The South Korean government plans to minimise operation rates at biomass-fired power plants during April-May, when solar power output in the country is typically high.
The country's trade and industry ministry (Motie) said minimising operating rates at biomass and hydropower power plantsfrom April is one of the preemptive actions the government plans to take to balance South Korea's supply and demand of electricity.
The measure will be implemented during warm and sunny weekends as well as holidays in April-May if solar power output rises. If this is not sufficient, the government also plans to limit nuclear power output while keeping adjustments within a safe range, Motie said. Motie plans to monitor spring electricity supply and demand during April-May.
Motie has started to review these measures as the government is concerned that higher solar power output during warm spring weekends and holidays, when electricity demand is lower, could result in an oversupply of electricity in the country. The Korea Meteorological Administration (KMA) projects a 90pc chance that temperatures during April-May will be in line with or above seasonal norms, according to its latest three-month outlook.
The South Korean government usually implements special measures during the summer and winter seasons. The country in 2022 only needed to control operation rates at coal and LNG power plants to keep the grid stable. But Motie will implement the measures in spring this year because of a steep increase in solar power generation.
South Korean wood pellet demand
South Korean wood pellet inventories previously increased during a 15-day truckers' strike that ended on 9 December 2022, curbing spot purchases.
South Korea imposed the system marginal price (SMP) cap from December to February. The December-February SMP caps were set at 158.96-161.54 won/kWh ($122.05-124.04/MWh), significantly lower than the average November SMP for inland South Korean power at W242.17/kWh. The SMP is the unit price at which independent power producers (IPPs) sell to state-controlled utility Kepco, and a lower SMP means lower profits for IPPs.
This might have weighed on demand for wood pellets during the SMP cap. It is still uncertain whether the South Korean government will implement the SMP cap again from April, after halting this measure in March.
South Korea imported 3.92mn t of wood pellets in 2022, up from around 3.36mn t a year earlier.
The spot cfr Gwangyang price continued to decrease since November 2022. Argus assessed the cfr Gwangyang price at $202.73/t on 23 November 2022, and it recorded 16 consecutive weeks of drops as of 29 March. The last assessment for cfr Gwangyang was at $159.83/t on 22 March.
By Sam Hong
