A rare earthquake in South Korea was triggered by the country's first experimental geothermal power plant, a team of government-commissioned experts said Wednesday.

The southeastern port city of Pohang was rattled by a 5.4-magnitude earthquake in November 2017 -- the second-most powerful tremor ever in the normally seismically stable South.

Dozens of people were injured and more than 1,500 left homeless -- while a nationwide college entrance exam was postponed in an unprecedented move as authorities scrambled with recovery efforts.

A year-long government-commissioned study pointed to the geothermal power plant as the cause.

The plant works by injecting high-pressure water deep underground to tap heat from the Earth's crust, but the process had produced micro-sized seismic activity as a result, said Lee Kang-kun, who led the research.

"And as time passed, this triggered the earthquake in Pohang," he added. "We concluded that the Pohang earthquake was a 'triggered quake'. It wasn't a natural earthquake."

Pohang residents filed a lawsuit against the government after the quake, and following the assessment Seoul expressed its "deep regret".

The geothermal plant -- which was temporarily suspended during the study -- will be "permanently shuttered", the trade, industry and energy ministry said in a statement.

It cost around 80 billion won ($71 million) to build and test operations began in 2016.

Unlike neighbouring Japan, the Korean peninsula rarely experiences significant quakes but seismic activity is closely monitored as a spike can be the first indication that North Korea has staged a nuclear test.

The country's most powerful quake to date was a 5.8-magnitude tremor that struck Gyeongju, also in the southeast, in September 2016.

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