KEPCO Posts Eighth Consecutive Loss as Fossil Fuel Reliance Deepens Crisis

South Korea's state-owned electricity provider Korea Electric Power Corporation reported an operating loss of 6.2 trillion South Korean won (approximately US$4.8 billion) in the first quarter of 2023, its eighth consecutive quarterly operating loss, driven by heavy reliance on coal and liquefied natural gas in its generation mix. The company's Chief Executive Officer resigned in May 2023 as losses accumulated and governance concerns mounted.

KEPCO generated 39% of its electricity from coal and 22% from LNG in 2022, while renewable energy accounted for only 2.4% of total capacity — or 2.5 gigawatts. Full-year 2022 operating losses reached 32.6 trillion South Korean won (US$24.4 billion), compounded by high fossil fuel prices and inadequate legislative support for tariff increases. IEEFA estimates that in the first quarter of 2023, KEPCO's loss margin per tonne of LNG used for power generation was 94.6%, compared to a profit margin of 9.0% per tonne of coal — underscoring that LNG remained financially unviable for the company.

KEPCO partially offset its losses in early 2023 by boosting nuclear generation from 42% to 45% of total output, allowing it to reduce coal use marginally from 40% to 39% — a move consistent with the G7 pledge to reduce coal-based power generation. However, running nuclear plants at over 80% utilisation — compared to below 30% for Japan's nuclear fleet — raises questions about the long-term sustainability of this strategy. IEEFA notes that no material financial relief is in sight given that fossil fuel prices are unlikely to fall significantly in the near term and KEPCO has no concrete plan to diversify its generation mix.

IEEFA argues that government intervention is the only practical near-term option for KEPCO, given the company's limited room to raise tariffs or reduce costs independently. Any state support package should, in IEEFA's view, be contingent on an immediate, binding, and enforceable pivot to renewable energy alongside a substantial cost-cutting programme that phases out fossil fuel generation. The CEO's resignation is unlikely to resolve the company's fundamental governance weaknesses, which IEEFA argues have allowed poor investment decisions to accumulate over decades.

Key figure — 32.6 trillion KRW (US$24.4 billion) — KEPCO's full-year 2022 operating loss