Strong power demand boosts S Korean coal burn in July

South Korean coal-fired generation likely rose by more than 2GW on the year to a 2021 high in July, although average load factors were unseasonably low, a statement from energy and trade ministry Motie suggested.

Average load factors across the South Korean coal fleet increased on the year last month, but coal's share of the country's power mix declined, Motie said today.

South Korea's coal-fired plant utilisation rate jumped by eight percentage points on the year to 77pc in July, but a sharp rise in overall power demand because of unseasonably hot weather still trimmed the fuel's share of total generation by 1.4 percentage points to 38.5pc.

South Korea had 35.4GW of installed coal-fired capacity in May, according to data from state-owned utility Kepco, with a 77pc average load implying average generation of around 27.2GW in July. This would be up from 25.2GW a year earlier, representing the first year-on-year growth since April 2020.

The growth is equivalent to an additional 560,000t of NAR 6,000 kcal/kg coal burn at 38pc efficiency compared with July last year, or 7.6mn t total consumption across the month.

But the 77pc average load was still down from 81.8pc in July 2019 and 80.4pc in July 2018, Motie said. Only around 1.25GW of South Korea's 31.6GW state-owned coal fleet was unavailable because of outages and maintenance in July, according to Argus analysis, meaning the restricted use of the state-owned fleet was likely driven by other factors including heightened cost-driven competition from natural gas-fired plants.

Gas-fired generation continues to climb

Coal's reported 38.5pc share of total generation suggests that national power generation reached an average of 70.8GW last month, which would be up from 62.7GW a year earlier.

In addition to stronger overall power demand, unplanned nuclear outages and scheduled maintenance reduced average nuclear generation by around 1.8GW on the year to 16.7GW, Argus estimates, further boosting the country's reliance on fossil fuels.

South Korean gas-fired generation is likely to have risen by around 3.2GW on the year to more than 21GW as a result, outpacing the implied 2GW increase in coal-fired generation.

Official power generation data is currently only available to May 2020, with full July statistics expected to be published in early September.

Daily peak power demand in South Korea averaged 81.2GW last month, compared with 68.9GW a year earlier and a 2017-19 July average of 76.5GW, according to data provided by the Korea Power Exchange (KPX).

Kepco utilities and independent power producer GS Global sought a combined total of 24.5mn t of coal through term and spot tenders in the second quarter this year, compared with 18.6mn t a year earlier. This was despite strength in seaborne coal prices and suggests a recovery in seasonal demand to restock ahead of the summer. Argus' NAR 5,800 kcal/kg cfr South Korea assessment more than doubled on the year to $131.13/t in July, up by $76.38/t.

By Evelyn Lee and Jake Horslen

South Korean nuclear generation GW

South Korean gas-fired generation GW

South Korean coal-fired generation GW