Korea Power Exchange (KPX), a nonprofit organization, plays a key role in South Korea’s power industry.

KPX ensures the reliability of power supply by coordinating the flow of electricity in all regions of South Korea.

As a neutral and independent organization, KPX also ensures the fair and transparent management of the power market.

To secure future power reliability, KPX runs a sophisticated national planning process for generation and transmission expansion by active cooperation and coordination with the government.

What is the Cost-Based Pool?

The current Korean electricity market is called Cost-Based Pool, since the market price reflects actual generation costs. Under the pool system, all generators are obliged to submit the details of their production costs, which are independently checked and approved by the Generation Cost Assessment Committee (GCAC). Using this information, KPX prepares a Price Setting Schedule and calculates the system marginal price (SMP) based on the principle of minimizing the system variable cost.

• System Marginal Price (SMP) is determined as the most expensive generation available for the trading period in the Price Setting Schedule.
• After real-time dispatching, settlement for the energy produced takes place based on the market price (SMP, Capacity Payment).

What KPX has done so far?

The most critical service in the power market is the coordination provided by the system operator. As a neutral, independent and nonprofit organization, KPX can ensure safe and reliable system operation. Thus, since its establishment in 2001, KPX has exerted considerable effort toward this end.

Mission

Korea Power Exchange's (KPX) mission is stipulated in the Electricity Business Law. KPX will become a driving force for national development by performing its missions given with sincerity by the country.

Vision

KPX, as an organization that operates the national electric power system and market, has played a pivotal role in developing the national electric power industry. We will become the world's best professional institution that will leads the future energy society by providing the public with the best service possible.

2020 Strategy

With the purpose of achieving the vision of 「leading the future energy society by providing the public with the best service possible」, KPX has established mid- and long-term management strategies to be completed by the year 2020. Its 3 strategic directions include: 'improvement of core business services', 'provision of customer-oriented service', and 'securing dynamic force for sustainable growth'. The 6 strategic objectives include: 'securing the reliability of the electric power system', 'ensuring efficient operation of the electric power market', 'realization of customer-satisfying management', 'embodying the idea of a socially responsible management', 'constructing the foundation for sustainable growth', and 'creating a new growth engine'. To that end, KPX analyzes and evaluates its achievements in conjunction with its strategic performance management on a yearly basis and provides feedback for the public, enhancing the possibility to fulfill its objectives.

In order to improve the efficiency of the electric power industry which has been the basis of South Korea's industries, the power generation sector of the Korea Electric Power Corporation (KEPCO) was separated into 6 companies in April, 2001 in accordance with the government policy. This is when Korea decided to introduce a competitive structure to the electric power industry that had been monopolized by the state for more than 40 years. Accordingly, the electric power market was newly established and KPX was founded as a non-profit public organization on April 2, 2001. This was done based on the Electricity Business Law with the purpose of operating a fair and transparent electric power market and system as well as establishing a long-term basic plan for electricity supply and demand.

Power market operation

KPX has introduced competition into the generation sector that accounts for around 70% of the total generation cost and operated the competitive generation market (Cost Based Pool).

Power system operation

KPX also operates generators, transmission lines and substations scattered the country, supplying high-quality electric power on a stable basis.

Establishment of the basic plan for long-term electricity supply and demand

In order to stabilize electricity supply and demand in the long run, KPX has biennially established a basic plan to secure stable electric power facilities in case of the future increase in electricity demand.