South Korea’s Industrial Power Rates Shift to Cheaper Days, Costlier Nights; Heavy Users Skeptical

Steam rises from a plant at the Yeosu petrochemical complex in South Jeolla Province on the 9th after international oil prices topped $100 a barrel. [Photo=Yonhap]

The government has unveiled a revamp of industrial electricity rates, but petrochemical and steel producers — among the biggest power users — say the plan is unlikely to bring meaningful relief. With continuous, 24-hour operations, they say it is difficult to shift consumption by time of day, limiting any direct benefit from lower daytime rates.

Industry officials said March 15 that companies in both sectors do not expect the changes to significantly reduce their overall power bills.

On March 13, the Ministry of Climate, Energy and Environment and Korea Electric Power Corp. announced a seasonal and time-of-use pricing overhaul. Starting April 16, daytime electricity will be as much as 16.9 won cheaper per kilowatt-hour, while nighttime power will cost 5.1 won more.

The government said the goal is to ease strain on the grid by encouraging companies to increase production during lower-demand periods, as power demand rises rapidly with the expansion of artificial intelligence data centers and broader electrification. It projected that about 38,000 businesses — 97% of companies — will see their average rate fall by 1.7 won per kWh.

But heavy industries say the policy’s impact will be limited because their processes cannot be easily rescheduled. Petrochemical plants, including naphtha cracking centers, typically run around the clock under high-temperature and high-pressure conditions. Stopping or shifting output to specific hours can affect equipment safety and production efficiency, making adjustments difficult.

Steelmakers cited similar constraints, saying key facilities such as electric arc furnaces and rolling lines operate largely as continuous processes, leaving little room to align production with time-based pricing.

Companies also worry energy costs could rise further. They point to a recent surge in international oil prices amid instability in the Middle East, which has pushed up raw-material costs even as business conditions remain weak.

Yeochun NCC recently declared force majeure to customers after supply disruptions linked to the Middle East situation made it difficult to fulfill some contracts, the report said.

Some analysts also warn that higher oil prices could add longer-term pressure for electricity-rate increases, as rising fuel costs lift power generation expenses and become a factor in future pricing adjustments.

Industrial electricity rates are already a major burden. Since 2022, industrial power prices have risen about 70% across seven increases, sharply raising costs for power-intensive sectors.

“We understand the policy aim of spreading out electricity demand, but for 24-hour continuous-process industries it is practically difficult to adjust production times to electricity rates,” one industry official said. “With limited room to respond by sector, fairness across industries also needs to be discussed.”

* This article has been translated by AI.

Lee nakyeong nakk@ajunews.com