Reducing Nuclear Power Share Could Cause 5.3 Trillion Won Loss, Study Finds

A study analyzing the “8th Basic Plan for Electricity Supply and Demand,” which aimed to reduce nuclear power and expand renewable energy, revealed that it could cause long-term economic losses of 5.3 trillion Korean won.

Professor Ahn Kwang-won’s team from Yonsei University’s Department of Industrial Engineering published a research paper titled “The Impact of Nuclear Energy on Social Welfare and the Future of Renewable Energy: Focusing on the Case of Korea” in the Nature sister journal *Humanities and Social Sciences Communications* on the 9th. The research was supported by the Ministry of Science and ICT and the National Research Foundation.

◇“Increasing Nuclear Power Share Boosts Social Welfare”

The research team developed an economic model reflecting generation costs and actual electricity shares for four energy sources: nuclear, renewable, liquefied natural gas (LNG), and coal. Using a “Dynamic Stochastic General Equilibrium (DSGE)” model, they quantified both the economic benefits of nuclear power and potential accident risks. The analysis confirmed that increasing the share of nuclear power leads to long-term growth in overall social welfare. The cost-effectiveness of nuclear power was found to outweigh economic damages from potential accidents.

The team also applied actual policies to their model. If the 7th Basic Plan for Electricity Supply and Demand—maintained under former President Park Geun-hye’s administration, which prioritized nuclear expansion—were implemented, social welfare would increase by 0.67%.

Conversely, applying the 8th plan under former President Moon Jae-in’s administration, which pursued nuclear phase-out and renewable expansion, social welfare would decrease by 0.63%. Converting this 0.63% loss to 2021 household consumption expenditure standards, the economic damage would amount to approximately 5.3 trillion Korean won.

◇“Energy Policy Must Not Shift with Administrations”

The team noted that as renewable energy’s cost-effectiveness has rapidly improved, the welfare reduction issue could soon disappear. If the levelized cost of energy (LCOE) for renewables decreases by over 19.2% compared to 2021 levels, expanding renewables could increase social welfare.

They emphasized minimizing policy uncertainty rather than engaging in a divisive debate between nuclear and renewables. Policymakers should design a consistent, science-based energy transition path.

The research team stated, “The most beneficial approach for the Korean economy is to halt policy shifts with each administration and maintain transparent, consistent energy policies to reduce market uncertainty.”