- Continuous Decline in Utilization and Generation: Structural Deficits Entrenched for Jeju’s Gas Power Plants
- Green Hydrogen Yields Minimal Effects Relative to Budget: Cannot Justify Gas Power Expansion
The Alliance for Resource & Climate Justice Center (ARC Center) has published a policy brief titled “Economic Feasibility Assessment of the Planned 300MW Gas Power Plant in Jeju” The plan to build a new gas power plant in Jeju is facing sharp criticism for being anachronistic. This comes at a time when the world is grappling with severe climate disasters, and South Korea itself is under an emergency situation with unprecedented May heatwaves. Furthermore, escalating geopolitical risks—such as the Ukraine-Russia war and conflicts in the Middle East—have fueled deep concerns over expanding power generation based on gas, a volatile fossil fuel.
In addition, there is widespread concern that the construction of the new gas power plant lacks economic viability and will inevitably turn into a stranded asset. This policy brief was published to verify its economic feasibility, which stands as a critical crux among various controversies surrounding the project. It focuses on analyzing whether the construction of the gas power plant and the green hydrogen co-firing and 100% hydrogen combustion plans represent an economically sound choice worthy of public funds and electricity tariff investments.
The ARC Center objectively evaluated the feasibility of introducing new facilities by analyzing the financial status and utilization data of gas power plants currently operating in Jeju. Moreover, it unveiled the economic reality of the green hydrogen plan, which is expected to require astronomical investment costs, to assess the project’s actual efficacy and to propose an alternative direction for energy transition tailored to Jeju’s local conditions.
The analysis revealed a severe lack of economic feasibility for the new gas power plant. First, Jeju’s power grid has no capacity to accommodate additional gas generation. With the commissioning of the Jeju-Mainland HVDC (High Voltage Direct Current) #3 Link, supply capacity expanded from 360MW to 600MW, driving the supply reserve ratio in the summer of 2025 to a historic high of 43.3%. Concurrently, while renewable energy installed capacity surpassed that of fossil fuels for the first time in 2022 and its generation maintained solid growth, gas-fired generation peaked in 2024 and entered a downward trend.
Under these circumstances, the financial status of gas power generation has already entered a deficit structure. Following amendments to the electricity market operation rules in August 2024, which lowered the minimum generation capacity of existing must-run thermal power plants, the utilization rate of the Jeju Combined Cycle Power Plant plunged from 60.6% in 2023 to 39.9% in 2025. Similarly, the Hanlim Combined Cycle Power Plant experienced a collapse from 50% in 2021 to a mere 6.3% in 2025. Due to this drop in utilization, both the Jeju and Namjeju Combined Cycle Power Plants recorded deficits in the tens of billions of won, entrenching a “negative margin” structure where the cost of goods sold exceeds revenue.
Furthermore, under the government’s plan to supply 2.5GW of renewable energy and 1GW of Energy Storage Systems (ESS) to Jeju by 2030, renewable power generation is predicted to more than double current levels around 2030, when the new gas power plant is scheduled to come online. Given that renewable power generation already outpaced gas power generation in 2025, building a new gas power plant in 2030 would merely replicate and lock in the existing deficit structure.
Promoting a “New gas-fired power plant” under the pretext of green hydrogen also presents major economic and technological hurdles. Specifically, the brief highlights several critical flaws:
- The need for massive infrastructure builds, including over 2.7GW of offshore wind (approx. 16.47 trillion KRW) and over 800MW of water electrolysis facilities (approx. 4.13 trillion KRW).
- A severe lack of economic viability, with Jeju’s green hydrogen production cost reaching 594 to 1,200 KRW per kWh-4 to 10 times higher than that of renewable energy.
- A meager CO2 reduction rate of just 24% under 50% co-firing; achieving a 50% reduction in CO2 would require a whopping 77% co-firing by volume.
- A stark supply shortfall, as the projected green hydrogen supply in 2030 (4,242 tons) falls far short of the volume required for 50% co-firing in four 50MW gas turbines (approx. 14,000 tons).
- Double spending on turbines due to the inefficient approach of installing 50% co-firing turbines first, only to replace them later with 100% combustion turbines.
The ARC Center emphasizes that the configuration of a combined cycle plant itself is structurally unsuited for a renewable energy backup role. Due to the thermal stress and thermal inertia of steam turbines, frequent startups and shutdowns are highly constrained, forcing a “must-run” operation. This unnecessary operation driving up green hydrogen demand and triggering a surge in nitrogen oxide (NOx) emissions. If the genuine purpose of building the gas plant had been to serve as a backup resource for expanding renewables, it should have been designed as an open-cycle (simple-cycle) system without steam turbines. This deficiency clearly demonstrates that the new gas power plant was never engineered to support the growth of renewable energy.
Regarding these findings, Jungdo Kim, Director of the ARC Center, stated: “This analysis unequivocally confirms that the plan to construct a new gas power plant is a reckless project completely devoid of economic viability. As this is a massive project involving an investment exceeding 500 billion KRW, the government must halt all related procedures immediately and conduct a comprehensive re-evaluation of the project’s feasibility.”