Korea Electricity Security Review

Around the world energy transitions are driving up the participation of renewable energy in electricity systems and increasing electricity’s share of total final energy consumption. According to the IEA Sustainable Development Scenario, the share of electricity in total final energy consumption is projected to increase from around 20% today to more than 30% by 2040. Objectives for greater deployment of hydrogen in energy systems will also rely on additional electricity demand.

These developments require policy makers to think about electricity security, which is the power system’s capability to ensure uninterrupted availability of electricity by withstanding and recovering from disturbances. The IEA looks at electricity security from three angles: adequacy, operational security and resilience. These three building blocks underpin each section of this report.

Jointly written by the IEA and the Korean Energy Economics Institute (KEEI), at the request of the Ministry of Trade, Industry and Energy, this report looks at electricity security in Korea’s power system in light of the ambitious goals set out in the 9th Basic Plan for Long-term Electricity (BPLE) and, more recently, the New Green Deal. These include an increase in the share of new and renewable energy (NRE) generation from 7.4% today to 20% in 2030 and 30-35% in 2040. NRE includes hydro, oceanic, biogas, landfill gas, fuel cell and IGCC energy sources, in addition to solar PV and wind.

Furthermore, the 8th and 9th BPLEs foresee a reduction in the share of nuclear power in power generation between 2020 and 2034 and a ban on new coal-fired generation. Given Korea’s history of a diversified and secure electric system, this report addresses the main considerations for ensuring electricity security through the following components: future flexibility requirements, operational security, long-term planning, market improvements, and cyber and climate resilience. 

The first outcome foreseen from the country’s long-term objectives is a shift from dispatchable to non-dispatchable generation. Between 2019 and 2030 the share of dispatchable generation is expected to fall from 94% to 79%. This shift in the energy supply accompanies a sustained increase in electricity demand of 0.6% per year, and a 1.1% yearly increase in peak load. The increase in NRE generation, of which the variable sources solar PV and wind comprise 70%, will significantly alter the generation matrix. Moreover, attaining the annual share of variable renewable energy (VRE) planned in the 9th BPLE will bring about significant changes to the power system’s operation, notably from more frequent and much higher levels of instantaneous penetration of VRE generation. By 2030, based on an initial analysis, it could reach around 70% of the system load, similar to the current maximum penetration levels in Texas, Spain and the United Kingdom.

According to initial analysis of the objectives of the 9th BPLE, by 2030 Korea’s power system will see an increase in its flexibility requirements. This can be appreciated from the evolution of the system’s net load and changes in the three-hour and one-hour ramping requirements. For example, the maximum upward daily three-hour ramp is expected to increase from 20 718 MW in 2019 to 35 435 MW in 2030. The maximum three-hour downward ramp increases from 12 941 MW to 25 483 MW over the same period. Overall, the maximum ramping requirement is expected to be around 50% of the system load. This is moderate compared to power systems like California and India, which can see ramps as high as 60-70%, but these systems have more interconnections with neighbouring systems than Korea.

A number of options are available to meet Korea’s increasing flexibility requirements; they include making use of the latent flexibility in existing assets as well as deploying new technologies. For example, operational guidelines and market rules – including enhanced compensation for reserves and other balancing services like ramping capability – could be updated to enable the flexible operation of coal and nuclear plants. Taking advantage of the existing technical capabilities of Korea’s thermal fleet may require regulatory and market updates to provide better signals.

Different storage technologies could contribute to meeting Korea’s increased flexibility requirements. For storage to be effective, it is important to understand the connection between the technologies’ ability to provide flexibility and the value to the system of various storage durations. For example, battery storage currently has a better case for very short-term to short-term flexibility, pumped storage hydro (PSH) can cover hourly to daily requirements, and power-to-gas technologies can serve the country’s longer-term flexibility requirements. Improvements in remuneration mechanisms are needed so that the full value to the system, and not simply the avoided fuel costs, is recognised.

Demand-side flexibility is also expected to play a key role in serving the system’s flexibility needs. While some industrial capacity already takes part in specific voluntary and mandatory load reduction programmes, widening participation to smaller customers will be important. Electric vehicles (EVs) could make a significant contribution, but to ensure participation it will be critical to improve the price signal provided to users through retail rates.

System-friendly deployment of variable renewables will be essential to ensure the operational security of Korea’s power system. This involves considering the technology mix between different VRE resources, managing their geographical spread and enabling their participation in the provision of system services (from frequency regulation to voltage, etc.). One option is to co‑ordinate network development and VRE deployment, as done with renewable energy zones (REZs), particularly given the plans for offshore wind deployment and current grid constraints.

Improving the visibility of VRE generators and the quality of generation forecasts is important for maintaining operational security and mitigating the cost of VRE integration. Improving the grid code is fundamental to ensuring that all assets, from VRE to distributed energy resources, are correctly equipped and all market participants share their forecasts and real-time data with the system operator on time. Korea has already taken significant steps to update its grid code, but it is important to continuously review and update it to account for both technological change and emerging system requirements.

Decreasing system inertia may start to become a challenge at higher shares of VRE or in specific regions with high concentrations of VRE. The solutions range from the most technically mature, such as maintaining a minimum of conventional generation or installing synchronous condensers, to introducing mechanisms to enable synthetic inertia from VRE or developing grid-forming converters. There is a growing body of experience globally on technical solutions to strengthen systems with a high penetration of converter-based assets. Deployment strategies should consider the technical and economic implications.

Better long-term planning will be needed to ensure adequacy and operational security with higher shares of renewables. For example, assuming that load patterns remain consistent, VRE deployment is expected to shift the system peak later into the evening as well as increase it by around 10 GW by 2034. Additionally, while Korea has already introduced probabilistic planning to some extent, it may be helpful to introduce more detailed analysis of more diversified scenarios that account for, among other factors, climate-related extreme events and VRE or load variability.

One of the main developments enhancing electricity system planning is making use of multiple reliability indicators rather than a single indicator. It is important to account for all dimensions of outage risk, such as average frequency, volume of energy not served and frequency of extreme events. This approach is vital to understand extreme as opposed to average events.

Developing an understanding of the economic impact of outages – across consumer groups, regions and times of the year – will be an important step to guide investment in the system once a set of reliability targets is defined. For policy makers this can provide an indication of the options that might be worthwhile, ranging from new programmes for demand-side flexibility to investments in flexible system resources.  

Integrated resource planning will become an increasingly important tool for co‑ordinating the development of the power system. While there is currently a degree of integration, better outcomes can be achieved by combining traditional generation and transmission planning with more sophisticated models that account for different scenarios of distributed energy resource deployment, distribution network development and electrification of new end uses. Such plans can be carried out in an indicative way, such that they allow for market dynamics while improving system efficiency in the long term and providing certainty to investors.

Improving market design will be an important element of maintaining and enhancing Korea’s high level of electricity security. This requires effective regulatory oversight to ensure competitive markets that are transparent, fair and flexible enough to adapt to a changing energy landscape. Such developments should account for both technological progress and changes in consumer preferences.

High-level improvements to market design include: strengthening mechanisms to ensure that market participants share data; enhancing price formation mechanisms so they reflect not only technical constraints, but also the value of scarcity; and improving the link between the existing emissions trading scheme (ETS) mechanism and price formation in the wholesale market. 

On power system resilience, Korea has taken good first steps both in respect of climate resilience and cybersecurity. For example, on climate resilience the power system’s long-term energy plans have strong proposals for infrastructure to mitigate future impacts, but it is important to embed climate adaptation measures in power system planning. Accounting for the greater incidence of harsher extreme weather events, such as heatwaves, extreme rainfall and more frequent typhoons, will be essential to safeguard the continuity of electricity supply in Korea.

On cybersecurity, it is important to build on existing mechanisms to protect national security and critical infrastructure, and reinforce mechanisms that apply specifically to the power sector and secure the whole value chain. While significant steps have been taken at the bulk power system level, it is important to introduce practicable security guidelines at the grid edge and for connected IoT devices. Finally, policy makers need to strike the right balance between prescriptive and more flexible regulatory requirements, recognising both the rapid evolution of technological development and potential threats, as well as the international nature of cybersecurity threats.