Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

This paper attempts to evaluate the validity of the plan for no nuclear powerand low-carbon electricity generation mix. For this purpose, this paper analyzesthe effects of changes in the fuel ratio of the mix on the cost and risk, byapplying the mean-variance theory. Therefore, optimal electricity generationmixes, which reflect various external costs considered in the 7th plan forelectricity supply and demand in 2015, are derived by determining an efficientfrontier. It turns out that the electricity generation mixes corresponding toboth the7th plan for electricity supply and demand and the new government’spolicy are inefficient, compared to the optimal electricity generation mixes. It is also found that these mixes have low cost but high risk, compared tothe electricity generation mix in 2014, which is the base year of the 7th planfor electricity supply and demand. The main reasons for these results comefrom the fact that increases in the proportions of LNG and renewable energyraise the risk level of the electricity generation mix, under the current coststructure. Therefore, based on these results, it can be shown that the planto substitute nuclear and coal (bituminous) for LNG and renewable energyincreases the cost and risk of the electricity generation mix.