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| The deterioration of the performance of power generation companies is increasing due to the reinforcement of the coal capping system and the like. (yunhap news) |
It predicted that the five power generation enterprises will record a total net loss of 1.3 trillion won this year. This earnings deterioration forecast reflects the acceleration of coal de-coaling and a decrease in power sales due to the cap on coal power generation.
According to the budget operation plans of five power generation enterprises on the 26th, net losses of 200 billion to 300 billion won are expected for each power generation company this year.
By power generation company, Southeast Power is expected to record 35 billion won in net loss, Central Power is 2633 billion won, Southern Power is 252.1 billion won, East-West Power is 246 billion won, and Western Power is 2308 billion won.
The reason for the deterioration of profits by power generation companies is that the regulations for coal power generation will be strengthened and the power wholesale price (SMP) will remain low. In addition to the seasonal fine dust management system that the government has already implemented, the coal cap system will be implemented from this year, and the loss of power generation enterprises that focus on coal power generation is inevitable.
The coal cap system sets a limit on the annual amount of coal power generation of residual coal generators in line with the greenhouse gas reduction target. This year, public enterprises will voluntarily reduce the amount of coal power generation, and it will be legislated next year.
Major power generation companies predicted losses while forecasting a low annual SMP. A power generation company predicted this year’s SMP at 66.09 won per kWh, which is lower than last year’s annual average SMP (68.52 won), the lowest level in 14 years. SMP is expected to rebound slightly as oil prices recently recovered, but the industry predicts that it will be difficult to recover to the level before the spread of Corona 19.
The government’s policy to promote competition in the electricity market by abolishing subsidies for power generation companies is also expected to affect operations. The 9th Basic Plan for Power Supply and Demand, which was recently confirmed, included the improvement of the settlement adjustment factor system that compensates for the losses of power generation companies. By abolishing subsidies for power generation enterprises, KEPCO and power generation enterprises will share risks and promote competition.
In addition to reducing coal power generation, power generation enterprises are in need of strengthening investment in new and renewable energy in line with the government’s energy conversion policy. Because of this, there is a prospect that the deficit management will continue for the time being.
Power generation companies decided to respond by forming a’Joint Response Task Force to Reorganize the Electricity Market and Solve Profitability Problems’. The company plans to implement a compensation system for combined generators that respond to the volatility of renewable power generation, improve coal capacity rates, and reduce fuel costs and maintenance costs. In the first half of the year, detailed plans to improve the power market system will be prepared, and discussions will be made with the government and power group companies from the second half of the year.
Reporter Yoon In-kyung [email protected]
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