Peak Hourly Power Consumption Expected to Surpass 2018 Figure
The author is an analyst of NH Investment & Securities. He can be reached at minjae.lee@nhqv.com. -- Ed.
At 3pm on Aug 6, 2012, the electricity supply reserve ratio stood at 3.8%, making the risk of a blackout visible. Maximum temperatures in July and August of 2021 are expected to exceed 35℃, and peak hourly power consumption is expected to surpass the 2018 figure due to increased working from home. Given this situation, the electricity supply reserve ratio is highly likely to once again drop into the single digits.
Sweltering heat highly likely to result in single-digit electricity supply reserve ratio
At 3pm on Aug 6, 2012, the electricity supply reserve ratio, which indicates the power market’s remaining supply capacity, fell to 3.8%, making the risk of a blackout visible. For reference, a large-scale blackout occurred on Sep 15, 2012. Since that incident, the government has been expanding domestic power generation facilities (total of 36GW; 4GW of nuclear power, 12GW of coal, and 20GW of LNG) over the last 10 years.
According to the Korea Meteorological Administration (KMA), a full-fledged heat wave will begin on Jul 19, 2021, with daily highs remaining above 35℃. In general, the causes of a sudden surge in maximum hourly power consumption are: 1) sustained daily highs of 35℃ or above; 2) discounted electricity rates; or 3) an increase in time spent at home (for example, due to telecommuting). Of note, on Jul 8, 2018, the hottest day of the past 10 years (peak temperature basis), the highest temperature was 39.6℃, maximum hourly power consumption was 92,478MW, and the electricity supply reserve ratio was 7.7%.
For Jul and Aug 2021, the average daily nuclear power utilization rate is forecast at 70.1% (about 1.0GW less than the average for Jul and Aug 2018), taking into account planned preventive maintenance for nuclear power plants of 8.3 units per month on average over Jun~Aug 2021. However, we note that additional nuclear power supply capacity has been secured with Shin-Hanul Unit 1 (1.4GW; scheduled for trial operations in 3Q21).
As of Apr 2021, total mandatory electricity reduction capacity in the demand response market stood at 4.5GW. For reference, the economic demand response in Aug 2020 was 1.975GW per day (total 39.5GWh for 20 days in Aug 2020), or around half of mandatory reduction capacity. In contrast, reliability demand response, which is carried out via bidding one day in advance, was not required.
Note) The demand response market is an electricity trading market where consumers can resell their excess electricity.