North Korea presents a chance to get creative with energy

Despite dilapidated power generation and distribution infrastructure, total reliance on imported oil and international sanctions, North Korea’s energy needs are being met by creative domestic solutions and a newly entrepreneurial citizenry, said an expert on the isolated nation’s power sector.

While energy sanctions are unlikely to drive North Korea into giving up nuclear arms, energy inducements could be a part of a solution to the long-running peninsula crisis, noted David Von Hippel, an expert on North Korea’s energy sector at the Nautilus Institute, who recently spoke at Seoul’s  East Asia Foundation.

And if North Korea ever does open up to the international community, Von Hippel believes it could provide a blank slate for some of the most advanced and environmentally friendly technologies – a bottom-up process that would be more efficient than rebuilding its creaky existing generation facilities and grid top-down.

A dilapidated national grid

Conventional wisdom sees North Korea as an industrial basket case with energy supplies that are unreliable and spotty. This wisdom is largely accurate.

“The general trend has been degradation over the years since the 1990s,” Von Hippel said of the national grid. “Goods were tied to the economy of the USSR, and when the USSR collapsed, the market went away, and spare parts for factories were no longer available.”

As a result, many industrial facilities were abandoned.

For related reasons, the power supply was impacted. Power plants face “many problems due to lack of spare parts and fuels; many boiler units in power plants are reportedly not in operation,” Von Hippel said. “And plants are heavily polluting, with large losses and low efficiency.”

Hydro, the leading source of electricity generation in the mountainous state, is seasonally dependent and related output rises and falls; capacity is “typically much less than 50%,” he said.

The nation has billions of tons of coal reserves – albeit of differing qualities – “but it is often used inefficiently,” Von Hippel noted. Coal is also difficult to transport on the rickety national transport net.

The largest state power plant has an output capacity of 1,600 megawatts, but in reality that may be only 500-600 megawatts, he said. A thermal power plant near Pyongyang has been under construction for nearly 10 years, “but there is no evidence it is running yet,” the expert noted.

North Korea’s key national asset – its nuclear reactor at Yongbyon, which produces fissile materials for nuclear arms  – supplies virtually no power.

“The reactor at Yongbyon but has never been connected to the grid,” said Von Hippel. “It has provided heat for the Yongbong complex and some housing around there, but it is only 5 megawatts, so it is tiny. And the experimental light-water reactor that has been under construction since 2010 has not been turned on yet.”

Von Hippel’s research, which encompasses everything from press reports to Chinese customs data, indicates that the country has a nominal generation capacity of 8-10 gigawatts; in reality, it may be as low as 2-3 gigawatts. And a key energy consumer is Pyongyang’s 1.1 million-man military, which devoured an estimated 31% of oil and 24% between 2010-2014.

While Pyongyang, manages to say lit up, electricity distribution is nationally uneven. “Some areas of DPRK see very little grid,” said Von Hippel, using the country’s official acronym, which stands for the Democratic People’s Republic of Korea.

Nationally, there has been an estimated 60% reduction in energy use since the early 1990s, Von Hippel has found. Home heating, public lighting, manufacturing output and citizens’ vehicular travel have all suffered.

Oil flows, self-sufficiency high

North Korea has no domestic oil source, making it entirely reliant on imports. China, which pipes crude oil into the country under the bordering Yalu River, stopped reporting its oil exports to North Korean in official economic data in 2014, Von Hippel noted. It also negotiated exemptions of crude oil exports from UN sanctions, most recently in 2017.

China has two reasons to keep the oil flowing, Von Hippel said. One is political: Beijing is reluctant to press North Korea too far – “they probably don’t want an influx of refugees coming across the border lacking energy and food,” he said.

Two is technological. “For technical reasons, they have to keep it flowing, as the oil is ‘waxy,’ and if you stop the pipeline, it will ‘freeze’ in place,” he explained.

In recent months, Chinese and Russian vessels have been caught supplying fuel to North Korean vessels at sea. “I think more oil is getting into the country than we know about, somehow,” Von Hippel said, “probably from Russia,” which shares a border with North Korea in the northeast.

As a result, the DPRK’s ostensibly precarious fuel situation appears stable, after a brief price-spike in mid-2017, when some prices more than doubled. “Retail fuel prices have moderated in the DPRK, they are down to nearly the level they were at three to four years ago,” Von Hippel said. “That is probably due to a combination of reduced demand and better supply, or less fear about impending supply.”

At home, North Korea has two energy sources to hand: “The total energy situation is dominated by two fuels: coal and biomass,” said Von Hippel. “Those are all domestic. “

North Korea’s plentiful coal supplies are foreign exchange earners. Between 2009 and 2017, there were major exports to China, where some varieties of North Korean coal are particularly suited to some Chinese metallurgical ventures, Von Hippel noted.

In 2016, $1.2 billion worth of coal exports formed Pyongyang’s major foreign currency earners – second only to $2 billion worth of labor exports. But with Beijing enforcing sanctions in earnest since 2017, coal exports dried up. Anecdotally, some coal that was exported has been shifted to the domestic market, but Von Hippel doubts that mining operations are continuing – even if inventory was sold locally.

Biomass – essentially, wood, which is easily sourced by human labor – has replaced much state-supplied energy. However, it is used “at low efficiency, with resulting deforestation and soil degradation.”

Despite the necessity of importing oil and despite the clunky inefficiencies of the national power generation and distribution net, North Korea actually has, thanks to these assets, a small net power surplus, Von Hippel discovered.

Creative energy

With official power supplies flickering on and off, average North Koreans are fending for themselves.

North Koreans became entrepreneurial during the famines of the 1990s, when survival back markets sprung up to supply a population starved of food and medicine with products sourced from China. The jangmadang, or private markets, have since gone from black to grey, have blossomed nationwide and have vastly upgraded economic efficiencies. They have also weaned the public off state distribution and engendered a consumer sector.

Creativity has been applied to transport. Wood has become a fuel of choice, with vehicles converted with gasifiers. “There are biomass fuel trucks – though they are not used so much in the city, but in the countryside,” said Von Hippel.

Sharing resources is another innovation. “You see multi-use vehicles, like 2.5 ton trucks – there are thousands of them in the DPRK – that are used to carry goods, people and soldiers, all at the same time,“ he said.

And the newly-moneyed public is increasingly turning to private, rather than state energy resources, with citizens and families acquiring their own personal equipment.

This reporter, visiting the North Korean city of Sinuiju in 2016, saw hundreds of solar panels and scores of diesel- or gasoline-fired generators on the roofs of apartment balconies in the city. Informed sources said that while Sinuiju looks almost completely switched off at night, many – if not most – households simply black out their windows, in order not to draw the attention of authorities.

Von Hippel estimates, based on Chinese customs data, that the total capacity of the 230,000 engine generator units exported to North Korea between 1993 and 2017 is 1.3 gigawatts. And while solar cells are not a national source of power, they are adequate for households to run TVs and entertainment systems.

Increasing access to everyday energy is reflected in recent imports of small vehicles. “In the last 3-4 years, there have been huge numbers of imports – in 2017, 130,000 scooters or electric bicycles,” said Von Hippel.

He is unconvinced of the efficacy of energy sanctions, which he considers a blunt instrument.

“The DPRK has options that render sanctions ineffective,” he said. “The goal is to cause pain for the regime and elites so they will have incentives to give up nuclear and missile programs,” but the targets are probably not feeling the damage.

“The elite will have energy sources,” he said. Moreover, sanctions breed countermeasures: “The more you reduce means of it getting it into the country through sanctions that are on the books, it is going to push more off the books.”

Building a new future

Energy could be one inducement for North Korean denuclearization, Von Hippel suggested. The international community’s provision of energy assets – notably oil and a light-water nuclear reactor – were key elements in the 1994 “Agreed Framework” agreement, which has since collapsed. Liquid natural gas, he suggested, would be appropriate, as it is difficult to divert for military use.

“Denuclearization will happen in very small steps in a very long time,” he said. Amid this process, “there are opportunities to bring North Korean delegations on study tours of energy facilities and opportunities for humanitarian aid to clinics and kindergartens, like heating systems: Small, fast projects. You have to start small.”

“Why not, rather than shooting for a North Korea that looks like a South Korea today, shoot for what a South Korea looks like in 2050?” he asked. “There is the opportunity to install smart grids, renewable generators and effective and sustainable options that a lot of countries aspire to, but cannot get to rapidly, due to a backlog of existing infrastructure.”

And a system based on renewables would synch with a central national belief. “North Koreans have a self-reliance philosophy,” Von Hippel said. “That is something we can work with.”