KEPCO has paid 3.17 trillion won ($2.2 billion) in compensation over the past five years and a half to power plants that could not generate electricity because of insufficient transmission capacity. The payments cover the cost of idling generators that were fully built but had no transmission lines available to carry their output. The case also exposes a structural problem in which costs stemming from delayed grid expansion flow into power purchase expenses and ultimately raise electricity bills for the public.
According to a report on the status and issues of public institutions released by the National Assembly Budget Office on the 22nd, electricity that could not be generated because of transmission constraints totaled 112,430 gigawatt-hours from 2021 through the first half of this year. KEPCO paid a combined 3.17 trillion won in make-whole adjustment payments (MAP) during that period, regardless of whether generators actually produced electricity. The scheme compensates generators included in a dispatch plan for forgone profits when the Korea Power Exchange orders them not to run.
The concern is that costs arising from the shortage of transmission lines can translate into higher electricity bills. Settlement payments made to generators are reflected in KEPCO's power purchase costs through the electricity market. Power purchase costs are a major component of the total cost base used to calculate electricity rates. Critics say the burden created by delays in grid expansion could eventually push rates higher.
The root cause is an infrastructure mismatch in which transmission construction cannot keep pace with the rollout of generation capacity. Solar and other generation facilities take one to three years to build, while high-capacity 345-kilovolt transmission lines require nine to 13 years to complete, including site selection, environmental impact assessments and consultations with residents. Analysts say a lack of advance planning linking power plant construction with grid expansion has left generators repeatedly unable to produce electricity despite having the equipment in place.
Conditions are unlikely to improve soon. As of the first half of this year, 12 power plants nationwide, including the Taean coal-fired plant and the GS Dangjin combined-cycle plant, face restrictions on generation because of transmission constraints. The constraints are not scheduled to be resolved until December 2028 for five plants in the Chungcheongnam-do region and October 2027 for seven plants on the east coast. With grid expansion running behind schedule, compensation payments tied to curtailed generation are expected to continue running into trillions of won for years.
A bigger issue is that the transmission shortage is spreading to advanced industrial complexes. Dedicated transmission projects for major industrial complexes have reached only 1% to 20% completion. The Yongin advanced system semiconductor cluster plans to build 14 lines at the 345-kilovolt level with an investment of 3.7 trillion won, but the project was only 1% complete as of the end of 2025.