Traditional Korean lamps in the city of Daegu, Korea’s third largest.
In a business world obsessed with quarterly returns, the energy sector continues to think about the long term in years and decades, not weeks and months.
Devising strategies for a future so uncertain is a luxury but also a major responsibility that requires careful balancing of costs, environmental concerns and safety while retaining enough flexibility to incorporate the impacts of transformative technology.
Belying the reputation of large integrated national utilities as hidebound organizations, South Korean utility KEPCO is embarking on a comprehensive effort to understand “Tomorrow’s Energy Today,” the company’s CEO Joong-Kyum Kim told Breaking Energy in an interview at the World Energy Leadership Summit in Istanbul, Turkey in late April.
Extending Its Reach
KEPCO will focus on technology and security in the context of making sustainable business decisions, said Kim, who is leading his company into new frontiers globally. Taking a page from international expansions by other state-sanctioned energy firms, KEPCO has put in place a target of obtaining 50% of its revenue from international operations, up from only four percent currently.
Those global investments, which will give KEPCO’s strategy much greater heft in global energy markets, will come from both direct investments and partnerships, and will build on its current 100% ownership of facilities in Mexico, the Philippines, China and Jordan. KEPCO is also spreading its approach and influence through participation in a technology-sharing program operated by Korea’s government, a KEPCO official said.
KEPCO focuses on its “green and clean” energy strategy in discussing its outlook, but Kim told Breaking Energy that there is a recognition that the move to renewable energy, while inevitable, is a long-term prospect.
“It will take more than three decades to completely transform,” Kim said, citing earlier research that had indicated full commercialization of renewable energy would be “almost impossible” before 2030. But with fossil fuel depletion inherent over the long term at the same time that energy demand rises along with development, there will be no choice but for energy prices to rise in a supply-constrained environment; when that happens, renewable energy sources will become inevitable.
Korea has a lot of lessons for how to prosper in a resource-constrained world. As Kim pointed out, Korea has “almost no natural resources but has achieved growth.”
During an upcoming planned meeting of the World Energy Council’s 22nd World Energy Congress in the Korean city of Daegu in 2013, which Kim will host as Chairman, Korea’s lessons for both developing and developed counties will be on show during a special section on Korea’s implementation of its green growth strategy. Find out more about the event here.
Growing Without Using More
Part of managing energy delivery in a resource-constrained world is focusing on demand management as much as on energy production, Kim emphasized several times in his discussion with Breaking Energy. Smart grid, electric vehicles and demand response are all part of that, and will have the add-on benefit of preparing the country for an eventual move to intermittent renewable generation.
Korea’s 2008 energy policy targets 2030 for implementation of demand reduction by focusing on the industrial sector, which consumes 60% of Korean power, and then on cooling and lighting, each of which consume 20%. “A lot of research is being carried out on high-efficiency equipment in manufacturing,” with a focus on demand side management that will help hit overall targets of a 12-15% power demand reduction over the next two decades.
Maintaining balance on the power grid is part of keeping the energy sector in Korea – and by extension other countries – reliable, Kim said. New nuclear generation capacity will help bridge the transition to currently unaffordable renewable energy in both Korea and other countries, he said, and increased communication about safety standards will reassure those concerned about a repeat of the 2011 Fukushima disaster in Japan.
Planning for the long term is a risk-filled prospect; for Kim and for Korea, not planning for the long term is riskier.