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| Union members of the Korea Hydro & Nuclear Power hold signs in Seoul, Friday, in a protest opposing the shutdown of the Wolsong-1 nuclear reactor. / Yonhap |
By Yoon Ja-young
The decision to shut down Wolsong-1 nuclear reactor as well as canceling plans for the construction of four new ones is raising concern that it will adversely affect export plans and hurt the industrial ecosystem. Analysts also expect electricity rate hikes will be inevitable.
"It is worrisome since the decision is likely to lead to contraction in the country's nuclear energy industry, which is globally competitive," said Song Jong-soon, a professor of nuclear engineering at Chosun University.
Korea Hydro & Nuclear Power (KHNP) recently announced plans to shut down the reactor in Gyeongju, which had operations extended for 10 years to 2022 following completion of its 30-year operational lifecycle in 2012. Plans to build Daejin 1 and 2 units as well as Cheonji 1 and 2 units also were abandoned.
The decision goes along with the energy transition plan of the Moon Jae-in administration which seeks to shift to renewable and LNG-fueled power from nuclear and coal-fired power plants. According to the government's long-term energy supply plan, the number of nuclear reactors will decrease to 14 in 2038 from current 24 as plans for new ones will be abolished while the lifecycle of existing reactors will not be extended. President Moon promised three things regarding nuclear energy when he was a presidential candidate: the country would not build additional nuclear reactors, those already built would be safely controlled, and those reaching the end of their lifespan would be shut down as soon as possible.
While the shift to renewable energy is global trend, there is concern that a sudden transition will demolish Korea's nuclear energy industry. According to a report on the industry, seven conglomerates and 1,993 SMEs participate in the construction of two nuclear reactors, offering jobs to 15,000.
The government plans to focus on exports but nuclear energy supporters say this market won't be enough to sustain the ecosystem. "On top of the demolition of the ecosystem, it will have a sudden negative impact on exports," said Chung Bum-jin, a professor of nuclear engineering at Kyunghee University. Korea is currently planning to export nuclear reactors to countries such as Saudi Arabia, the Czech Republic, Poland and the Philippines, following a successful export to the United Arab Emirates.
Electricity rate will likely be raised. The falling operation rate of nuclear reactors following stronger safety checkups coupled with surging global oil prices have snowballed costs for the Korea Electric Power Corp. (KEPCO), which purchases electricity from power plants. According to KEPCO, the average purchasing price stood at 95.92 won per kWh in April, which is up 25.5 percent from a year ago. Among its portfolio, the ratio of cheap nuclear power fell to 21.9 percent from 31.7 percent, while LNG-fueled electricity rose to 30.6 percent from 18.3 percent. Though the cost of renewable energy is continuing to fall thanks to the development of technology, it will remain more expensive than nuclear energy for a considerable time. KEPCO recorded over a 120 billion won deficit in the fourth quarter last year and the first quarter this year, each. Analysts thus expect electricity rate hikes to come soon.
"If it doesn't go up now, KEPCO will face financial limitations in playing its role of absorbing external shocks to protect the internal economy. It also needs to improve its financial structure to invest in renewable energy facilities," noted Kang Seong-jin, an analyst at KB Investment and Securities.
