KEPCO to cut fuel cost by $1 bn by partly replacing LNG with coal

State-run Korea Electric Power Corporation (KEPCO) looking at a colossal deficit of $21 billion this year plans to employ coal more in place of expensive LNG in power generation to save cost by 1.6 trillion won ($1.1 billion).

KEPCO said Wednesday that it recently reported to the Ministry of Economy and Finance about its plan to improve its financial soundness by generating electricity from coal power beyond the cap under special allowance, while cutting back on the employment of LNG.

The firm plans to produce 12.8 terawatt-hour (TWh) of electricity from coal-powered generators and scale back LNG generation by 8 percent.

The change will allow the power monopoly to save fuel expense by 1.6 trillion won, said KEPCO.

In detail, KEPCO will be able to save 945.8 billion won in direct expense due to difference in unit cost. LNG costs 169.88 won per kilowatt-hour (kWh) and coal 95.98 won.

Additional cut of 801 billion won will come from fall in system marginal price, or the price that KEPCO pays to public and private electric power producers.

KEPCO is limited on the use of coal under the Korean government¡¯s policy to reduce greenhouse emissions. The utility firm negotiated with the government to ease the limit for this year to restore its financial health.

The additional use of coal will push up carbon credit cost by 147.8 billion won. But the saving will greater than additional expense, said the firm.

KEPCO incurred 14.3 trillion won losses in the first half of 2022. The half-year figure, a record high, more than doubles its annual operating losses of 5.9 trillion won posted last year.

The company said it will be increasing coal use only this year, considering its large emissions.

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