·Statistical support Lee, Bo-hye([email protected]) Phone: +82-31-420-2270, +82-31-420-2234
Fax: +82-31-420-2164
KEEIMid-Term Korea Energy Demand Outlook (2013-2018) 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 in Korea……… 9
Ⅱ. Mid-Term Energy Demand Outlook(2013~2018) ……… 23
1. Outlook methodology and premise ……… 25
2. Primary energy demand outlook ……… 31
Ⅲ. Energy Demand Outlook by Scenario ……… 41
1. Setting of economic growth scenarios ……… 43
2. Energy demand by scenario ……… 45
Ⅳ. Outlook Characteristics and Implications ……… 55
Reference Materials ……… 63
Table of Contents for Titles
<TableⅠ-1> Change in major economic and energy consumption indicators …………14
<TableⅠ-2> Change in energy consumption of different manufacturing industry types ………18
<TableⅠ-3> Change in primary energy consumption ………21
<TableⅠ-4> Change in final energy consumption ………22
<TableⅡ-1> Premise on economic growth rate for mid-term outlook ………29
<TableⅡ-2> Temperature variable premise ………30
<TableⅡ-3> Outlook on major economic and energy consumption indicators …………32
<TableⅡ-4> Primary energy demand outlook ………38
<TableⅡ-5> Final energy demand outlook (2013~2018) ………39
<TableⅢ-1> Economic growth scenarios ………44
<TableⅢ-2> Outlook on primary energy demand by scenario ………45
<TableⅢ-3> Outlook on energy intensity by scenario ………46
<TableⅢ-4> Change in demand for major energy sources by scenario compared to the baseline scenario ………48
<TableⅢ-5> Changes in demand in the final consumption sector by scenario compared to the baseline scenario ………51
Table of Contents for Tables
[FigureⅠ-1] Change in primary energy consumption ………12
[FigureⅠ-2] Change in major energy consumption indicators ………14
[FigureⅠ-3] Change in primary energy consumption by energy source ………16
[FigureⅠ-4] Change 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
[FigureⅡ-2] Outlook on primary energy demand ………31
[FigureⅡ-3] Outlook on major energy consumption indicators ………33
[FigureⅡ-4] Outlook on rate of increase in primary energy demand by energy source …35 [FigureⅡ-5] Outlook on consumption share of each energy source ………36
[FigureⅡ-6] Outlook on rate of increase in demand by final energy sector ………37
[FigureⅡ-7] Outlook on share of consumption of each final energy sector ………37
[FigureⅢ-1] Outlook on GDP by scenario ………44
[FigureⅢ-2] Comparison of primary energy demand outlook among scenarios…………46
[FigureⅢ-3] Comparison of energy intensity outlook among scenarios ………47
[FigureⅢ-4] Outlook on oil demand by scenario ………48
[FigureⅢ-5] Outlook on LNG demand by scenario ………49
[FigureⅢ-6] Outlook on coal demand by scenario ………50
[FigureⅢ-7] Outlook on energy demand in the industrial sector by scenario ………51
[FigureⅢ-8] Outlook on energy demand in the transport sector by scenario ………52
Table of Contents for Figures
[FigureⅢ-9] Outlook on energy demand in the residential/commercial/public sector by scenario ………53
[FigureⅣ-1] Changes in and outlook on share of consumption by the industrial
sector ………59 [FigureⅣ-2] Changes in and outlook on share of primary energy taken up by major
energy sources for power generation ………60 [FigureⅣ-3] Changes in and outlook on oil dependence………61
(2013~2018)
Energy Consumption in Korea
Primary energy consumption rose at an annualized rate of 2.9% from 2000 through 2013.
Primary energy consumption rose at a modest rate, below the annualized economic growth rate of 3.8% over the same period.
- In the 1990s, primary energy consumption rose at an annualized rate of 7.5%, which was higher than the annualized economic growth rate of 6.5% in the same period. This was attributable to sharp growth of energy-intensive industries, including the petrochemical industry.
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 persistently remained low in the 1990s, averaging only USD 17.48 per barrel. It began to rise sharply in 2005 and reached USD 109.1 a barrel in 2011.
- The fabricated metal industry expanded relatively sharply. It has a lower energy input per unit of added value than the energy-intensive industries that led economic growth in the 1990s, including the petrochemical and steel industries.
In the last five years (2008~2013), primary energy consumption rose at an annualized rate of 3.1%, only slightly above the annualized economic growth rate of 3.0% during the same period.
- In 2010 and 2011, the rate of increase in energy consumption rose significantly compared to the economic growth rate 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 in the same period.
- 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 2011.1)
1) Annual increases in crude steel output from converters: 23.3% in 2010, 23.5% in 2011Annual increases in bituminous coal consumption for steel making: 31.2% in 2010, 16.7% in 2011
- The establishment of new facilities and a rise in output in the petrochemical industry triggered greater demand for naphtha. Naphtha demand rose 7.0% in 2011 and 8.3% in 2012.2)
- Primary energy consumption rose less than 1% in 2012 and 2013 after having risen sharply in 2011, partly because of a slowdown in energy consumption in the industrial sector due to domestic economic recession.3)
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, primary energy consumption rose at an annualized rate of only 2.5% from 2000 through 2013.
[FigureⅠ-1] Change in primary energy consumption
2) Percentage of primary energy consumption accounted for by naphtha in 2012: 16.9%
3) Final energy consumption in the industrial sector rose 10.2% in 2010 and 8.5% in 2011. It rose only 1.1% in 2012 and 2.0% in 2013.
Consumption of petroleum products, excluding naphtha, fell at an annualized rate of 1.5% in the same period, owing to continued substitution of oil by other energy sources such as town gas.
The share of primary energy accounted for by energy for raw material use (naphtha, coking coal) remained at around 21% between 2000 and 2006, inclusive. It began to rise in 2007 and reached 24.9% in 2013.
Key indicators related to energy consumption
Energy intensity (toe/KRW 1 million), which is a measure of national energy efficiency, improved at an annualized rate of 0.9%, declining from 0.278 in 2000 to 0.247 in 2013.
- The annualized 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 high 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.4)Improvements continued in 2013, resulting in a return to 2008~2009 levels of energy intensity.
Per-capita energy consumption rose from 4.10 toe in 2000 to 5.58 toe in 2013, indicating annualized growth of 2.4%.
4) When the energy conversion factor is standardized, energy intensity in 2012 should be about the same as that in 2011.
Notes: p indicates that the figures are preliminary. The figures in parentheses are annual growth rates (%).
[FigureⅠ-2] Change in major energy consumption indicators
Category
’09~’13
’00~’13
2000 2009 2010 2011 2012 2013p
GDP 695 982 1,044 1,082 1,104 1,135
3.8 3.0
(KRW trillions) (8.8) (0.3) (6.3) (3.7) (2.0) (2.8) Estimated
population 47.0 49.2 49.4 49.8 50.0 50.2 0.5 0.5
(Million persons) Primary energy
192.9 243.3 263.8 276.6 278.7 280.4
consumption 2.9 3.1
(Million toe) (6.4) (1.1) (8.4) (4.9) (0.7) (0.6) Per-capita
consumption 4.10 4.95 5.34 5.56 5.57 5.58 2.4 2.6
(toe) GDP elasticity
of energy 0.72 3.67 1.33 1.32 0.35 0.21 -9.0 -51.0
consumption Energy intensity
(toe/KRW 0.278 0.248 0.253 0.256 0.252 0.247 -0.9 0.1
1 million)
<TableⅠ-1> Change in major economic and energy consumption indicators
Annualized change (%)
Primary energy consumption by source
Oil consumption recorded relatively high annualized growth of 7.6% in the 1990s. It rose at an annualized rate of only 0.8% between 2000 and 2013 as a result of the high oil prices after 2000.
- Naphtha consumption for raw material use indicated sound annualized growth of 4.1%
during the same period.
- Excluding non-energy oil, oil consumption actually fell at an annualized rate of 1.5%
from 2000 through 2013, reflecting active substitution of oil by town gas, electricity, and other sources of energy.
From 2000 through 2013, coal consumption rose at an annualized rate of 5.3%, which was more rapid than in the 1990s, when it rose at an annualized rate of 4.4%.
- Anthracite consumption plummeted at an annualized rate of 11.7% in the 1990s.
It rebounded in the 2000s as a result of renewed demand for both residential and commercial use, a response to the high oil prices, as well as increased demand for industrial use. This is also attributable to bituminous coal consumption for power generation increasing at a rapid annualized rate of 6.9%.
- Consumption of coking coal indicated annualized growth of 3.9% from 2000 through 2013 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 rose at a very high annualized rate of 20.1% in the 1990s, and rose at a high annualized rate of 8.1% from 2000 through 2013.
- The distribution of town gas is approaching a state of saturation, resulting in a slower rise in LNG consumption for gas production. In contrast, LNG consumption for power generation is rising rapidly.
- LNG consumption for power generation rose at an annualized rate of 11.5% in the same period, greatly exceeding the annualized increase of 5.7% in consumption for town gas production.
Consumption of nuclear energy indicated annualized growth of 7.5% in the 1990s, but rose at an annualized rate of only 1.9% from 2000 through 2013.
- From 2000 through 2013, nuclear power generation capacity increased at an annualized
rate of 3.2%, or by 7,000 MW in absolute terms by the end of the period. In the 1990s, capacity rose at an annualized rate of 6.1% for a total expansion of 6,100 MW.
- As of the end of 2013, nuclear power generation capacity totaled 20,716 MW at 23 plants.
Electricity consumption went up at an annualized rate of 9.8% in the 1990s, and continued to rise steadily at an annualized rate of 5.4% from 2000 through 2013.
- Electricity consumption also indicated relatively rapid growth after 2000, for several reasons: low charges, diversification and increased use of electric-powered equipment, high growth of the energy-intensive fabricated metal industry, and convenience in use.
- In the last five years, from 2008 through 2013, electricity consumption in the industrial sector rose at an annualized rate of 5.7%, leading the rise in overall consumption, whereas consumption in the residential/commercial/public sector rose at an annualized rate of 2.8%.
Primary energy consumption structure
The consumption structure by energy source from 2000 through 2013 was largely [FigureⅠ-3] Change in primary energy consumption by energy source
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 37.8% in 2013.
The share taken up by coal is rising as a result of a rapid rise in consumption for power generation and industrial use. It went up from 22.2% in 2000 to 29.2% in 2013.
The share accounted for by LNG was a mere 3.2% in 1990. It rose sharply to 9.8% in 2000 and to 18.4% in 2013 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. The share of primary energy accounted for by nuclear power rose to approximately 16% through 2005, when new facilities were under construction.
- The share taken up by nuclear power declined steadily afterwards, reaching 10.4% in 2013, since no more than three new facilities5)were established after 2006.
[FigureⅠ-4] Change in consumption share by energy source
5) Singori Nuclear Power Plant Unit 1 (March 2011, 1,000 MW), Singori Nuclear Power Plant Unit 2 (July 2012, 1,000 MW), Sinwolseong Nuclear Power Plant Unit 1 (August 2012, 1,000 MW)
Final energy consumption by sector
Energy consumption in the industrial sector is rising slowly compared to the 1990s, when it rose at an annualized rate of 8.8%. However, it still led the overall rise in final energy consumption after 2000, recording annualized growth of 3.5%.
- Excluding energy for raw material use, energy consumption in the industrial sector from 2000 through 2013 went up at an annualized rate of 2.8%.
- Energy consumption in the relatively low energy-consuming fabricated metal industry rose an annualized 5.8% during the same period, indicating the most rapid growth in the entire manufacturing sector.
- The petrochemical industry and primary metal industry (steel making), which are energy-intensive, indicated relatively high annualized increase rates of 4.2% and 4.3%, respectively, between 2000 and 2013 in energy consumption.
(Unit: Million toe)
Industry
’08~’13
’00~’13
2000 2009 2010 2011 2012 2013
Food and tobacco 1.6 1.6 1.7 1.7 1.7 1.7 0.4 1.5
Textiles and clothing 3.5 2.0 2.1 2.1 1.9 1.6 -5.7 -4.7
Lumber and printing 2.2 0.2 0.2 0.2 0.2 0.2 1.7 1.7
Oil and 35.9 50.9 52.9 57.4 58.4 60.5 4.2 4.2
petrochemicals
Base metals and minerals 5.4 5.0 5.2 5.5 5.0 4.9 -1.0 -2.4
Primary metals 17.4 19.0 24.7 28.2 27.8 28.4 4.3 6.1
Fabricated metals 5.1 7.5 8.8 9.7 10.1 10.6 5.8 6.5
Others 3.4 3.0 3.4 3.3 4.3 3.7 0.5 4.5
Total for manufac-turing sector 74.7 92.0 101.8 110.7 112.0 114.0 3.3 4.1
<TableⅠ-2> Change in energy consumption of different manufacturing industry types
Annualized change (%)
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.
- In contrast, energy consumption in the basic metal and mineral industry, which was one of the three major energy-intensive industries in the past, fell at an annualized rate of 1.0% between 2000 and 2013. Energy consumption in this industry fell below that of the fabricated metal industry in 2014.
Energy consumption in the transport sector rose at an annualized rate of 7.9% in the 1990s. It went up at a substantially lower annualized rate of only 1.4% from 2000 through 2013.
- The slowdown in the increase in energy consumption in the transport sector is attributable to the facts that the number of automobiles registered on the road nationwide has nearly reached the point of saturation and that the use of automobiles has been discouraged by the sharp rise in oil prices and the slowdown in economic growth.
Energy consumption in the residential/commercial/public sector rose at an annualized rate of 3.5% in the 1990s, but only at an annualized rate of 1.5% from 2000 through 2013.
- The rate 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.
[FigureⅠ-5] Rate of change in consumption by final energy sector
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 above 60% after 2011.
- The share accounted for by the residential/commercial/public sector dropped after about 2005 to stand at approximately 20.2% in 2013.
- 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 17.6% in 2013.
[FigureⅠ-6] Share of consumption of each final energy sector
Note: p indicates that the figures are preliminary. The figures in parentheses are year-on-year changes (%).
Category
’08~’13
’00~’13
2000 2009 2010 2011 2012 2013p
742.6 778.5 794.3 801.6 827.7 826.8
0.8 1.7
(3.2) (2.4) (2.0) (0.9) (3.2) (-0.1)
494.5 427.5 433.2 413.5 412.2 405.8
-1.5 -0.9 (3.2) (0.9) (1.3) (-4.5) (-0.3) (-1.6)
66.5 108.4 121.0 130.9 128.1 129.6
5.3 4.5
(12.5) (4.0) (11.7) (8.1) (-2.1) (1.1)
47.1 87.6 93.8 99.1 96.7 87.5
5.8 3.9
(15.8) (8.7) (7.0) (5.6) (-2.5) (0.9)
14.6 26.1 33.1 35.6 38.5 40.3
8.1 8.0
(12.3) (-4.9) (26.8) (7.6) (8.1) (4.7)
5.6 5.6 6.5 7.8 7.7 8.3
3.0 8.3
(-7.5) (1.4) (14.7) (21.0) (-2.3) (8.2)
109.0 147.8 148.6 154.7 150.3 138.8
1.9 -1.7
(5.7) (-2.1) (0.6) (4.1) (-2.3) (-7.7)
2.1 5.5 6.1 6.6 8.0 8.9
10.6 8.2
(17.9) (5.4) (10.7) (9.1) (21.4) (10.6)
192.9 243.3 263.8 276.6 278.7 280.4
2.9 3.1
(6.4) (1.1) (8.4) (4.9) (0.7) (0.6)
148.2 183.3 198.0 204.1 204.9 205.5
(6.8) (1.5) (8.0) (3.1) (0.4) (0.3) 2.5 2.6
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> Change in primary energy consumption
Annualized change (%)
Note: p indicates that the figures are preliminary. The figures in parentheses are year-on-year changes (%).
Category
’08~’13
’00~’13
2000 2009 2010 2011 2012 2013p
83.9 106.1 116.9 126.9 128.3 130.9
3.5 4.2
(5.1) (-0.3) (10.2) (8.5) (1.1) (2.0)
42.0 46.1 51.1 54.3 54.6 56.0
2.8 3.9
(5.4) (-0.5) (10.8) (6.3) (0.4) (2.7)
30.9 35.9 36.9 36.9 37.1 37.1
1.4 0.7
(8.1) (0.4) (2.8) (-0.2) (0.7) (0.0)
35.0 40.0 41.7 42.1 42.7 42.5
1.5 1.1
(1.2) (-0.8) (4.3) (0.9) (1.3) (-0.4)
149.9 182.1 195.6 205.9 208.1 210.6
2.7 2.9
(4.7) (-0.3) (7.4) (5.2) (1.1) (1.2)
105.2 122.1 129.8 133.3 134.4 135.7
(4.7) (-0.3) (6.3) (2.7) (0.8) (1.0) 2.0 2.1
698.7 752.2 767.4 778.9 796.5 800.4
1.1 1.6
(1.3) (1.5) (2.0) (1.5) (2.3) (0.5)
450.7 401.2 406.3 390.8 381.0 379.3
-1.3 -1.2
(-0.4) (-0.7) (1.3) (-3.8) (-2.5) (-0.4)
3.3 8.4 9.3 10.6 9.9 10.4
9.1 4.7
(37.1) (2.0) (10.1) (14.8) (-7.1) (5.2)
27.0 27.5 34.3 39.3 38.5 39.1
2.9 4.6
(4.6) (-11.8) (24.5) (14.7) (-1.9) (1.6)
7.6 6.8 7.0 7.5 7.0 7.1
-0.5 -1.5
(2.9) (-11.1) (3.9) (6.8) (-6.4) (0.6)
239.5 394.5 434.2 455.1 466.6 474.8
5.4 5.2
(11.8) (7.0) (10.1) (4.8) (2.5) (1.8)
12.0 18.4 20.0 21.7 23.8 24.5
5.9 5.8
(19.5) (2.7) (8.3) (8.5) (9.7) (3.0)
3,248 6,417 7,064 7,535 8,875 9,532
8.6 8.8
(15.8) (2.5) (10.1) (6.7) (17.8) (7.4) 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)
<TableⅠ-4> Change in final energy consumption
Annualized change (%)
Mid-Term Energy Demand Outlook
(2013~2018)
1. Outlook methodology and premise 2. Primary energy demand outlook
A. Model structure and methodology
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.
Outlook methodology and premise
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.
Forecasting the 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 for each 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.
- The amount of LNG that is directly imported by businesses is separately estimated and added to the LNG demand that is assigned to the transformation sector to determine total LNG demand.
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 for each source and 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 for forecasting is categorized into demand for steel making, cement, and other industries. 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.
B. Outlook premise
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 rise from around 2.8% in 2013 to approximately 3.7% in 2014, which is about the potential growth rate. For economic growth rates after 2014, the premise is that economic growth will gradually decelerate from the potential growth rate.
Notes: p indicates that the figures are preliminary. The 2014 economic growth rate is from KDI (KDI Economic Outlook, November 2013). The economic growth rates from 2015 through 2018 are the premise values in “2013 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.
- Temperatures in January and February 2014, when there were abnormally high temperatures, were excluded when determining average temperature premises.
Category 2013p 2014 2015 2016 2017 2018 Annualized(%)
GDP growth rate (%) 2.8 3.7 3.7 3.7 3.6 3.5 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 102.96 per barrel for Dubai oil for 2014, which is an approximately 2.2% drop from USD 105.25 per barrel in 2013.
For international oil prices for 2014, base oil prices that were forecast by KEEI (January 2014) 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 the forecast period after 2014 is that the real price level at the time that the forecast is made in 2014 will be maintained.
Average
-2.5 1.0 5.3 11.9 18.1 22.9 24.7 26.1 21.7 15.5 7.7 -0.6 temperature
CDD 0 0 0 3 37 147 212 257 102 9 0 0
HDD 632 498 393 187 31 1 0 0 8 88 312 57
Category
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 ~ 2018
<TableⅡ-2> Temperature variable premise
Primary energy demand is expected to rise at an annualized rate of 2.7% from 2013 through 2018 and reach 319.6 million toe in 2018.
Demand increased at only a modest rate in 2013 because of the economic downturn but will probably begin to accelerate in 2014, when the economy is expected to enter a full recovery.
This is somewhat lower than the annualized economic growth rate of 3.6% of the same period.
* Economic growth rate (annualized, %): 3.0% in ’08 ~ ’13 →3.6% in ’13 ~ ’18
* Primary energy increase rate (annualized, %): 3.1% in ’08 ~ ’13 →2.7% in ’13 ~ ’18
Outlook on major energy indicators
Energy intensity is forecast to improve at an annualized rate of 0.9%, declining from 0.247 in 2013 to 0.236 in 2018.
Primary energy demand outlook
2
[FigureⅡ-2] Outlook on primary energy demand
* Energy intensity (toe/KRW 1 million): 0.247 in 2007, 0.247 in 2013, 0.236 in 2018 Per-capita energy demand is expected to rise at an annualized rate of 2.3% in tandem with an increase in income levels. It will likely rise from 5.58 toe in 2013 to around 6.25 toe in 2017.
* Per-capita energy consumption (TOE): 4.87 in 2007, 5.58 in 2013, 6.25 in 2018 - 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 2013 through 2018 should be around 0.7.
* GDP elasticity of energy consumption: 1.0 in ’08 ~ ’13, 0.7 in ’13 ~ ’18
Notes: p indicates that the figures are preliminary. The figures in parentheses are annual growth rates (%).
Category
Annualized change (%) ( ’13~’18)
2013p 2014 2015 2016 2017 2018
GDP 1,134 1,177 1,220 1,265 1,311 1,357
(KRW trillions) (2.8) (3.7) (3.7) (3.7) (3.6) (3.5) 3.6
Estimated
population 50.2 50.4 50.6 50.8 51.0 51.1 0.4
(Million persons) Primary energy
280.4 287.6 295.3 303.6 312.3 319.6
consumption 2.7
(Million toe) (0.6) (2.6) (2.7) (2.8) (2.8) (2.4)
Per-capita
consumption 5.58 5.70 5.83 5.98 6.13 6.25 2.3
(toe) GDP elasticity
of energy 0.22 0.70 0.72 0.77 0.79 0.68 0.72*
consumption Energy intensity
(toe/KRW 0.247 0.244 0.242 0.240 0.238 0.236 -0.9
1 million)
<TableⅡ-3> Outlook on major economic and energy consumption indicators
Outlook by energy source
Oil demand is projected to rise at an annualized rate of 0.5% from 2013 through 2018.
- Oil demand for fuel will likely decline at an annualized rate of 1.1% 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 annualized rate of 1.8% and lead the growth in overall oil demand.
Coal demand is projected to rise at an annualized rate of 4.8% during the forecast period.
- Bituminous coal demand is forecast to indicate annualized growth of 4.9% during the forecast period as it is expected that demand for power generation will rise significantly at an annualized rate of 6.0%.
- 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 major facility expansions6) from 2014 through 2017 according to the 6th Electricity Supply and Demand Plan.
[FigureⅡ-3] Outlook on major energy consumption indicators
6) New power generation facilities with total capacity of 12,520 MW (15 facilities) are planned over four years.
By the end of 2017, facility capacity will likely rise 53.5% from 2013’s capacity of 23,409 MW.
- Anthracite demand is forecast to indicate an annualized increase of only 3.3% during the forecast period owing to a slowdown in demand for industrial use, which recorded a double-digit annualized increase rate since 2000.
LNG demand is forecast to fall at an annualized rate of 0.2% during the forecast period, which compares starkly with the annualized rate of increase of 8.3% during the period of 2008 to 2013.
- LNG demand for town gas production is projected to rise at an annualized rate of 2.7%
during the forecast period as a result of an increase in town gas consumption for industrial use, which should rise at an annualized rate of 4.7%.
- LNG demand for power generation, which is used to handle peak load, will likely drop between 2016 and 2018 as a result of establishment of numerous new nuclear power and coal-fired power generation facilities.
Nuclear power generation is projected to rise at an annualized rate of 7.4% during the forecast period. New power plants will be established from 2013 through 2018 according to the national power supply plan.
- New nuclear power plants with total capacity of 5,200 MW will be built during the forecast period. Total facility capacity will rise from 20,716 MW in 2012 to 27,316 MW in 2018.
- Along with Singori Nuclear Power Plant Units 1 and 2, which are already in operation, operation of Sinwolseong Nuclear Power Plant Unit 2 (1,000 MW) should be launched at the end of 2014. Construction is expected to be completed for Singori Nuclear Power Plant Unit 3 (1,400 MW) in 2015; Singori Nuclear Power Plant Unit 4 (1,400 MW) in 2016; Sinhanul Nuclear Power Plant Unit 1 (1,400 MW) in 2017; and Sinhanul Nuclear Power Plant Unit 2 (1,400 MW) in 2018.
Consumption of new & renewable energy is expected to rise at a relatively high annualized rate of around 7.8% during the forecast period.
Electricity demand will likely continue high growth of an annualized 3.5% during the forecast period, led by demand for industrial use, which should rise at an annualized rate of 4.7%.
- This is somewhat higher than the annualized 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 37.8% in 2013, and it is projected to continue to fall during the forecast period to around 33.8% by 2018.
The share accounted for by LNG went up to 18.7% in 2013, an outcome of a sharp rise in consumption. The share is expected to decline to 16.2% in 2018 as a result of a fall in LNG demand for power generation starting in 2014.
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 10.4% in 2013 to 13.1% in 2017.
The share taken up by coal rose steadily in the 2000s owing to a rapid increase in coal consumption for power generation and industrial use. It is forecast to rise from 29.2% in 2013 to 32.3% in 2018 owing to the establishment of new bituminous coal-fired power generation facilities between 2014 and 2018 and the resulting increase in demand.
[FigureⅡ-4] 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 annualized rate of 2.2% from 2013 through 2018 and reach 234.8 million toe by 2018.
Energy demand in the industrial sector is expected to rise at a robust annualized rate of 2.9% on the assumption that the actual economic growth rate will match the potential annualized growth rate 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 46% of energy consumption in the industrial sector in 2013. Oil demand is expected to rise at an annualized rate of 1.3% owing to a steady rise in demand for raw material use. Electricity and town gas will likely indicate relatively high annualized increases of 4.7% and 4.7% respectively.
The rate of increase in energy demand in the transport sector is expected to fall to an annualized 1.3% as the number of registered cars should nearly reach the saturation level during the forecast period.
- Oil demand for transport will likely increase at an annualized rate of 1.3%, while town gas is expected to record an annualized rise of 2.0% due to increased use of CNG buses.
[FigureⅡ-5] Outlook on consumption share of each energy source
Energy demand in the residential/commercial/public sector is projected to rise at an annualized rate of 0.8% during the forecast period.
- Demand for electricity and town gas is projected to rise at annualized rates of 2.1% and 0.8%, respectively. Oil demand is forecast to fall at an annualized rate of 4.3% 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 2.1%p. In contrast, the shares accounted for by the transport sector and residential/
commercial/public sector are expected to decline 0.7%p and 1.4%p, respectively.
[FigureⅡ-6] Outlook on rate of increase in demand by final energy sector
[FigureⅡ-7] Outlook on share of consumption of each final energy sector
Notes: p indicates that the figures are preliminary.
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 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
Annualized change (%) ( ’13~’18)
2013p 2014 2015 2016 2017 2018
826.8 832.0 829.5 834.8 840.3 847.1 0.5
(-0.1) (0.6) (-0.3) (0.6) (0.7) (0.8)
405.8 400.1 388.5 385.2 383.3 383.2 -1.1
(-1.6) (-1.4) (-2.9) (-0.8) (-0.5) (0.0)
129.6 130.9 136.9 143.6 157.7 163.5 4.8
(1.1) (1.0) (4.6) (4.9) (9.8) (3.6)
97.5 97.9 103.0 108.8 122.1 127.1 5.4
(0.9) (0.4) (5.2) (5.6) (12.2) (4.1)
40.3 41.1 42.1 41.9 40.7 39.8 -0.2
(4.7) (2.0) (2.6) (-0.5) (-2.9) (-2.3)
8.3 8.2 8.2 8.2 8.2 8.2 -0.2
(8.2) (-1.1) (0.0) (0.2) (-0.2) (0.0)
138.8 158.4 169.1 182.8 182.3 198.0 7.4
(-7.7) (14.2) (6.7) (8.1) (-0.3) (8.6)
8.9 9.6 10.4 11.3 12.1 12.9 7.7
(10.6) (7.6) (9.0) (8.5) (7.1) (6.2)
280.4 287.6 295.3 303.6 312.3 319.6 2.7
(0.6) (2.6) (2.7) (2.8) (2.8) (2.4)
205.5 210.7 216.6 223.3 230.4 236.3
(0.3) (2.5) (2.8) (3.1) (3.2) (2.6) 2.8
<TableⅡ-4> 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 conversion factor is applied, the 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) p indicates that the figures are preliminary. The figures in parentheses are annual growth rates (%).
Category
Annualized change (%) ( ’13~’18)
2013p 2014 2015 2016 2017 2018
130.9 135.5 139.6 143.7 147.4 151.0
(2.0) (3.5) (3.0) (2.9) (2.6) (2.4) 2.9
56.0 58.6 60.9 63.3 65.5 67.6
(2.7) (4.5) (4.0) (4.0) (3.5) (3.2) 3.8
37.1 37.7 38.3 38.8 39.3 39.7
(0.0) (1.6) (1.4) (1.3) (1.3) (1.2) 1.3
42.5 42.3 42.8 43.3 43.7 44.1
0.8
(-0.4) (-0.4) (1.1) (1.1) (1.0) (0.9)
210.6 215.6 220.7 225.7 230.4 234.8
(1.2) (2.4) (2.4) (2.3) (2.1) (1.9) 2.2
135.7 138.6 142.0 145.4 148.5 151.5
(1.0) (2.2) (2.4) (2.4) (2.2) (2.0) 2.2
800.4 809.1 817.0 825.1 832.2 838.9
(0.5) (1.1) (1.0) (1.0) (0.9) (0.8) 0.9
379.3 377.2 376.0 375.4 375.1 375.0
(-0.4) (-0.6) (-0.3) (-0.1) (-0.1) (0.0) -0.2
10.4 11.0 11.4 11.8 12.0 12.2
(5.2) (5.7) (3.8) (3.1) (2.2) (1.5) 3.3
39.1 40.3 41.3 42.2 43.1 44.0
(1.6) (2.9) (2.6) (2.2) (2.1) (2.0) 2.4
7.1 7.3 7.4 7.5 7.5 7.6
(0.6) (2.4) (1.7) (1.1) (0.9) (0.8) 1.4
474.8 487.8 506.4 525.4 544.9 564.5
(1.8) (2.7) (3.8) (3.8) (3.7) (3.6) 3.5
25.1 25.9 26.5 27.1 27.5 28.4
(2.5) (3.0) (2.6) (2.2) (1.6) (3.3) 2.5
9,532 10,298 11,089 11,874 12,565 13,192
(7.4) (8.0) (7.7) (7.1) (5.8) (5.0) 6.7
<TableⅡ-5> Final energy demand outlook (2013~2018)
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 exogenous 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.
- This, coupled with the uncertainties in future economic conditions, increases the need to provide economic leaders a wider range of energy demand forecasts.
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 KDI (November 2013) was used for the economic growth rate (3.7%) of 2014. The premise values of the “2013 Long-Term Korea Energy Demand Outlook” were used for the growth rates between 2014 and 2017.
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.
The economy is expected to grow at an annualized rate of 3.6% from 2013 through 2018 according to the baseline scenario. The corresponding figure is an annualized rate of 4.6% in the high-growth scenario and an annualized rate of 2.6% in the low-growth scenario.
Setting of economic growth scenarios
1
Notes: Figures in parentheses are annual changes (%).
(Unit: KRW trillions)
Category Baseline High-growth scenario Low-growth scenario
2014 1,177 (3.7) 1,188 (4.7) 1,165 (2.7)
2015 1,220 (3.7) 1,244 (4.7) 1,197 (2.7)
2016 1,265 (3.7) 1,302 (4.7) 1,229 (2.7)
2017 1,311 (3.6) 1,362 (4.6) 1,261 (2.6)
2018 1,357 (3.5) 1,424 (4.5) 1,293 (2.5)
Annualized
growth rate (%) 3.6 4.6 2.6
(’13~’18)
<TableⅢ-1> Economic growth scenarios
[FigureⅢ-1] Outlook on GDP by scenario
Outlook on primary energy demand for each scenario
Primary energy demand is forecast to rise at an annualized rate of 2.7% during the forecast period (Year 2013~2018) and reach 319.6 million toe in 2018. Primary energy demand is expected to indicate an annualized rise of 3.2% in the high-growth scenario and an annualized increase of 2.1% in the low-growth scenario.
- Compared to the baseline scenario, primary energy demand in 2018 is 2.7% higher in the high-growth scenario and 2.7% lower in the low-growth scenario.
Notes: Figures in parentheses are annual changes (%).
(Unit: 1 million TOE)
Category Baseline High-growth scenario Low-growth scenario
2014 287.6 (2.6) 289.1 (3.1) 286.1 (2.0)
2015 295.3 (2.7) 298.0 (3.1) 292.2 (2.1)
2016 303.6 (2.8) 308.2 (3.4) 298.7 (2.2)
2017 312.3 (2.8) 318.7 (3.4) 305.5 (2.3)
2018 319.6 (2.4) 328.3 (3.0) 311.0 (1.8)
Annualized
growth rate (%) 2.7 3.2 2.1
(’13~’18)
<TableⅢ-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 annualized improvement of 0.9% during the forecast period, thus improving from 0.247 (KRW 1 million/toe) in 2013 to 0.236 (KRW 1 million/toe) in 2018.
Energy intensity is forecast to improve at an annualized rate of 1.4% in the high-growth scenario and an annualized rate of 0.5% in the low-growth scenario. Energy intensity is expected to drop further as the economy grows quickly.
Notes: p indicates that the figures are preliminary.
[FigureⅢ-2] Comparison of primary energy demand outlook among scenarios
(Unit: toe/KRW 1 million)
Category Baseline High-growth scenario Low-growth scenario
2014 0.244 0.243 0.245
2015 0.242 0.240 0.244
2016 0.240 0.237 0.243
2017 0.238 0.234 0.242
2018 0.236 0.231 0.241
Annualized
improvement rate (%) -0.9 -1.4 -0.5
(’13~’18)
<TableⅢ-3> Outlook on energy intensity by scenario
Energy intensity tends to improve relatively quickly in the high-growth scenario and relatively slowly in the low-growth scenario.
- Energy-intensive industries in Korea, including the petrochemical, steel, and fabricated metal industries, are continuing to grow at relatively steady rates. For this reason, the rate of increase in energy demand for basic national economic activities does not drop proportionately even when the economic growth rate is low.
- When the economic growth rate is high, there is a high possibility that low energy- consuming industries will indicate relatively higher growth, such as the service industry. The rate of increase in energy demand may not, therefore, rise proportionately with the economic growth rate.
Outlook on demand by scenario of major energy sources
Compared to coal and nuclear energy, LNG and oil indicate significant differences in demand forecasts across scenarios.
[FigureⅢ-3] Comparison of energy intensity outlook among scenarios
