South Korea had 58.8 gigawatts (GW) of installed electricity generating capacity in 2004. In that same year, the country generated 343 billion kilowatthours (Bkwh) of electricity, of which 63 percent came from conventional thermal sources, 36 percent came from nuclear power, and a small amount came from hydropower stations.

South Korea’s government intends to privatize the country’s power sector, although these plans have proceeded slowly due in part to tepid investor response, public concerns about rising power prices, and reluctance on the part of the government to sell some power sector assets. In 2001, state-owned Korea Electric Power Generating Corporation (KEPCO) was broken up into six separate power generation companies (“gencos”) in preparation for privatization. Of these six, South Korea’s government will retain control of one genco, the Korea Hydro & Nuclear Power Company (KHNPC), which operates the country’s nuclear and hydroelectric power stations. The remaining five are to be auctioned off, although the planned sales have been repeatedly delayed since 2002. Current plans call for the government to sell majority stakes in the gencos to private companies and offer minority stakes through public stock issues. Foreign ownership is limited to 30 percent of any single division. The bidding process will be managed by the Korea Power Exchange (KPX), which was established in 2001.

As noted above, South Korea gets the majority of its electricity supplies from conventional thermal sources (mostly coal and natural gas, with a small amount coming from oil-fired power plants). However, nuclear power is playing an increasingly prominent role in South Korea, steadily increasing its share of the country’s net electricity generation for the past two decades. All told, KHNPC owns four nuclear power stations totaling 20 nuclear reactors, with two additional plants currently planned or under construction (see table below). Investment in new conventional thermal power plants has subsided in recent years as a result of uncertainty surrounding the planned privatization process.