South Korea Power Report Q2 2008

The new South Korea Power Report from BMI forecasts that the country will account for 4.88% of Asia Pacific regional power generation by 2012, with a shrinking generation surplus that is reducing a theoretical export capability. BMI's Asia Pacific power generation estimate for 2007 is 6,709 terawatt hours (twh), representing an increase of 6.8% over the previous year. We are forecasting an increase in regional generation to 9,034twh by 2012, representing a rise of 48.1%.

Asia Pacific thermal power generation in 2007 is estimated by BMI at 5,084twh, accounting for 75.8% of the total electricity supplied in the region. Our forecast for 2012 is 7,162twh, implying 51.38% growth that reduces the market share of thermal generation to 72.1% - thanks partly to environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. South Korea's thermal generation in 2007 is estimated at 299twh, or 5.87% of the regional total. By 2012, the country is expected to account for 4.88% 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 5,324mn tonnes of oil equivalent (toe) by 2012, representing 51.1% growth over the period. South Korea's estimated 2007 market share of 6.05% is set to fall to 4.66% by 2012.

South Korea's estimated 140twh of nuclear demand in 2007 is forecast to fall temporarily to 110twh by 2012, with its share of the Asia Pacific nuclear market falling from 23.7% to 14.1% over the period.

South Korea is ranked a lowly ninth, only just behind Hong Kong and the Philippines, in BMI's newly revised Power Business Environment rating, thanks largely to the considerable size of the market, established competitive landscape and reasonable country risk profile. The country is well clear of Taiwan below it and may over the longer term be able to challenge Hong Kong above it.

BMI is forecasting South Korea's real GDP growth will average 4.87% per annum between 2006 and 2012, with a 2008 estimate of 5.10%. Population is expected to expand from 48.1mn to 48.9mn 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 388twh in 2007 to 489twh by the end of the forecast period, leaving surplus generation falling from an estimated 57twh in 2007 to a potential 4twh of import requirement by 2012, assuming 2.9% annual growth in generating capacity.