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Korean businesses fast migrate to LNG for security and emission control

11 May 2022

South Korean private energy suppliers are replacing coal with liquefied natural gas (LNG) for power generation to meet carbon emission control as renewables remain more costly and unstable.

According to industry sources on Monday, SK chemicals Co. is replacing coal-fired power plant facilities at its Ulsan plant with combined heat and power system to make it fully operational by 2024 at a cost of 420 billion won ($328.6 million).

The new facility will use LNG and LPG as fuels, instead of soft coal, wood chip and oil, to reduce carbon emissions partly to back the government-led efforts to expand dispersed energy. The company spun off the utility supply business of Ulsan plant to a separate entity of SK multi utility in December last year for the project.

SK chemicals plans to build 300-megawatt LNG plant facilities on a site of 37,965 square meters. LNG and LPG will be supplied from nearby SK gas terminals.

SK gas Ltd. has joined the world’s first LNG and LPG combined cycle power plant project worth 1.2 trillion won in Ulsan via its subsidiary Ulsan GPS. It acquired a stake in a coal-fired power plant under Dongbu Group in 2014 but switched its business to LNG and LPG combined cycle power generation.

The new plant, if it becomes operational by 2024, would be capable of producing 1.2GW. SK gas built a joint-venture dubbed KET (Korea Energy Terminal) for the business with the Korea National Oil Corporation.

Hanwha Energy Corp. will also replace 250MW coal-fired power station in Yeosu with LNG fuel.

Its affiliated unit Hanwha Impact Corp. develops hydrogen and natural gas dual-fuel power generation technology, raising expectations for Hanwha Energy’s entry into the business as well.

LNG is promoted as a cleaner fuel source as it emits halved carbon emissions compared with coal or LPG. A combined heat and power system also boasts higher energy efficiency by producing electricity and steam at the same time.

During transition period, LNG would be favored as power sourcing.

Among the refiners, Hyundai Oilbank Co. injected 400 billion won to build an eco-friendly power plant using LNG and blue hydrogen as fuels with an aim to cover 70 percent of power consumption at its Daesan plant. It hopes to reduce a maximum 67 percent of greenhouse gas emissions through the dual-fuel hydrogen system.

SK E&S Co. is pushing ahead with low-emission LNG business using the carbon capture and storage technology. Hyundai Motor Co. recently has built an LNG plant near its finished car manufacturing plant in Ulsan and is reviewing direct generation of power.

“In the long term, power bills will likely be heftier, considering KEPCO’s cumulative losses and volatile global oil prices. This is why big manufacturers are adding LNG fueling facility,” said an official from the financial industry.