Power Generation Cost

The difference between the unit fuel costs of bituminous coal and LNG for power generation dropped below 30 won (US$0.027) for the first time ever since 2001.
The difference between the unit fuel costs of bituminous coal and LNG for power generation dropped below 30 won (US$0.027) for the first time ever since 2001.

 

The Korea Power Exchange (KPX) announced on May 31 that the unit fuel cost of bituminous coal for power generation reached 50.22 won (US$0.045) per kWh in April this year, when the unit LNG fuel cost reached 79.25 won (US$0,071) and the difference between the two dipped below 30 won (US$0.027) for the first time ever since the KPX began to provide the data in April 2001.

A unit fuel cost can be defined as the cost of generating one kWh of electricity by using an energy source such as nuclear power, coal and LNG. In South Korea, uranium has a unit cost of three to five won (US$0.027 to 0.045) per kWh and those of bituminous coal and LNG are 10 to 50 won (US$0.009 to 0.045)) and 50 to 200 won (US$0.045 to 0.180), respectively.

The narrowed gap between the unit fuel costs of bituminous coal and LNG is because the price of the former has gone up and the price of the latter, which is closely related to international oil prices, has been stabilized while showing a downtrend. The unit fuel cost of bituminous coal has jumped from 30 won (US$0.027) or so to over 50 won (US$0.045) since last year.

The gap is likely to be further narrowed once the South Korean government cuts taxes on LNG during its energy tax reform. At present, bituminous coal for power generation is subject to only special consumption and value added taxes whereas LNG is subject to more types of taxes.
 

 

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