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The Reasons for Re-emphasizing the Importance of New and Renewable Energy2016-08-31Hit:2558

Title: The Reasons for Re-emphasizing the Importance of New and Renewable Energy

 

Korea Electric Power Corporation (KEPCO) has, up until now, monopolized the national electric power market. In order to maintain the power supply, only KEPCO has had the right to control the electric power market. Now, however, the electric power market is open to the public and competition based on the free market economy will soon emerge.

Korea’s geographical location makes it difficult to receive power supplies from other countries, so the ability to maintain an appropriate level of electricity is vital for the national security. When comparing the average electricity rates with other OECD nations, Korea maintains a relatively low rate. This shows KEPCO has been doing a great job in terms of supplying  an adequate level of electricity .

It is important to find out where the low electricity rates come from. On the one hand, it is noteworthy to praise KEPCO’s efficient operation system. On the other hand, however, power coming from coal which creates carbon dioxide, along with fine dust should be minimized. Also, we need further investment for reducing nuclear waste from nuclear power plants.

Without considering these issues, artificially maintaining low electricity rates should not be welcomed. This artificially low price level threatens investment in new and renewable energy. It is also dangerous for the future of our environment.

A firm’s competitiveness should be at risk, when the environmental costs are not considered.

Google operates a data center which tries to reduce the amount of electricity used, and also tries to increase dependence on renewable energy. Google also has a zero carbon management goal.

Apple computer has also achieved zero carbon emissions in the US manufacturing market. Through these means, Apple manages its risk and practices green business.

Korean firms often do not consider these environmental costs, yet merely cry out for further reductions in electricity prices, which is absurd.

If we pursue only short-term profit, it is almost like carrying a time bomb.  Environmental costs should be reflected in the electricity price, and a new ecosystem that values the importance of supplying renewable energy is critical.

For these things to happen, an open market system will enable an innovative technology to be implemented.  In fact, is may already be too late to open the electricity market to the public.

Recently, Tesla merged with a solar power company, Solarcity. This is an example of an innovative business model that reflects a change in the new energy ecosystem market. It is pity that Korea is falling behind when it comes to this kind of innovation.  The success of many domestic firms is based on the follower’s strategy rather than creating an innovative business model.

Also important is the fact that, the world economic environment has changed dramatically. When Chinese firms actively develop renewable energy, it will be difficult to compete with them with the high wage level of Korean employees.

It is true that using renewable energy has been mandatory for companies in Korea. Still, however, the supply of renewable energy is at only 11%, which is strikingly low compared to other countries. Therefore, an open and free trade system will increase the competitiveness of the renewable industry overall.

For example, in the case of solar energy, the price of the polysilicon module has decreased to as low as $ 0.32, and many firms that manufacture this have actually closed. It seems like the solar industry is on the verge of a breakdown.  However, this low price has actually opened a new opportunity in a solar energy market. The US based firm, Solarcity, is an example of a company taking advantage of this opportunity.

In the longer term, government subsidy is needed so that the price of using renewable energy matches the price of using fossil fuels.


In the midst of a new change, when we are faced with such a destructive technology,  some companies will grab the opportunity, while others will fail. Rather than pursing self-interest, we all can live together when we the vision to see the future. 


Contact : Bae, Sujee ( sjbae05@kaist.ac.kr )

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