UPDATE 2-South Korea warns of rolling power blackouts in winter

Fri Nov 16, 2012 11:59am IST

Stocks

   

* Closure of nuclear plants for safety checks to cut reserve capacity

* Plans to add 1,270 megawatts from generators, curb demand by 3,000 MW

* Rolling blackouts may have to be brought in if reserves fall

* South Korea may have to buy fuel on spot market - minister (Adds details on LNG)

By Meeyoung Cho

SEOUL, Nov 16 (Reuters) - South Korea may have to bring in rolling power blackouts this winter after the closure of nuclear plants for safety checks means the electricity network will have less than a third of normal reserve capacity.

Asia's fourth-largest economy said it plans to add 4,000 megawatts (MW) of power supply capacity through savings and new plants in a bid to head off potential blackouts.

The nuclear problems have increased the risk of power shortages in the harsh Korean winter after the closure of two reactors to replace parts with fake certificates and an extended shutdown of another reactor where microscopic cracks were found.

The northeast Asian country is heavily dependent on oil, gas and coal imports, but usually supplies about a third of its electricity from nuclear power generation from its 23 reactors.

Economy minister Hong Suk-woo said it remained uncertain whether reactors would be restarted in December after parts were replaced because the approval of the regulator was necessary, as well as support from residents.

"This winter will be very, very difficult for us to cope with," he said, when asked what would happens if reactors did not restart as planned in December

Under the government's plans, an additional 1,270 MW of power capacity would come from private and public power generators, a statement from the economy ministry said.

A further 3,000 MW is targeted from power savings including less heating at firms and public places, switching off neon lights and even a campaign to wear thermal underwear.

Without this, South Korea's excess generating capacity in January is forecast at 1,270 MW, or 28 percent of the margin that the government aims for to guarantee supplies, the statement said.

With little spare capacity, the grid would be vulnerable to power outages. If two 1,000-MW nuclear reactors fail to restart by the end December, the margin will drop sharply.

"It is important that no more power plants have outages from now on," said an economy ministry source, declining to be named.

FUEL BUYING

Minister Hong said South Korea may need to buy more fuel on spot markets to provide extra power.

"We would buy on the spot markets if necessary. At the moment we don't need to do as there are enough stocks."

South Korea, which is the world's fifth-largest crude oil importer and the No.2 LNG importer behind Japan, said this week it lost two December LNG shipments from Indonesia after a fire at a terminal there. The cancelled volume was equivalent to 0.3 percent of South Korea's natural gas consumption of 35.41 million tonnes of LNG equivalent, it said.

South Korea said its LNG stocks stand at more than 80 percent of storage capacity at its three storage sites. The storage capacity is at 4 million tonnes of LNG equivalent.

The level is normal for winter, according to a spokesman at state-run Korea Gas Corp (KOGAS), although gas markets are nervous about future demand.

Asian spot LNG prices have been steadily rising since Seoul announced the nuclear outages, with spot prices now near $14 per million British thermal units (mmBtu), according to Platts' benchmark for North Asian LNG, up from just under $13.50 when news of the nuclear problems broke.

Spot LNG prices are still far below the peak of $18 hit earlier this year caused by the closure of all of Japan's nuclear capacity over safety concerns after the Fukushima disaster.

ROLLING BLACKOUTS

South Korea would have to conduct rolling blackouts in the public sector if excess power generating capacity falls below 2,000 MW, the economy ministry said.

If the margin dips below 1,000 MW, nationwide rolling blackouts could occur, a ministry source said, similar to what happened in September of last year when there was maintenance during a period when demand unexpectedly spiked due to hot weather.

The economy ministry said that shortage of power supply was expected to improve from 2014 as a combined 7,000 MW from power plants would be added to a total of more than 80,000 MW of power generating capacity by the end of 2013. (Additional reporting by Jane Chung, Eunhye Shin in Seoul, and Rebekah Kebede in Perth; Editing by Ed Davies)

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