Record-Breaking Heatwave and War... What Will Happen to the Power Crisis This Summer?

A heatwave hits Cordoba in southern Spain
[Image source=EPA Yonhap News]

[Asia Economy Reporter Hwang Sumi] Amid expectations of a surge in cooling demand due to early heatwaves this summer, power shortages are raising concerns worldwide. This is due to a combination of rising international energy prices for natural gas and oil following Russia's invasion of Ukraine, as well as abnormal weather conditions.

This summer is expected to be particularly hot. India and Pakistan have already experienced heatwaves reaching 50 degrees Celsius. In southern Spain's Andalusia region, temperatures reached 40.3 degrees Celsius on the 20th of last month (local time), 16 degrees higher than the average. Consequently, Spanish meteorological authorities issued heat warnings for 17 areas.

On the 21st of the same month, the temperature in San Antonio, Texas, USA, reached 38.33 degrees Celsius. This surpassed the previous May record high of 36.67 degrees set in 1939. The US National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center forecasts that average temperatures across most of the US will exceed normal levels this summer. Furthermore, by 2050, heatwaves in states like California are expected to occur 4 to 10 times more frequently than now.

As a result, global power shortages are a growing concern. Although increased cooling demand is expected to raise electricity consumption, energy supply remains unstable.

Firstly, the prolonged Ukraine war has destabilized natural gas supply. Consequently, more countries are refusing imports not only of Russian oil but also natural gas and coal. Additionally, unprecedented heatwaves and droughts caused by abnormal climate conditions have compounded the situation.

For these reasons, rising crude oil prices are leading to fears of an electricity bill shock that would heavily burden energy-poor households.

In fact, countries worldwide are significantly raising electricity rates amid high oil prices. France increased rates by 24.3% last February, followed by the UK raising them by 54% in April. Japan has also cumulatively increased rates by 34.6% since last year.

South Korea is not exempt from this trend. Korea Electric Power Corporation (KEPCO) reported an operating loss of approximately 5.7 trillion won in the first quarter and projects a deficit exceeding 17 trillion won this year, intensifying pressure to raise electricity rates.

In practice, with the upward adjustment of the benchmark fuel cost linked to international oil prices and the climate environment charge, electricity rates have already increased by 6.9 won per kWh since April. For a four-person household using an average of 307 kWh per month, this translates to an additional monthly electricity cost of about 2,120 won (excluding VAT and the electricity infrastructure fund).

Moreover, the wholesale electricity price paid by KEPCO to power producers surged 2.6 times in April compared to a year earlier, further increasing pressure for additional electricity rate hikes.

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