2634 Trillion Won Needed for Carbon Zero Power Plants by 2050

Professor An Young-hwan's Report... Development Cost per Unit Increased by 40%, Raising Financial Burden

[Sejong=Asia Economy Reporter Joo Sang-don] A study has found that more than 2,634 trillion KRW is required at the power plant level alone to achieve net-zero carbon emissions by 2050. If the share of renewable energy increases, the cost of power generation is also expected to rise by more than 40% compared to the current level, indicating that the burden of energy costs will significantly increase in the mid to long term.

According to the final report of the study titled "Research on Greenhouse Gas Reduction Measures in the Power Generation Sector for Establishing a Long-term Low-carbon Power Generation Strategy," recently submitted by Professor Ahn Young-hwan of the Department of Climate, Environment and Energy at Sookmyung Women’s University to the Korea Power Exchange, the total cost required at the power plant level by 2050 is estimated at 2,634.3 trillion KRW.

Professor Ahn’s cost estimation is based on the 2050 power generation share targets of 6.1% nuclear, 0% coal and LNG, and 70.8% renewable energy. This corresponds to one of the two carbon neutrality scenarios finalized by the government last October.

Professor Ahn estimated the system cost, which includes facility costs, operating costs, fuel costs, and carbon costs at the power plant level until 2050. Facility costs considered the decommissioning of coal-fired power plants, conversion to liquefied natural gas (LNG) power generation, and expansion of solar and wind power. Operating costs were reflected at 4-10% of facility costs over the operation period. Fuel costs were calculated by applying annual fuel prices, thermal efficiency by generator, fuel usage ratio, and power output. Additionally, carbon costs were calculated by multiplying energy usage by the projected carbon cost per ton according to each scenario’s generation mix. The carbon cost in the third scenario was 20.79 trillion KRW, accounting for 7.9% of the total system cost. However, the total cost excludes grid costs such as transmission and distribution facility investment and operation costs, so including these will likely increase the power generation sector’s cost to achieve carbon neutrality by 2050.

Professor Ahn explained, "The absolute value of the cost in this study utilized cost projections from various research results on power generation facilities for carbon neutrality by 2050. Also, the total estimated cost was calculated in present value terms, so the actual future total cost realized may be higher or lower."

The report also projected that the power generation cost per unit will increase by more than 41% compared to the current level. It is estimated to rise from about 82 KRW/kWh (kilowatt-hour) in 2021 to 115.1 KRW/kWh in 2050, a 41.7% increase. However, the generation cost is expected to peak around 2039-2040 (119.4 KRW/kWh) and then slightly decrease. This assumption is based on the premise that as the share of renewable energy facilities increases, fuel and carbon costs will decrease, leading to a downward trend in generation costs.

Although costs required in each sector to realize carbon neutrality are being announced one after another, including this study by the Korea Power Exchange, the government remains silent on the costs, citing "limitations in estimating future costs 30 years ahead from the current perspective." The government is emphasizing only the necessity of carbon neutrality without disclosing the pain to be endured during the realization process, that is, how much cost the public will have to bear.

Professor Jung Dong-wook of the Department of Energy Systems Engineering at Chung-Ang University and president of the Korean Nuclear Society said, "Since the development and commercialization potential of future technologies are key to achieving carbon neutrality in energy and other sectors, it is certainly difficult to estimate costs. However, given that enormous costs will be incurred for carbon neutrality and that these will ultimately lead to a burden on the public, the government should at least roughly inform the public about how much it will cost to realize carbon neutrality to gain public consensus."

This content was produced with the assistance of AI translation services.