Resource-short South Korea faces energy crisis ahead of the peak summer season as it struggles to obtain bituminous coal, responsible for 34 percent of generating power in the country, amid global shortage from protracted Russian aggression in Ukraine.

If soft coal supply runs thin, state power supplier Korea Electric Power Corp. (KEPCO) would have to rely more on costlier liquified natural gas (LNG) to make electricity, exacerbating its bottom line which already logged near 8 trillion won ($6.2 billion) in operating loss in the first quarter.

Public generators have turned to Australia and Indonesia to make up for the losses from Russia, but they fear they could at most stock 70 to 80 percent necessary for power generation in the third quarter.

They may have to endure on coal swap with whomever can secure more to sustain supply in their jurisdiction.

“We are seeing a serious imbalance in supply and demand as countries all rush to other coal producers like Australia and Indonesia since the Russian war,” said an official from the public utility company.

“It could take months for coals from Australia to arrive even if we make an extra purchase immediately. For now, expensive price is less of a matter since we won’t be able to make power,” he added.

Five generators under KEPCO are in the same conundrum as they must ready supplies for the third quarter.

They have been upping sourcing from Australia, Indonesia, South Africa, and Colombia in replace of cheaper Russian coal since Korea joined international sanctions.

Russian coal is relative cheap but as good as others. It is the biggest import after Australia.

According to Korea Institute of Geoscience and Resources, Korea imported 57.69 million tons of bituminous coal from Australia last year, followed by 19.33 million tons from Russia, 18.91 million tons from Indonesia, 9.99 million tons from Canada, 3.03 million tons from the United States, 2.87 million tons from South Africa, and 2.79 million tons from Colombia.

The bituminous coal supply shortage stems from the prolonged war between Russia and Ukraine. After Russia cut off LNG to Europe, countries have turned to coal as alternative energy source.

“European countries had relied on South Africa, Colombia, and Russia for bituminous coal imports,” said another official from a power generating company who asked to be unnamed. “After the war, they have turned to Australia and Indonesia that have been import source for many Asian countries including Korea due to geographic proximity.”

European countries are seeking coal from the Asia-Pacific region despite higher shipping cost to suggest the gravity of their energy woes.

Colombia’s capacity for this year has been fully booked and the country is selling next year’s volume.

The government has joined public utility firms for intergovernmental cooperation to prevent an energy crisis.

KEPCO reported 7.8 trillion won ($6.2 billion) in losses in the January-March period, eclipsing last year’s record operating loss of 5.86 trillion won.

Greater role of LNG in place of coal would push up system marginal price (SMP) or wholesale power price. A higher SMP aggravates KEPCO’s strains and can stretch annual red figure beyond the market consensus of 21.9 trillion won.

Last month, SMP hit historic high of 202.11 won per kilowatt hour. A higher SMP means that much of rise in power purchase unit cost for KEPCO.

Korea would have to bolster nuclear reactor role to lessen the cost and raise electricity bills,” said

Chung Bum-jin, professor of nuclear engineering at Kyung Hee University.

By Song Gwang-sup and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]