Lee cautions against preferential nuclear power access for big firms

The proposed privilege would let selected major steelmakers buy electricity directly from nuclear generators at potentially lower and more stable prices. President Lee Jae Myung warned that this could concentrate nuclear power’s benefits among a few corporations while the public bears plant-related risks and social costs.

The ministry objected to giving particular consumers exclusive access to cheaper nuclear generation. It said this could shift electricity costs onto other consumers and create fairness concerns. The arrangement could also raise procurement costs for Korea Electric Power Corp., the state-run utility.

That could mean higher electricity rates for households and manufacturers outside the favored group. Lee asked whether granting the privilege to one steelmaker would lead companies in semiconductors and other energy-intensive industries to demand the same treatment. The government’s internal discussions reportedly rejected nuclear-based PPAs for steelmakers last month.

A nuclear power purchase agreement, or PPA, is a proposed arrangement for a company to buy electricity directly from a power generator. In this case, an energy-intensive steelmaker would purchase electricity from a nuclear plant instead of relying only on electricity supplied through the wider market.

The direct contract could give the steelmaker a more stable and affordable power supply. That matters because hydrogen-based steelmaking requires substantial electricity, and producing hydrogen carries high electricity costs. Lower-cost nuclear power could therefore help make the shift commercially viable.

South Korea’s environment and energy ministry effectively rejected the idea for selected companies. It worried that allowing one consumer to monopolize low-cost generation would be unfair and could increase Korea Electric Power Corp.’s procurement costs. The proposal was discussed internally for steelmakers, but the ministry reportedly decided against introducing it.

South Korean steelmakers are seeking nuclear-based PPAs to support hydrogen-based steelmaking. The proposed arrangement targets energy-intensive industries that want to reduce carbon emissions. The ministry also worried that semiconductor companies and other heavy electricity users could later seek identical treatment.

Steelmakers are replacing coal with hydrogen in the ironmaking process. That change requires substantial amounts of electricity, especially because hydrogen production is power-intensive. Stable, affordable, low-carbon electricity would help control those costs and support production that can compete internationally.

The pressure is growing because the European Union’s Carbon Border Adjustment Mechanism has entered its definitive phase. The steel industry says affordable clean electricity is essential for a commercially viable transition. At the same time, Lee’s K-GX strategy identifies steel decarbonization as a central priority, with POSCO Holdings involved in a flagship low-carbon steel ecosystem project.

The article does not state how many megawatt-hours hydrogen-based steelmaking requires. It only says the process needs substantial amounts of electricity and that hydrogen production carries high electricity costs. A precise comparison with conventional coal-based steelmaking is therefore unavailable from the source.

The basic difference is the production route. Hydrogen-based steelmaking replaces coal with hydrogen during ironmaking. Producing that hydrogen requires significant electricity, so the steel plant’s energy needs include both the steelmaking process and hydrogen supply. Coal-based production does not use that same hydrogen-production step.

This larger or more complex electricity requirement helps explain the industry’s request for stable, affordable, low-carbon power. The article presents such access as essential to commercial viability, but it does not quantify the increase over conventional production. The ministry’s rejection means the proposed nuclear supply arrangement was not introduced for steelmakers.

The ministry warned that selected companies’ access to cheaper nuclear electricity could redistribute costs across the power system. If particular consumers receive low-cost generation, other consumers may bear a larger share of the system’s costs. The ministry described this as a fairness concern.

The key mechanism involves Korea Electric Power Corp., the state-run utility. Exclusive access could increase the utility’s power procurement costs. Those higher costs could then contribute to increased electricity rates for households and manufacturers that do not receive the special access.

The result would be a possible transfer of economic benefits to a small group and higher prices for everyone else. President Lee used this concern to oppose exceptional privileges for major corporations. The ministry also feared that one approved steelmaker could encourage semiconductor companies and other energy-intensive industries to seek comparable treatment.

The European Union’s Carbon Border Adjustment Mechanism makes low-carbon production more urgent for South Korean steelmakers. The mechanism places a carbon price on certain carbon-intensive imports. The article says it entered its definitive phase in January, increasing the pressure on exporters.

South Korean steelmakers therefore need to reduce emissions while remaining globally competitive. Hydrogen-based steelmaking is one proposed route because it replaces coal with hydrogen in ironmaking. But hydrogen production requires substantial electricity, and high power costs can make the transition difficult to afford.

That is why the industry views stable, affordable, low-carbon electricity as essential. Steelmakers sought direct access to nuclear generators through proposed PPAs, hoping to support commercially viable production. The ministry effectively rejected the proposal, while the government’s K-GX strategy still identifies hydrogen-based steelmaking as a major industrial priority.

Regulated electricity markets typically organize generation, networks, and retail supply through utilities and approved pricing rules. Costs and risks are shared across the customer base, while benefits from the system’s generation resources are not automatically reserved for one company. This structure supports broad access and common rates.

The article’s example shows how a special deal could alter that balance. If one steelmaker bought cheaper nuclear electricity directly, Korea Electric Power Corp. could face higher costs to procure power for everyone else. The ministry said those costs could raise rates for households and other manufacturers.

The concern is therefore broader than one contract. A privileged arrangement could shift benefits toward selected energy-intensive companies while shifting financial costs onto other consumers. It could also encourage semiconductors and other industries to seek similar exceptions. Lee warned that the public would still bear nuclear power’s risks and social costs.