South Korea Power Report Q1 2008

The new South Korea Power Report from BMI forecasts that the country will account for 5.11% of Asia Pacific regional power generation by 2011, with a shrinking generation surplus that is reducing a theoretical export capability. BMI's Asia Pacific power generation estimate for 2006 is 6,278 terawatt hours (twh), representing an increase of 8.5% over the previous year. We are forecasting an increase in regional generation to 9,207twh by 2011, representing a rise of 46.6%.

Asia Pacific thermal power generation in 2006 is estimated by BMI at 4,772twh, accounting for 76% of the total electricity supplied in the region. Our forecast for 2011 is 6,578twh, implying 38% growth that reduces the market share of thermal generation to 71% - thanks largely to environmental concerns that should help to promote renewables, hydro-electricity and nuclear generation. South Korea's thermal generation in 2006 is estimated at 289twh, or 6.06% of the regional total. By 2011, the country is expected to account for 5.20% of thermal generation.

For South Korea, oil is the dominant fuel, accounting for 46.7% of 2006 of primary energy demand (PED), followed by coal at 24.3%, nuclear at 14.9% and gas with a 13.6% share of PED. Regional energy demand is forecast to reach 4,972mn toe by 2011, representing 41.1% growth over the period. South Korea's 2006 market share of 6.41% is set to fall to 4.89% by 2011. South Korea's 149twh of nuclear demand in 2006 is forecast to fall temporarily to 110twh by 2011, with its share of the Asia Pacific nuclear market falling from 26.3% to 15.0% over the period.

South Korea's overall business environment can be considered no better than neutral in a regional context, in spite of exceptionally low levels of long-term political and economic risk. The country's overall composite score is held back by the weakest generation and energy demand growth trend in the region. It also fares badly in the areas of energy import dependency and deregulation, with little progress in establishing a competitive power industry. In the BMI Business Environment Ranking matrix, South Korea receives an unchanged composite score of 26, which now ranks the country seventh out of 11 states included in the Asia Pacific region.

BMI is forecasting South Korea's real GDP growth will average 4.83% per annum between 2006 and 2011, with 2007's forecast at 4.70%. Population is expected to expand from 48.1mn to 49.8mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly.

The country's power consumption is expected to increase from an estimated 368twh in 2006 to 467twh by the end of the forecast period, leaving surplus generation falling from 48twh in 2006 to 3twh in 2011, assuming 2.9% annual growth in generating capacity.