South Korea’s state-run power generators have been unable to provide long-term financial forecasts for their coal-fired power assets, including projected utilisation rates, early closure costs and carbon-related losses beyond 2030, raising questions over the financial viability of the government’s planned coal phaseout by 2040, according to a recent report.
The report by climate think tank Solutions for Our Climate (SFOC) said five state-owned generation companies submitted data to Seoul-based lawmaker Lee Hak-young’s office in March on their coal-fired assets and unrecovered investment costs as of 2025.
But the firms — Korea South-East Power Co (KOEN), Korea Southern Power Co (KOSPO), Korea East-West Power Co (EWP), Korea Western Power Co (WP) and Korea Midland Power Co (KOMIPO) — said it was difficult to calculate long-term profitability for coal plants due to uncertainty over key assumptions after 2030.
The companies said long-term projections were difficult because variables such as fuel costs, wholesale electricity prices, plant utilisation rates, electricity market reforms, power demand, weighted average cost of capital and carbon permit allocations had not yet been finalised, according to the report.
The findings come as the South Korean government pushes ahead with a broad energy transition strategy, which calls for achieving 100 gigawatts (GW) of renewable energy capacity by 2030 and phasing out coal-fired power generation by 2040.
Under the plan, 21 coal-fired units that would still have remaining design life after 2040 would be retained as backup power sources for energy security purposes. The government also proposed consolidating the five state-owned generators, which heavily rely on coal, into renewable energy-focused entities.
SFOC warned that without a detailed reassessment of coal assets, the restructuring could amount to little more than shifting risky assets into a different organisational structure.
“To implement the 2040 coal phaseout and electricity market reforms, the future value and impairment risks of coal and LNG assets held by KEPCO and state generators must first be evaluated,” Kim Won-sang, communications officer at SFOC and author of the report, said in a statement.
The report said the lack of long-term financial projections from state utilities contrasts with growing international concern over stranded asset risks tied to coal generation.
According to a study published in the academic journal Nature Sustainability, Korea Electric Power Corp (KEPCO) is among companies globally with the highest exposure to stranded coal assets under a scenario aligned with limiting global warming to 2°C above pre-industrial levels.
The study estimated KEPCO’s stranded coal asset exposure at between US$22 billion and US$33 billion, equivalent to roughly KRW32 trillion to KRW49 trillion.
KEPCO was grouped alongside major Asian utilities including India’s NTPC, Indonesia’s PLN and India’s Adani as companies facing elevated stranded asset risks from coal generation. The study also identified KEPCO as one of the top holders of stranded gas and oil-fired assets.
SFOC said that of KEPCO’s roughly KRW73.8 trillion in electricity purchase costs in 2024, about KRW8.2 trillion was paid as capacity payments, including approximately KRW6.15 trillion directed to fossil fuel power plants.
Capacity payments compensate generators for maintaining available generation capacity regardless of whether electricity is actually produced.
The think tank said the current market structure continues to channel substantial financial support toward maintaining existing fossil fuel infrastructure.
The report recommended that the government and KEPCO disclose long-term financial projections for coal and LNG assets, conduct stranded asset audits, clarify compensation mechanisms for early plant closures and improve transparency in electricity market settlement rules as part of the transition process.
