According to data released by the KPX yesterday, the unit fuel cost of coal powered electricity was 50.22 won (US$0.045), while the unit cost of LNG fuel was 79.25 won (US$0.071), the smallest gap between the two since the KPX began keeping records in April 2001. (Image: Kobiz Media)
SEOUL, June 1 (Korea Bizwire) – The gap in the cost of electricity generated by coal-fired power plants and LNG power plants is closer than ever, the Korea Power Exchange (KPX) said.
According to data released by the KPX yesterday, the unit fuel cost of coal powered electricity was 50.22 won (US$0.045), while the unit cost of LNG fuel was 79.25 won (US$0.071), the smallest gap between the two since the KPX began keeping records in April 2001.
It’s the first time the difference in cost between the two fell below 30 won, a gap that now stands at 29.03 won.
The unit cost of fuel refers to the cost required to generate one kWh of electricity from a range of power sources including coal, LNG, wind and nuclear power.
Experts say the narrow cost gap between the two different energy types could send a signal that despite fears of growing electricity prices due to the shutdown of aging coal-fired power plants, electricity bills won’t go up drastically.
Traditionally, uranium has the cheapest per kWh unit cost at three to five won (US$0.027 to 0.045) in South Korea, followed by that of bituminous coal, which is typically from 10 to 50 won (US$0.009 to 0.045).
The unit cost of LNG per kWh was estimated at 50 to 200 won (US$0.045 to 0.180).
The narrowing cost gap between bituminous coal and LNG stems from the rising price of the former in the international market, while the price of LNG, which is closely tied to international oil prices, has dropped in recent months.
The annual average unit cost of bituminous coal was estimated at 37.25 won in 2015, and dropped to 34.72 last year, until it began surging in recent months.
Considering the fact that the bituminous coal used in power generation generates a tax exemption, the actual gap with LNG further shrinks, the latter of which is subject to a number of taxes including tariffs.
“If energy policy against LNG improves, the cost gap between the two will be even narrower,” an industry official said.
Ashley Song (ashley@koreabizwire.com)
