[To lower the price of renewable energy]

[To lower the price of renewable energy]

Since the electricity industry’s inception, it has been challenging to determine how fair electricity should be. Electricity must match supply and demand at every moment, so power generation, transmission, and consumption must work hand in hand. Calculating each cost contribution seems simple, but it is very difficult to accurately analyze.

In particular, it is challenging to artificially control the direction of electricity because alternating current electricity requires constant voltage and frequency. It is challenging to determine how much electricity flows through multiple generators when they supply electricity to millions of consumers. As a result, the cost is either 1/n per grid or roughly calculated. This is due to the fact that more detail is required.

LCOE is a comparison of the generator-level costs. It is the total amount of electricity that is estimated to be produced by this generator during the lifetime cycle divided by the total amount of cost. If you build a 100MW solar power plant today in the plains of Honam, where the land is cheap and the sun is good, and operate it for 25 years, the LCOE is about 130 won/kwh. If the LNG import unit price is $8/MMBtu, the LCOE of a 40-year gas power plant is about 140 won/kwh. A new large nuclear power plant on the east coast with a 60-year lifespan is expected to be about 80 won/kwh. It varies depending on interest rates and utilization rates, but it does not deviate much from the domestic situation.

The plant’s lifespan must be extended to lower the LCOE of renewable energy. In many cases, the core components of gas power plants are replaced every five years, and after 20 years, the entire turbine is replaced. Nuclear power plants also replace and repair major devices after 30 years. Solar power replaces inverters every 10 years, but even after 25 years, the plant’s lifespan can be extended as much as possible. In the United States, solar power plants often lease land for 35 years and replace panels once in the middle, which significantly improves LCOE. If the lifespan of a solar power plant is increased to 40 years in Korea, the LCOE drops to approximately 100 won/kwh, and if it is increased to 60 years, the LCOE drops to 70 won/kwh.

However, the LCOE does not reflect the actual cost of electricity that users have to pay. It should take into account the cost of transmission and network maintenance, and the cost of matching production and consumption. According to KEPCO’s plan for large-scale electricity supply to Yongin Semiconductor Industrial Complex, it plans to invest 2.6 trillion won to build a transmission network to send Honam renewable energy to Yongin. Nuclear power plants and gas power plants have concentrated power plants, and track utilization is high, but renewable energy has distributed access points and track utilization is low. And you should install ESS or back up with a gas generator to compensate for intermittence. This cost is similar even if the renewable energy is extremely dispersed like roof solar. This is because roof solar alone cannot cover all the power you need.

The calculation of these hidden costs has never been done properly in Korea, but it is estimated that more than half of the investment cost of renewable energy power plants and ESS investment are needed to raise it to RE50 in the current RE10 situation in Korea. For example, to build a 100GW solar power plant, you need to invest about 100 trillion won, and you need to invest 50 trillion won in transmission networks, ESSs, and gas generators for backup. Even if the LCOE is lowered to 70 won/kwh, the hidden cost will be 40 won/kwh.

To lower the “total cost” of renewable energy, we must first calculate the hidden cost. This calculation must not be avoided for political reasons. All generators have hidden costs, whether they were nuclear power plants. This is because when environmental costs are included, it will change again, and when the dismantling of the generator and disposal of waste are considered, it will change again. Energy security costs will also change.

The overall cost = LCOE+transmission network + ESS+backup + environmental security diagram makes it difficult to determine whether the total cost of renewable energy in Korea will be higher or lower than other power sources after 2030, but it should not be concluded that it will be extremely expensive. The cost of environmental and energy security varies depending on the situation, and considering the risks and probabilities, it may be more important than the cost of LCOE+transmission network +ESS+backup.

The war in Ukraine in 2022 reduced the overall cost of imported gas generation in Europe. Therefore, we are diligently installing solar panels and floating wind turbines in the deep sea even in places where the latitude is high and the power generation time is less than 70% of Korea. We also need to think and prepare how to calculate the overall cost and how to convey the results to make it easier for citizens to understand. Only then will we be able to consistently pursue energy policies in the long run without being swayed by the regime’s tastes.