1. Korea Electricity Supply Industry and Power System A Korea Power Exchange

2. A F 2 1. Korea Electricity Supply Industry 2. KPX & Korea Power Market Contents 3. Korea Power System

3. A F 3 1. Korea Electricity Supply Industry 2. KPX & Korea Power Market 3. Korea Power System

4. A F 4 General Information on Korea  Economy GDP : $925.1 billion (2004) GDP per Capita : 19,200 (2004) GDP Real Growth Rate : 4.6%(2004)  Trading : World’s 11th country Export : 254 billion US$ (‘04) Import : 225 billion US$ (‘04)  Energy and Electricity 1st Energy Consumption : 221 mTOE(’04) Energy Dependency on Import : 96.6%(‘04) Electricity Consumption : 312 TWh (’04) Consumption per Capita : 6,491 kWh(’04)  Population : 48 million (‘04)  Area : 98,480 sq km

5. A F 5 Energy Consumption  1 st Energy Consumption by Source (2004) Antracite (kton) Bituminous (kton) Oil (kbbl) LNG (kton) Total8,17373,804754,43321,908 Generation2,41245,51529,0778,221 CoalOilLNGHydroNukeOtherTotal Share(%)24.145.612.90.714.82.0100 Import (mil $) 4,12437,7546,5030265048,306  Energy Consumption for Generation (2004)

6. A F 6 Brief History of Korea Power Sector  Until April 2001, the industries were monopoly by KEPCO, the vertically integrated utility  In 1999, Electricity Business Act was amended to facilitate restructuring Power Sector  In April 2001, 1st phase of restructuring started with so-called Generation Competition 6 Gencos established by separating generation division of KEPCO Regulation body, KOREC created within MOCIE A market operator and national power system operator, KPX established

7. A F 7 Installed Generation Capacity By fuel (MW, %, Oct. 2005) Oil 7.4% Hydro/others 8.6% Nuclear 27.9% LNG 26.6% Others 6,448 (10.4) 5 Gencos 37,543 (60.3) KHNP 18,250 (29.3) 62,241MW Coal 29.2% By Genco

8. A F 8 Trend of Capacity and Peak Load  Average annual growth rate of generation capacity from 1985 to 2004 was 7.2% while peak load was 9.4%.

9. A F 9 TWh 51 94 163 240 312 Trend of Total Electricity Sales  Average annual growth rate of the total electricity sales from 1985 to 2004 was 10.0%.

10. A F 10 Typical Annual Load Curve

11. A F 11 Long-term Supply and Demand

12. A F 12 Projected Capacity Expansion by Fuel

13. A F 13 1. Korea Electricity Supply Industry 2. KPX & Korea Power Market 3. Korea Power System``

14. A F 14 Structure of Current Market contract Bid CBP Market (KPX) KEPCO(T&D) Eligible Customers 50,000kW PPAs 6 Major Gencos IPPs Captive Customers Bid CESs Regional Customers

15. A F 15 Korea Power Exchange  Legal status and missions Established April 2, 2001 based on EB Act A non-for-profit independent organization  Major functions Electricity Market and Power System Operator Long-term Power Development Planning Development of a further competitive power market Providing policy supports to Government  Governance via: Members General Meeting Board of Directors Four(4) Committees: Rule Revision, Cost Estimation, Information Release, and Dispute Resolution  Operating expenses Funded through electricity trading fees(0.086 Won/kWh)

16. A F 16 KPX Organization Chairman & C.E.O Audit & Inspection Power Planning Customers Support Market Operation General Management Power Sys. Operation National Dispatch Center IT Dept. Executive Director Executive Director Jeju Island Dispatch The number of personnel : 284

17. A F 17 KOREC MOCIE Members Regular members Associate Members KPX Board Member Genco (thermal) Genco (H&N) PSB Directors (3) experts (3) KPX Non-Profit Members General Meeting Independent Auditor Market Governance

18. A F 18 Market Design Principles  Gross (Mandatory) Electricity Pool  Hourly Market Price Setting Based on Gen. Cost  Uniform market prices regardless of region  Separation of Market Base Load Market and Non Base Load Market  Compensation for generators Energy and Capacity Payment CP is paid only for the centrally dispatchable generators

19. A F 19 BLMP SMP Base Load CP Non-Base Load CP Base Load Generator Base Load Generator Non-Base Load Generator Non-Base Load Generator Scheduled Generator Non-Scheduled Generator Non-Scheduled Generator Conceptual Diagram for the Settlement

20. A F 20 1. Korea Electricity Supply Industry 2. KPX & Korea Power Market 3. Korea Power System

21. A F 21 Characteristics of Power System  Isolated electricity network - high supply reliability required  Steady demand growth  No indigenous energy resources – vulnerable to external impacts  Imbalances of regional power supply and demand - power centers in rural areas but largest demand pocket in Capital region

22. A F 22 Korea Transmission System Year200520102017 T/L (C-km) 765 kV 7561,005 345 kV 8,1509,5159,816 154 kV 19,42223,00625,473 Total 28,32833,52636,294 M.Tr (MVA) [No. of S/S] 765 kV 21,110 [5]25,110 [7]33,510 [8] 345 kV 85,581 [78]104,586 [91]120,589 [101] 154 kV 99,748 [535]123,196 [661]135,356 [744] Total 206,439 [618]252,892 [759]289,455 [853]

23. A F 23 Jeju Haenam 154kV : 18,144 / 472 HVDC (in km) 154kV 345kV765kV 345kV : 7,497 Yeonggwang Singwangju Sinhwasun Singangjin Gwangyang Yeosu Uiyreong Muju Donghae Sinpohang Wolseong Sinonsan Ulsan Gori Sinyangsan Singoseong Singimhae Nambusan Bukbusan Ulju Hadong Samcheonpo sinmasan Sancheong Seodaegu Singyeongsan Sinulsan Boryeong Cheongyang Gunsan Sinokcheon Sinyeongju Singimje Sinnamwon Goryeong Seonsan Singyerong Taean Sindangjin Asan Cheongwon Sinjecheon Sinincheon UijeongbuYangJu Incheon Seoincheon Sinsiheung Pyeongtaek Sinyongin Migeum Dongseoul Sinbupyeong Sinyangjae SeoSeoul Seongdong Hwaseong Sinseongnam Yeongseo Jungbu Uljin Dangjin Sinanseong Sinseosan Singapyeong Sintaebaek 765kV : 662 Transmission System

24. A F 24 Nuclear : 17,716 Wolseong 2779 Yeonggwang 590 Uljin 5900 3137 Gori (MW) 58 Chuncheon Paldang 120 Cheongpyeong 80 Uiam45 412 Chungju 400 Cheongpyeong PS 70 Small Hydro 200 Soyanggang 108 Hwancheon 82 Gangreung 30 Seomjingang 20 Yongdam 2 Juam 90Daecheong 600 Muju 700 Sancheong 100 Hapcheon 600 Samrangjin 50 Imha Andong 90 Hydro : 3,882 Total : 62,241 Hydro CC ThermalNuclear LNG CC : 15,015 1800 Hanjong 1800 Seoinsheon 1800 Sinincheon 900 Ilsan 900 Bundang LG Bugok500 450 Anyang 480 1800 1200 450 Bucheon 1800 Busan Power Plant Locations Ulsan Jeju 537 390 Seoul Seocheon 400 1800 Yeongnam 400 Hadong 3000 Samcheonpo 3240 Yeosu 530 Honam 500 Yeongdong325 Donghae 400 2500 Taean 3000 Boryeong 3000 Pyeongtaek 1400 Incheon 1150 Thermal : 2,5538 Dangjn

25. A F 25 Security Criteria for System Operation  Legal source : Decree on reliability standards and electricity quality  Security Criteria In case of single contingency (N-1) Power system must be stable ; no outage, no heavy overload, no voltage problem, etc. In case of double contingency (N-2) Power system must maintain security ; no out of step, no fault propagation, no wide area outage, etc.

26. A F 26 Challenges of Korea Power System  Increasing fault current level As growing grid size  Management of overload Due to delayed construction of transmission line  Transient stability Resulted from large-sized generation capacities without enough transmission capacities  Voltage stability Caused by long distance transmission from remote generation plants  Difficulties in building new generation plants, S/S & T/L due to environmental problems and NIMBY

27. A F 27 Preventive Measures for Security  Changing network configuration  Replacement of CB  Applying SPS such ax FPPC  Constraint operation  Installation of reactive power compensators  Reinforcement of network

28. A F 28 Development for Security Enhancement  R & D Increasing in carrying capacity Improvement of system stability Increasing the flexibility of load flow control Development of system monitoring and control Improvement of wide area monitoring system (WAMS) System recovery technologies Research on prevention of a cascading blackout  Up-grade the accuracy of system modeling Dynamic modeling methodologies and simulation tools  Advancement of operation skill

29. A F 29