A feasibility study on a natural gas power plant project in the DPRK under the CDM scheme and grid connection

Abstract

This study analyzed the economics of natural gas power generation in North Korea, taking into account the clean development mechanism and grid connection. North Korea has been facing a serious electric power problem and requires the establishment of a new power plant. Natural gas might emerge as a new energy resource in the Democratic People's Republic of Korea when supply from Russia reaches East Asia, including the Korean peninsula. I analyzed the economic validity of adopting a 500 MWh natural gas combined cycle (NGCC) power plant, by applying levelized cost of electricity (LCOE), net present value, and internal rate of return methods. The results of the analysis show that the LCOE of natural gas power generation of North Korea is US$598 per MWh, which is three times higher than the current costs of power in North Korea. It means that NGCC in North Korea is not profitable without additional revenue. When electricity generated from the NGCC is tradable with other countries, it allows for a reasonable electricity charge, improving the economics of the NGCC. The results of this study provoke a paradigm shift, providing suggestions not simply for support but also for business revenue generation in the evaluation of North Korean economic activity.

Keywords::

• North Korea
• natural gas power plant
• CDM
• sensitivity analysis
• LCOE

Notes

^1. Email: [email protected]

^2. The price of electricity in South Korea is US$128/MWh and China is US$89.6 MWh.

Additional information

Notes on contributors

Kyoung Hee Kim

Kyoung Hee Kim is currently a Ph.D. candidate of the Energy Systems Engineering at Seoul National University. She has worked for Korea Energy Management Corporation (KEMCO) for about 10 years. She holds a BS degree in chemical engineering from Hongik University and an MS degree in Environmental System Engineering from Pohang University of Science and Technology. (Email: [email protected])

Changsok Yoo

Changsok Yoo is an assistant professor of the Department of Culture and Tourism Contents at Kyung Hee University. He holds BS and MA degrees in Civil, Urban and Geosystem Engineering from Seoul National University, and a Ph.D. degree in Environmental, Energy and Engineering Economics from Seoul National University. (Email: [email protected])