Are Private Power Generators on a Path of Death?... Power Market Shaken by Launch of 'Korea Power Generation'

Integrated Power Generator to Hold 32.7% Market Share
"Potential for Market Dominance by Adjusting Bid Prices and Supply Volume"

Panelists are speaking at the seminar titled "Structural Changes in the Power Industry and Direction for Rational Power Market Reform," jointly hosted by the Korean Resource Economics Association and the Private Power Generation Association at the Seoul Textile Center Building on the 22nd. Photo by Hee-Jong Kang

As the government is moving to merge the five power generation subsidiaries under Korea Electric Power Corporation (KEPCO), concerns are mounting among energy experts. They warn that a unified power generation company could expand its market dominance, undermine fairness in the electricity market, and ultimately harm consumer interests.

At the seminar on "Changes in the Structure of the Power Industry and Rational Power Market Reform Directions," held on the 22nd at the Seoul Textile Center Building by the Korean Society of Resource and Economics and the Private Power Generation Association, Professor Ju Seong-Gwan of the Department of Electrical and Electronic Engineering at Korea University presented on "Structural Issues and Directions for the Domestic Power Market." He stated, "Based on KEPCO's power purchase volume for 2025, the consolidated market share of the five power generation companies would reach 32.7%." Professor Ju explained, "While cost savings through joint procurement, large-scale investment in renewable energy, and collective capacity to address the phase-out of coal-fired power are expected outcomes, there is also a possibility of exerting market dominance by manipulating bid prices and supply volumes, so complementary safeguards are needed."

To address this, Professor Ju proposed, "It is important to evaluate whether there are alternative operators by time zone and region to replace the consolidated generation company, and to verify their bidding and supply capabilities." He also added that flexible resources, such as private power generators, energy storage systems (ESS), demand response (DR), and virtual power plants (VPP), should be allowed to participate in competition and be compensated at their fair value.

Hong-Jong Cho, President of the Korean Society of Resource and Economics and Professor of Economics at Dankook University, who participated as a panelist, pointed out, "The consolidated power company's investment in renewables, grid, and flexibility will eventually lead to higher power generation costs, which will ultimately be passed on to KEPCO's expenses." He emphasized, "The practical benefits of consolidation without restructuring measures such as workforce reduction will be limited." He went on to say, "A large, unified power generator could, with its monopoly power and policy backing, undermine fair competition with private power companies. Ultimately, competition and choice should lead to lower electricity generation costs and greater benefits for the public."

Professor Woo Young Jeon of Seoul National University of Science and Technology's Department of Energy Policy also commented, "The integration of power generation companies means the creation of a major player handling 30–40% of total generation. We need to consider whether this conflicts with the existing plan for a segmented market structure, price signals, and the goal of strengthening competition."

Choi Seungjin, CEO of energy consulting firm C2S, remarked, "The rapid pace of power company consolidation currently underway may, contrary to its intentions, result in electricity rate increases due to transition policies, leading to public pressure for restructuring and workforce reductions. Premature coal phase-out without new growth engines will fail to generate alternative businesses, cause regional and corporate decline, increase grid reliability risks, and, with rising electricity rates, impose an even greater burden on the public."

Professor Hyunbo Shim of Soongsil University noted, "If power plant integration is inevitable, regulatory and market reforms are needed to minimize negative side effects. A sophisticated regulatory framework is needed in advance to prevent inefficiencies caused by information asymmetry between regulatory agencies and regulated institutions."

Jin-Pyo Park, attorney at law firm Bae, Kim & Lee LLC, stated, "Merging power generation companies could improve efficiency in public procurement and portfolio management, but may reduce cost-performance comparisons between companies and limit opportunities for independent investment. There should be thorough checks on whether the consolidated operator could hold localized market dominance in specific regions or during certain time periods."

Yang-Hun Son, emeritus professor at Incheon University and the moderator of the seminar, expressed concern, "Under a government-KEPCO-100% subsidiary structure, the consolidated power generation company could effectively control 70–80% of the power market. As KEPCO's dominance is further consolidated, private power generation operators could find themselves on a 'path of death.'"

Meanwhile, the government plans to merge the five power generation subsidiaries — Korea South-East Power, Korea Midland Power, Korea Western Power, Korea Southern Power, and Korea East-West Power — and launch a provisional Korea Power Generation Corporation as a 100% subsidiary of KEPCO in October next year. The government is also considering exempting the merger of these power generation companies from corporate combination review by the Fair Trade Commission.

This content was produced with the assistance of AI translation services.