March 13 (Bloomberg) -- South Korea’s plan to install smart meters in half the country’s households by 2016 could cut electricity consumption equivalent to the cost of one nuclear power plant.
“We want to make the utility industry intelligent and efficient,” said Choi Kyu Chong, director of the Smart Grid & Electricity Market Division of the Knowledge Economy Ministry. South Korea expects it will be able to save the cost of building a reactor by 2016 by helping households and utilities to manage electricity consumption through the meters, he said.
The country is investing in smart meters amid opposition from citizens and political parties over plans to expand its reliance on nuclear energy after the Fukushima disaster last year in Japan. State-run utility Korea Electric Power Corp., also known as Kepco, has awarded contracts to companies including LS Industrial Systems Co., Iljin Electric Co. and Nuri Telecom Co. to install the meters from a program that has won a 1.47 trillion won ($1.3 billion) commitment from the government.
Smart meters show customers what they pay for power at each time of the day, which utilities say will smooth demand fluctuations by encouraging more people to shift consumption to off-peak hours when it’s cheapest to generate electricity. The devices cost from 20,000 won to 140,000 won a unit, depending on whether they are for small or large electricity users.
Energy consumption in South Korea, the fourth-largest user in Asia, more than doubled in the 12 years to 2010, the highest rate among developed countries, according to the Korea Energy Economics Institute, a state energy policy adviser. Electricity prices in the country only cover 87 percent of the cost of generating electricity, according to the government.
“While Korea’s overall approach to smart grid has been technologically advanced, the program can be only effective if the country raises its electricity tariffs,” Ali Izadi-Najafabadi, an energy technologies analyst at Bloomberg New Energy Finance, said in an e-mail.
South Korea plans to replace all analogue meters at households with the new devices by 2020. The government on Feb. 28 said it plans a 14-fold increase in the number of meters to 10 million units by 2016.
As many as 30 bidders have participated in a series of tenders by Kepco to supply 2.3 million smart meters. LS Industrial Systems Co., Iljin Electric Co. and Nuri Telecom Co. were among companies selected to supply the meters to Kepco, said Sung Ki Jong, an analyst at Daewoo Securities Co. in Seoul.
Western smart meter makers like Landis+Gyr, the world’s biggest, may start to participate as Kepco ramps up the volume of meters to be installed, said Izadi-Najafabadi.
“As the government has focused on pilot projects so far, the demand for the meters is quite small, making it difficult for suppliers to earn lots of money,” Sung said. “With larger numbers to be installed over the next few years, there is scope for suppliers to make real money.”
Kepco plans to issue a tender for 1.5 million units in June or July, and in 2013 for more than 2 million units. It plans to install the meters at 15.2 million households between 2016 and 2020.
If South Korea meets its 2016 target to install the meters at half its households, it will be second in Asia only to China, which plans to install them at 80 percent of households by 2016, according to New Energy Finance. In Europe, Italy already has these meters in all houses, while in the U.S., they are installed in about half of all households.
The meters are part of the Smart Grid project announced by the government in 2009 to help reduce energy consumption by 3 percent and cut electricity consumption by 10 percent by 2030. In 2030, when the project is completed, it will lead to the reduction of 230 million metric tons of greenhouse gas emissions and 47 trillion won of energy imports, according to government estimates.
South Korea, the world’s biggest producer of ships, televisions and computer memory chips, plans to legislate a cap-and-trade carbon trading system.
To contact the reporter on this story: Sangim Han in Seoul at firstname.lastname@example.org