S. Korea plans energy U-turn away from coal, nuclear

The plan by the new administration of President Moon Jae-in, which took power in early May would move a notable laggard in renewables toward green energy, responding to public concerns over air pollution and nuclear safety. (Reuters)
Updated 04 June 2017
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S. Korea plans energy U-turn away from coal, nuclear

SEOUL: A proposed energy U-turn by South Korea’s new government would put the environment at the center of energy policy, shifting one of the world’s staunchest supporters of coal and nuclear power toward natural gas and renewables.
If implemented, the ambitious plans by the world’s fourth-biggest coal importer and No.2 liquefied natural gas (LNG) buyer will have a big impact on producers. South Korea’s LNG imports could jump by more than 50 percent by 2030, while coal shipments could peak as early as next year.
But experts warn that any move to halt construction of a raft of new coal and nuclear plants, many of which are already being built, could threaten energy security.
The plan by the new administration of President Moon Jae-in, which took power in early May would move a notable laggard in renewables toward green energy, responding to public concerns over air pollution and nuclear safety.
“The government cannot neglect people’s demands and in the long term, it is right to pursue clean and safe energy. But there will be many challenges,” said Sonn Yang-Hoon, Economics Professor at Incheon National University.
South Korea, Asia’s fourth-largest economy, gets 70 percent of its electricity from thermal coal and nuclear reactors and offers tax benefits to both sectors to ensure abundant electricity at affordable prices.
While Moon’s energy road map is still being hashed out, his staff say that care for the environment will play a central role in forming policy.
“Currently taxes are imposed on gas for power generation and we plan to correct the skewed tax system by seeking to levy environmental taxes on coal and nuclear,” said Paik Ungyu, an energy engineering professor at Hanyang University who advises Moon on energy policy.
The government hopes to boost gas-fired generation from about 18 percent now to 27 percent by 2030 and boost the use of renewables, now mainly hydro, from roughly 5 percent to 20 percent, said Paik.
At the same time, coal’s contribution would fall from about 40 percent to 21.8 percent and nuclear from 30 percent to 21.6 percent, based on power demand growth of 2.2 percent.
A key short-term option is to boost the operating rates of gas-fired power stations from 40 percent to 60 percent through the reduction or removal of tariffs on gas imports. Coal and nuclear power are exempt from import tariffs.
The price of gas-fired electricity in March was 129.51 won ($0.1160) per kilowatt-hour (kWh), 40 percent more than coal and nearly double the cost of nuclear power, according to data from Korea Electric Power Corp. (KEPCO).
Long-term energy economics favor policy change, with renewable costs falling sharply due to improved technology and LNG prices sliding over 70 percent from their 2014 peak on a huge supply increase, especially from Australia and the US.
“If there are no new nuclear and coal plants, the potential LNG imports could be 46-49 million tons per annum depending on the success of the renewable targets,” said Chong Zhi Xin, principal Asia LNG analyst at energy consultancy Wood Mackenzie.
Moon this month ordered a temporary halt on 10 old coal-fired power plants and outlined plans to bring forward their permanent closure.
More controversially, he pledged during his campaign to review existing plans to build nine coal power plants and eight nuclear reactors, including the part-completed Shin Kori No.5 and No.6, citing safety concerns.
Experts estimate up to $2.7 billion has already been committed on Shin Kori No.5 and No.6 by state-run Korea Hydro & Nuclear Power Corp. Work has also started on the coal plant projects, although all are less than 10 percent complete.
If forecasts suggest that not building the new plants means South Korea will be unable to meet projected electricity demand, then the government’s pledges will not be feasible, said Kim Nam-il, a senior research fellow at the Korea Energy Economic Institute
The Independent Power Producer Association (IPPA), which represents the coal and gas industries, estimates that nearly $2 billion has also been spent on the nine coal-fired plants under threat, raising the issue of compensation.
“The government cannot unilaterally push cancelations as private companies have already invested in the projects. If the government scraps a plan, it would have to compensate properly,” said Yoo Seung-Hoon, an energy policy professor at Seoul National University of Science & Technology.


Dubai property developer Damac on hunt for land in Saudi Arabia

Hussain Sajwani
Updated 18 March 2019
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Dubai property developer Damac on hunt for land in Saudi Arabia

  • Brexit a “concern” for UK property market says Sajwani
  • Developer mulls investing “up to £500 million” on London project

LONDON: The Dubai-listed developer Damac says it is scouting for additional plots of land in Saudi Arabia, both in established cities and the Kingdom’s emerging giga-projects such as Neom.
Hussain Sajwani, chairman of Damac Properties, also said the company would look to invest up to £500 million ($660 million) on a second development in the UK, and that it is on track to deliver a record 7,000 or more units this year.
Amid a slowing property market in Dubai, Damac’s base, the developer is eying Saudi Arabia as a potential ground for expansion for its high-spec residential projects.
Damac has one development in Jeddah, and a twin-tower project in Riyadh — and Sajwani said it is looking for additional plots in the Kingdom.
“It’s a big market. It is changing, it is opening up, so we see a potential there … We are looking,” he said.
“In the Middle East, Saudi Arabia is the biggest economy … They have some very ambitious projects, like the Neom city and other large projects. We’re watching those and studying them very carefully.”
The $500 billion Neom project, which was announced in 2017, is set to be a huge economic zone with residential, commercial and tourist facilities on the Red Sea coast.
Sajwani said doing business in Saudi Arabia was “a bit more difficult or complicated” that the UAE, but said the country is opening up, citing moves to allow women to drive and reopen cinemas.
He was speaking to Arab News in Damac’s London sales office, opposite the Harrods department store in Knightsbridge. The office, kitted out in plush Versace furnishings, is selling units at Damac’s first development in the UK, the Damac Tower Nine Elms London.
The 50-storey development is in a new urban district south of the River Thames, which is also home to the US Embassy and the famous Battersea Power Station, which is being redeveloped as a residential and commercial property.
Work on Damac's tower is underway and is due to complete in late 2020 or early 2021, Sajwani said.
“We have sold more than 60 percent of the project,” he said. “It’s very mixed, we have (buyers) from the UK, from Asia, the Middle East.”
Damac’s first London project was launched in 2015, the year before the referendum on the UK exiting the EU — the result of which has had a knock-on effect on the London property market.
“Definitely Brexit has cause a lot of concern, people are not clear where the situation will go. Overall, the market has suffered because of Brexit,” Sajwani said.
“It’s going to be difficult for the coming two years at least … unless (the UK decides) to stay in the EU.”
Despite the ongoing uncertainty over Brexit, Sajwani said Damac was looking for additional plots of land in London, both in the “golden triangle” — the pricey areas of Mayfair, Belgravia and Knightsbridge, which are popular with Gulf investors — and new residential districts like Nine Elms.
Sajwani is considering an investment of “up to £500 million” on a new project in the UK capital.
“We are looking aggressively, and spending a lot of time … finding other opportunities,” he said. “Our appetite for London is there.”
Damac is also considering other international property markets for expansion, including parts of Europe and North American cities like Toronto, Boston, New York and Miami, Sajwani said.
The international drive by Damac comes, however, amid a tough property market in the developer’s home market of Dubai.
Damac in February reported that its 2018 profits fell by nearly 60 percent, with its fourth-quarter profit tumbling by 87 percent, according to Reuters calculations.
Sajwani — whose company attracted headlines for its partnership with the Trump Organization for two golf courses in Dubai — does not see any immediate recovery in the emirate’s property market, or Damac’s financial results.
“(With) the market being soft, prices being under pressure, we are part of the market — we are not going to do better than last year,” he said. “This year and next year are going to be difficult years. But it’s a great opportunity for the buyers.”
But the developer said Dubai was “very strong fundamentally,” citing factors like its advanced infrastructure, safety and security, and low taxes.
In 2018, Damac delivered over 4,100 units — a record for the company — and this year, despite the difficult market, it plans to hand over even more.
“We’re expecting north of 7,000,” Sajwani said. “This year will be another record.”