Desperate for modification in law for more flexibility
Need to expand the market with interfield cooperation
Industrial electricity price should be increased
Seung IlI Moon, PhD, Ohio State University of the United States
Professor of SNU, department of electrical and computer engineering, fellow of the Green Growth Committee, member of the National Academy of Engineering of Korea
“KEPCO is a goose that lays golden eggs. However, without modification in law it will only be left for display.”
Seung Ill Moon (58), former director of Basic Electric Research Center (Professor of SNU, college of engineering, department of electrical and computer engineering, director of SNU Basic Electric Research Center) said the above during an interview with ‘Economy Chosun.’ During the interview held on March 11th at his research lab in SNU, Gwanak-gu, Seoul, he seemed very busy. Within an hour-long interview, his phone rang every 5 minutes.
Former director Seung Ill Moon is an expert in the field of Smart Grid, which integrates Information Technology(IT) and conventional power grids to enhance energy efficiency. He was granted membership for the National Academy of Engineering of Korea this year. Known as the ‘hall of fame’ of engineering, members of the National Academy of Engineering of Korea hold authority not only in Korea but also in 27 other countries where the National Academy of Engineering is founded.
He emphasized that there should be a modification in domestic laws for KEPCO to adjust to the evolving electric power industry. According to professor Moon, the current Electric Utility Act was enacted to support the efficient operation of large-scale power grids such as thermal and nuclear power plant, but not for applying renewable energy. Therefore, KEPCO is having difficulty supplying a massive amount of renewable energy. He asserted, “Upcoming electric power industry will be following a different direction than now. KEPCO needs tighter collaboration with other fields such as information and communication technology to discover new markets.”
What is the prospect of the new energy market?
“I think we finally have the opportunity for which we have been waiting for the last 100 years. The recent advancement of technology in renewable energy such as Energy Storage System(ESS) and solar power will bring us a new energy market worth 12 trillion dollars (15 quadrillion won). KEPCO already has a complete infrastructure for the conventional power system including power generation, transmission, substation, distribution, and also sales. KEPCO is more than capable of succeeding in the market with its expertise and know-how.”
How competitive is KEPCO globally?
“The brand power of KEPCO in the global power system market is even stronger than what Samsung has in the electronics market. KEPCO is a business-to-business(B2B) or business-to-government(B2G) company rather than a business-to-customer(B2C) company, which makes it less well known. However, it has a very strong foundation. The quality of electricity in Korea is globally highly rated in terms of annual blackout time and consistency of frequency and voltage. It is also mostly operating on standalone technology in power generation. In 2016, America’s business magazine, ‘Forbes’, ranked KEPCO as the world’s 1st in the field of power utility.”
How is it possible to expand globally?
“As the electric power industry involves governments of different countries, it will be difficult for individual companies to expand their market without KEPCO. The brand power of KEPCO will be able to lead related companies to the global stage. The customers, which will be governments from different countries, primarily ask for reliability since they are purchasing a part of their national infrastructure. Not making use of KEPCO will be the same as just looking at a goose that lays golden eggs. Although Korea already has its infrastructure, developing countries do not. KEPCO will have a lot of work to do on the spot.”
Are there any barriers blocking KEPCO’s movement towards the new energy market?
“There should be a modification in the Electric Utility Act. This law was made for the efficient operation of large-scale power grids such as thermal and nuclear power plant, but not for applying renewable energy. Such a law system makes it hard to operate renewable energy in larger scales. To grow the renewable energy industry, ESS should be expanded to a national scale. Also, to increase efficiency, there has to be cooperation between different fields such as information and communication network, Internet of Things(IoT), Big Data, and Artificial Intelligence(AI). Establishing such legal infrastructure cannot be done by individuals. The government should hurry and make required regimes.”
How are electric power companies overseas?
“Oversea electric power companies are able to make various attempts since they are less limited in M&A and establishing subsidiary companies. However, KEPCO is strictly limited by the Electric Utility Act to only work on power transmission, distribution and electricity sales. Establishing a subsidiary company is also difficult, showing its limited stage. Global companies are actively transforming to compete for new markets. KEPCO might be missing these chances due to its title as a public enterprise and the barriers of law and regulations.”
What can the government do now?
“If it takes too long to make or modify some law, they can first make changes in the public enterprise management evaluation methods for public energy companies. They can add the scale of investment in new businesses as an evaluation metric to give higher points to the ones that make bigger investments. The result of the management evaluation, which is determined between the level of S to D by adding the points from each metrics, is very important for public companies since this can change the annual incentives. The modification of the management evaluation can be done solely by the Ministry of Strategy and Finance without the approval of the national assembly.”
Is KEPCO willing to try new businesses?
“KEPCO is willing to do a business which integrates AI and Big Data to power systems. Other public electric companies are thinking the same. However, since their movement is limited by the law and regulations, it can only make passive movements following government demands such as developing related technologies to electric cars.”
The prospect of super grid?
“Korea has a geographically isolated power grid. However, the era of Super Grid, which allows power exchange between countries, will definitely come. This also will not have legal support even when KEPCO succeeds in developing technology to connect power grids. Related laws should be justified.”
KEPCO says that the current electricity pricing is too low.
“Korea allowed companies to use energy at a cheap price when it was in the developing stage. Since then, the price of electricity was determined below its cost of manufacturing until now. With the government’s push towards renewable energy, KEPCO has turned to red. The industrial electricity price should be increased since this situation is not sustainable Although the increase might give negative impacts to some companies, the government should convey a meaningful message.
The problems of the electricity price cannot be resolved if it is purposely neglected as now. Also, to efficiently reduce the consumption of electricity, consumers should be able to have access to accurate information. By visualizing the level of usage, it can significantly reduce electricity consumption. Especially during peak time, the consumption rate can reduce up to millions of kilowatts. The ‘Smart Meter’, which shows electricity consumption information in real-time, should be pervasively used.
Translated by Kyungjin Lee, English Editor of Department of Electrical and Computer Engineering, email@example.com