Comparison of the economic effects of nuclear power and renewable energy deployment in South Korea

Abstract

The South Korean government has been pushing for an energy transition, reducing nuclear power (NP) generation and increasing renewable energy (RE) generation, since mid-2017. The government needs quantitative information on the economic effects of the two sectors. This article aims to derive such information through an input-output (IO) analysis using the recently published 2015 IO table. The production-inducing effects, value-added creation effects, and wage-inducing effects of one dollar of production in the two sectors are analyzed using a demand-driven model. One dollar of production or investment in the two sectors causes 1.606 and 1.718 dollars of production, 0.856 and 0.859 dollars of value-added, and 0.168 and 0.174 dollars of wage, respectively. The economic effects of the RE sector are greater than those of the NP sector. The supply-shortage effects of the two sectors are examined using a supply-driven model. One dollar of supply shortage in the RE and NP sectors brings 1.673 and 1.670 dollars of production failure, respectively. The production failure resulting from the supply shortage in the RE sector is smaller than that of the NP sector. A price-side model also revealed that a 10% increase in the price of output in the NP and RE sectors raises the overall price levels by 0.05858% and 0.01304%, respectively. The RE sector is thus better than the NP sector in terms of minimizing supply shortage effects and price-pervasive effects, as well as maximizing economic effects.