A study on the profitability improvement of LNG generation: Focused on variable cost margin and restrictive price bidding pool

In this study, we analyzed the factors affecting the variable cost margin required for the recovery of investment costs for LNG generators and proposed a restrictive price bidding pool(RPBP). For this, we investigated the issues of Korean LNG generators focusing on the profitability and reviewed some alternatives for overcoming these issues. Next, we calculated the minimum required variable cost margins for 23 Korean LNG generators, and obtained an average of 16.7 KRW/kWh. We also performed multiple regression and found that the investment cost, operation and management cost, and the allocation time for price-setting schedule energy(PSE) have statistically significant effects on the minimum required variable cost margin. Finally, we proposed a RPBP based on the results and analyzed the effect of the RPBP on the electricity market from the perspective of game theory. This study is academically and institutionally meaningful in that it is the first attempt to design the RPBP system using the real-world data of LNG generators.