Korean media: South Korean industrial electricity prices are 50% higher than China's, and further increases are inevitable!
On September 29, the Korean media "Seoul Economic Daily" published an article stating that high electricity prices are the core reason why South Korean companies are deciding to move overseas. A few years ago, South Korea was known for its low-cost, high-quality power supply, but experts say this advantage is gradually disappearing.
It is reported that South Korean industrial electricity prices are nearly 50% higher than those in China. As of January this year, the industrial electricity price in Guangzhou, one of China's largest manufacturing bases, was 640 yuan per megawatt-hour (89.25 USD). In comparison, the industrial electricity price for large enterprises in South Korea reached 185,500 won per megawatt-hour (133.92 USD). This means that even when using the same amount of electricity, South Korean manufacturers face energy costs that are about 50% higher than their Chinese counterparts.
The industry in South Korea has consistently complained that the recent significant increase in industrial electricity prices has worsened their situation. Data from the Organization for Economic Co-operation and Development (OECD) shows that in 2022, South Korea's industrial electricity price was only 95.3 USD per megawatt-hour. At that time, the gap between South Korea and China's electricity prices was not large, but after the South Korean government significantly increased industrial electricity prices within just two years, the gap widened further. Unlike South Korea, the industrial electricity prices in major cities in China have remained unchanged for many years.
Therefore, electricity consumption has already declined, especially in high-power industries. Data from Korea Electric Power Corporation shows that industrial electricity consumption reached 296,035 gigawatt-hours in 2022, but dropped to 286,212 gigawatt-hours last year. This is due to the decline in high-power industries such as steel and petrochemicals, as well as reduced production caused by rising electricity prices.
Under these circumstances, the South Korean government has hinted at the possibility of increasing electricity prices. President Lee Jae-myung recently held a senior secretary meeting at the Cheong Wa Dae, urging bold expansion of renewable energy power plants. He stated, "Achieving greenhouse gas emission reduction targets will inevitably lead to higher electricity prices. We must actively inform the public about this and seek their understanding and agreement." This indicates that increasing the capacity of renewable energy power plants to achieve carbon neutrality will lead to higher power generation costs, increased grid construction costs, and ultimately result in higher electricity prices.
Although the South Korean government has clearly stated it does not plan to immediately raise electricity prices, the higher the proportion of renewable energy generation, the greater the pressure to increase electricity rates, which is unavoidable. According to industry insiders, the electricity price for offshore wind farms is approximately 300 won per kilowatt-hour, more than twice the average electricity price of all power generation by Korea Electric Power Corporation last year (145 won per kilowatt-hour). This is almost five times the marginal price of the nuclear power plant system. Of course, a significant increase in equipment supply will lead to a decrease in power generation costs, but currently, high costs remain unavoidable.
European countries with a higher proportion of renewable energy generation have relatively higher electricity prices. According to OECD data, as of last July, the industrial electricity price in the UK was 321.40 USD per megawatt-hour, the highest among OECD member states. Countries with a higher proportion of renewable energy, such as Germany (220.10 USD), the Netherlands (200.70 USD), and Denmark (189 USD), have also experienced periods of higher electricity prices.
Original: www.toutiao.com/article/1844581781064714/
Statement: The article represents the views of the author.