BMI's Executive Summary

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The new South Korea Power Report from BMI forecasts that the country will account for 5.21% of Asia/Pacific regional power generation by 2011, with a shrinking generation surplus that is reducing a theoretical export capability. BMI's Asia/Pacific power generation estimate for 2006 is 6,167 terawatt hours (twh), representing an increase of 7% over the previous year. We are forecasting an increase in regional generation to 9,041twh by 2011, representing a rise of 46.6%.

Asia/Pacific thermal power generation in 2006 is estimated by BMI at 4,644twh, accounting for 69.9% of the total electricity supplied in the region. Our forecast for 2011 is 6,455twh, implying 39% growth that raises the market share of thermal generation to 71% - in spite of environmental concerns that should be promoting renewables, hydro-electricity and nuclear generation. South Korea's thermal generation in 2006 is estimated at 300twh, or 6.86% of the regional total. By 2011, the country is expected to account for 5.21% of thermal generation.

For South Korea, oil is the dominant fuel, accounting for an estimated 46.4% of 2006 PED, followed by coal at 24.6%, gas at 13.8% and nuclear with a 13.4% share of PED. Regional energy demand is forecast to reach 5,258mn toe by 2011, representing 47% growth over the period. South Korea's estimated 2006 market share of 6.39% is set to fall to 4.79% by 2011. South Korea's estimated 135twh of nuclear demand last year is forecast to fall temporarily to 110twh by 2011, with its share of the Asia/Pacific nuclear market falling from 23.8% to 15.1% over the period.

South Korea's overall business environment can be considered no better than neutral in a regional context, in spite of exceptionally low levels of long-term political and economic risk. The country's overall composite score is held back by the weakest generation and energy demand growth trend in the region. It also fares badly in the areas of energy import dependency and deregulation, with little progress in establishing a competitive power industry. In the BMI Business Environment Ranking matrix, South Korea receives a composite score of 26, which ranks the country equal sixth out of 11 states included in the Asia/Pacific region, alongside Hong Kong.

BMI is forecasting South Korean real GDP growth averaging 4.8% per annum between 2006 and 2011, with this year's forecast at 4.7%. Population is expected to expand from 48.1mn to 49.8mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly. The country's power consumption is expected to increase from an estimated 368twh last year to 467twh by the end of the forecast period, leaving surplus generation falling from 55twh in 2006 to 4twh in 2011, assuming 3.0% annual growth in generating capacity.