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Korea Power ExchangeKorea Power Exchange
2007. 10. 152007. 10. 15
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Korean Electric Industry Overview(1)
No Inter-Connection - Isolated electric power system Highly dependent on foreign energy resources (Gas, Oil)
- Imported fuels 97% Rapid growth in electricity
demand (about 6.8%/year) - Recent 5 years (’01~’05) - about 9.7% (’91~’00) Peak Electricity Demand - 62,285MW(Aug. 21, 2007) Total Generating Capacity
- 67,196MW(August, 2007)1
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Area of South Korea : 99,601 km2
GDP : 897.4 Billion USD(’06, 12th Largest in the World)
Population: 49 million (Seoul Metro. Area : 24mil. ’07)
Electric Power Industry Overview
17.62 million customers (December, ‘06)
832 Generating Units (July, ‘07)
765kV/345kV/154kV/(66kV), DC180kV
Installed Capacity : 67,196 MW (August, ‘07)
Electricity Consumption per Capita: 7,191 kWh(‘06)
Korean Electric Industry Overview(2)
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Electric Power Supply and Demand
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By Generating Fuels
By Genco’s
(as of 2007.10, MW,%)
Oil8.8%
Hydro8.2%
Nuclear26.4%
CC,LNG26.9%
Private762 (11.3%)
5 Genco’s41,330 (61.5%)
KHNP 18,250 (27.2%)
67,196MW
Coal29.7%
Generation Capacity in South Korea
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제주
해남
154kV : 20,242 / 561
해저케이블
( Unit : km / Station)
154kV345kV765kV
당진신안성
신서산
765kV : 755 / 5
신가평
신태백울진
Total : 6,720 / 832
Nuclear : 1,772 / 20Thermal : 2,527 / 220CC(Gas) :1,755 / 136
율촌
일산
LG 부곡
Hydro/PP: 656 / 456
신인천 CC
분당
서천
한종
영동
호남
영남
삼랑진
청평
345kV : 8,279 / 80
영광 신광주
신화순
신강진
광양
여수
의령
무주
동해
신포항월성
신온산울산
고리
신양산
신고성
신김해 남부산
북부산
울주
하동삼천포
신마산
산청
서대구
신경산신울산
보령 청양
군산
신옥천
신영주
신김제신남원
고령
선산
신계룡
태안
신당진아산
청원
신제천
신인천
의정부 양주
인천서인천
신시흥평택
동서울신부평
신양재서서울
성동
화성신성남
영서중부
영흥
미금
청송
양양
광양 cc
신용인곤지암
신온양
신덕은
Power System Network in South Korea
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Generators
Transmission Network
Distribution Network
GeneratorTransformer Eligible
Customers345kV,154kV
Transmission Lines 765,345,154kV
HV Customers
22.9kV
Captive Customers220V, 380V
154/22.9
kV
Power System Facility Configuration
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Electric industry liberalization in South Korea
Industry structure before the liberalization start in 1999– KEPCO monopolized 94% of installed generation capacity of 47,053MW, and 100%
of transmission & distribution (Government owned utility)– A small number of IPP’s sold electricity to KEPCO, a single buyer. – Tariff based on usage (Residential, Commercial, Industrial, agricultural)
Objectives of the liberalization– To enhance the efficiency of the electricity supply industry– To effectively finance new generation capacity– To increase consumer benefits and improve service quality
Guiding Principles of Electricity Industry liberalization– Unbundling of electricity business into Generation, Transmission, Distribution, Supply– Mandatory Pool– Regulatory Body– Independent System & Market Operator
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PHASE I PHASE I PHASE II PHASE II PHASE III PHASE III
Generation
Competition
Wholesale
Competition
Retail
Competition
20092004
Split the generation seSplit the generation sector into six Gencos anctor into six Gencos and introduce competitiod introduce competitionn
KEPCO maintains transmission and distribution sector
Introduce competition into the Introduce competition into the ddistribution istribution unbundled unbundled from Kfrom KEPCOEPCO
The transmission system serves The transmission system serves as a common carrieras a common carrier
The distribution will The distribution will be privatized.be privatized.
Regional supply Regional supply monopoly will be monopoly will be eliminated.eliminated.
2001
Electric Industry Liberalization Plan in ‘99
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Liberalization process to date– 1999. 01 “The basic plan for restructuring of the electric power industry” unveiled
– 2000. 12 Necessary Legislations were enacted
– 2001. 04 KOREC and KPX established, 6 Genco’s were spun off
– 2004. 06 Distribution Spin-off suspended by Biz, Labor & Government• Impact of Electricity Market crisis in U.S. (California)
• Concern about Price Volatility and Unstable Supply in the future Wholesale Market
– 2006. 09 Transformed Regional Distribution & Sales Branches of KEPCO into
9 Independent Business Divisions and Internal Competition among them
Current State and Effects of the Liberalization– Cost-Based Pool Model is being continued
– Genco’s and Distribution & Sales divisions are Not yet privatized
– Investments are not effectively on time
– Managerial efficiency in the Generation Sector has been improved
– Power System Quality has been improved than before
What has been done thus far in South Korea
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1) MOCIE: Minister for Commerce & Industry2) KOREC(Korea Electricity Commission) was established
on April 27, 2001, but have not been separated fromgovernment.
Wholesale Market(KPX) - Market Operation - System Operation - Long-Term Adequacy
Wholesale Market(KPX) - Market Operation - System Operation - Long-Term Adequacy
Intra – NetworkIntra –
Network
Power & HeatPower & Heat
CHP
C E S3)(Community
Energy Supplier)Gencos IPPs Self-Gen
Transmission BusinessDistribution Business
Retail Business
KEPCO
End Users or Customers
Connection
OR
Government
MOCIE1)
KOREC2)(Regulator)
Electricity IndustryTeam
. ESI Policy
. Long-Term Adequacy (Generation and Transmission)
. Issue Licenses
. Control of KEPCO’s Manpower and Budget
. Approve the Tariffs
. Supervise Market & System Operations
. Approve Market Rule
. Approve Transmission & Distribution Code. Privatize state-own Gencos and et cetra
3) CES has right to supply electricity and heat to the specific area and it should own generation plant and can sell or buy unserved or excessive electric power to/from KPX or KEPCO
Industry role map in the electricity market
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Transmission
Distribution
Retail
KPXKPXKPXKPX
KOMIPOKOMIPOKOMIPOKOMIPO
KOSEPKOSEPKOSEPKOSEP
KHNPKHNPKHNPKHNP
KOSPOKOSPOKOSPOKOSPO
KEWPKEWPKEWPKEWP
WPWPWPWP
Generation(65-70%)
Consumer
Transmission (10%)
Distribution (10%)
Retail (10~15%)
Consumer
Market Structure Change in 2001
Competition was introduced into generation sector which takes 65%~70% of electricity cost.
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◈ Competition in generation (2001~ )
Genco’s compete among themselves in the Generation Pool.
Major Genco’s are subsidiary companies of KEPCO
KEPCO manages transmission and distribution sectors.
Eligible customers can buy electricity directly from Gencos.
PPA
Bid Bid
Generation Pool
KEPCO(T&D)
EligibleCustomers
IPPs
Gencos(KEPCO)
Gencos(Private)
Customers
Bid
Current Electricity Market Structure
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Key Features of the Market(1)
All generators and retailers should trade electricity through the market. Generators bid into the pool with their available capacity of each generator
and each trading daily
KEPCO is the only purchaser in the market
Eligible Customers are allowed to buy electricity directly from the pool(2003.1)
Some PPA holders do not participate in the market
Dispatch schedule is made by the predetermined costs of each generator. Generation Cost Evaluation Committee(GCEC) determines the variable
costs of each generator. GCEC evaluates the construction cost and fixed costs of each generator.
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Generators are paid by system marginal price(SMP) plus capacity payment SMP reflects actual production costs(start-up, no-load, incremental cost)
of the latest generator brought into operation CP is paid to all generators offering, whether or not dispatched
CP ensures capital costs recovery and underpins further investments
Key Features of the Market(2)
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GeneratorsGeneratorsKPXKPX
Available Cap.Available Cap.Offer
Fixed CostFixed Cost
Gen. Ready Gen. ReadyNotify
Gen. Operation Gen. OperationDispatch Instruction
Payment PaymentInvoice Notification
SchedulingDay ahead
Fixed : YearlyFixed : Yearly
Settlement
After 26 days
Real-time Dispatch
Trading day
Var. : MonthlyVar. : MonthlyProd. CostEvaluationProd. CostEvaluation
• SMP• Commitment
Variable CostVariable CostSubmit
Demand Forecast
Historical data Weather data
Electricity Market Business Process
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Electricity Market Timeline
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Market Volume by Fuel Type
As of 2006As of 2006
Total Total 354.9 TWh354.9 TWh
Traded Energy (GWh)
LNG 57,251(16.1%)
Oil 15,305 (4.3%)
Nuclear42,114
(40%)
Coal 134,480(37.9%)
Others 871 0.4%
Hydro 4,843 1.3%
Total Total 18,924Bwon18,924Bwon
Traded Volume (Million US$)
Nuclear 5,829
(28.6%)
LNG 6,340(31.1%)
Others 77 0.3%
Coal 5,650(27.8%)
Oil 1,925( 9.5%)
Hydro 5362.7%
Total Total 354.9 TWh354.9 TWh
Total Total 20,35720,357
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Generation Type
Renewables304 MW (0.4%)
Distributed Gen3,723 MW
(5.5%)
Generators63,169 MW
(94.1%)
Total
67,196 MW
As of ’07.09.14 18
Total : 90 MembersTotal : 90 Members
As of ’07.09.14
Associates(7)Associates(7)
PPA Generators(3)PPA Generators(3)
Under Cosntruction(1)Under Cosntruction(1)
Registered (83)Registered (83)
KEPCO (TAO + PSB) KEPCO (TAO + PSB)
Generators(54) - KEPCO Subsidiary(6) - Renewables (43) - IPP(5)
Generators(54) - KEPCO Subsidiary(6) - Renewables (43) - IPP(5)
Distributed Gen. (27) Distributed Gen. (27)
Community Service[1] Community Service[1]
Community Service[3]Community Service[3]
Market Participants (Trading Members)
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3.703.633.943.93
4.214.06
5.35
4.72
6.12
5.04
9.30
6.31
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
US Cents/kWh
2001 2002 2003 2004 2005 2006
Average Market Price Average Settlement Price
Electricity Market Price in South Korea
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10.50
5.79
10.18
5.55
10.15
5.67
10.38
5.66
10.42
5.66
10.75
5.82
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
13.00
US Cents/kWh
2001 2002 2003 2004 2005 2006
Residential Industrial
Consumer(Retail) Price in South Korea
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Issues in the Korean electricity Market
Electric industry liberalization program has been stopped for long time o Phase 1 model(Cost Based Pool) has been maintained for more than 6 yearso CBP was designed for simplicity and quick implementation during the
transitory period (need some amendments to be a sustainable market)
CBP has revealed the limitation as a temporary system lacking of
detailed provisions in the market designo Low efficiency due to the dual market structure (Base & Non-base load markets)
o Lack of locational signal in consideration of transmission losses
o Possibility of over-investment with inappropriate capacity payment
o Lack of incentives to save fuel costs
Extensive improvement works in market rules and trading arrangements were carried out in 2006 to make a sustainable electricity market
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Recent Changes in Market Settlement
Energy Paymento Marginal Loss Factors are applied to price setting and settlement
o Adjusted settlement price for the Base-load (Nuclear, Coal) Energy • Settlement prices of baseload power plants are negotiated with parties, bas
ed on the advice of an independent committee to protect Korean electricity consumers
Ancillary Services Paymento Regulation reserve services are compensated for their contribution
Capacity Paymento To further refine the signal, the payment amount is weighted to reflect the
value of capacity across the year and the locations
o Locational(Seoul Metropolitan/ Non-Metropolitan/ Jeju-island) and season
al (Peak/Medium/Off-peak) reserve requirements are applied22
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Issues to be challenged in the future
Introducing bilateral contracts in Energy Market• Bilateral purchasing agreements between the generating
companies and KEPCO(Vesting Contract, Off-Take Contract)
Zonal Pricing in Energy Market
Ex-post pricing for real-time market• Multi-settlement with Day-ahead market and real-time only
Ancillary Service settlement• By Whom and how much should AS payment be paid?
Real time cost offer or/and limited price bidding
Forward Capacity Market
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