Impacts of a Japan–South Korea power system interconnection on the competitiveness of electric power companies according to power exchange prices

In many regions, international power system interconnections provide economic, energy-security, environmental, and technical benefits. In contrast, such interconnections remain scarce in Northeast Asia. In 2016, after approving a joint memorandum of understanding between major electric power companies from China, Japan, South Korea, and Russia, related initiatives regained momentum in the region. Nevertheless, the corresponding developments in Japan remain limited, mainly owing to the lack of involvement of Japanese electric power companies. This study represents a pioneering attempt to provide an economic assessment based on power exchange prices of a power system interconnection between Japan and South Korea regarding the competitiveness of electric power companies in terms of competitive business segments and strategic consequences. We found that although the position of Japanese generators may slightly deteriorate, that of the supply segment would substantially improve, thus suggesting that more opportunities than threats are derived from the interconnection. This promising outcome may foster the adoption of an interconnection with South Korea considering the positive economic and business perspectives in Japan. Furthermore, realizing the interconnection may improve the energy security and air quality in the region.