(Bloomberg) -- South Korea is urging companies, businesses and the public to roll back their electricity consumption as the year’s worst heatwave threatens to outstrip supply.
Surging electricity demand from scorching heat and reduced operations at nuclear reactors are straining the country’s power grid, according to the energy ministry, which is asking for a nationwide effort to conserve energy, starting with government offices.
Korea Power Exchange estimates the reserve margin, the projected buffer between the amount of power that plants have available and expected peak demand, will this afternoon fall below 2018 levels when the country experienced the worst heatwave in 111 years.
“There’s a possibility that the electricity demand will surge at any time due to the sustained heat waves,” said Energy Minister Moon Sung Wook said in a statement. “State agencies that deal with electricity supply will have to do everything in their power to keep the supply stable with extraordinary caution.”
While a single-digit reserve margin doesn’t indicate an imminent blackout, it has typically stoked concerns over power shortfalls and increased the likelihood of a troublesome summer. Korea Meteorological Administration warned of heat domes -- mountains of high pressure that bring extreme temperatures -- from this week, and predicted temperatures to surpass 38 degrees Celsius in a number of regions.
The risk of a power shortage worsened after two nuclear reactors unexpectedly shuttered following a mechanical glitch, while prolonged maintenance work at other units further curbed generation, the energy ministry said.
South Korea’s nuclear energy output, which accounts for about 30% of the country’s total, is running at less than 70% the normal rate, with seven of its 24 reactors under maintenance as of July 21, according to Korea Hydro & Nuclear Power Co. The ministry said the restart of three plants this week should somewhat alleviate the potential supply shortage, but one unit went under maintenance on Wednesday and another one is scheduled for next week.
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The government expects peak electricity demand to reach 93.2 gigawatts in the fourth week of July, bringing the reserve margin to as low as 4.2%, or 4 gigawatts of buffer, according to a statement earlier this month. For this summer, the peak consumption is forecast to rise to as high as 94.4 gigawatts in the second week of August, the ministry said.
Massive economic losses
A power failure could slow South Korea’s economic recovery as the Asian nation relies heavily on energy-intensive industries like semiconductor, petrochemical and steel. During the hottest months of the year, the government regularly asks major companies to lower their electricity consumption as blackouts would lead to massive economic losses.
An outage across Texas last February, caused by historically cold weather, temporarily shut down a U.S. chip plant run by Samsung Electronic Co., the world’s second-largest semiconductor maker. The disruption caused Samsung to post a 400 billion won ($348 million) loss in the first quarter, and further deepened the global supply crunch caused by the pandemic.
In the case of a supply shortage, South Korea can implement contingency measures to avoid blackouts, including initiating a “demand response” program that reduces some customers’ power use in exchange for lower rates or other compensation. Government agencies have already been told to lower air conditioning use, according to local media reports.
“We did run into some major outages in the past where the disruption hit massive plants,” Chun Yeonghan, a professor at Hongik University’s electronic and electrical engineering, said by phone. “It’s definitely something that scares people, but there’s no need to panic as it’s unlikely for something similar to happen this year.”
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