Invest KOREA

One of the key election pledges of the Moon administration since its inauguration in 2017 was to provide ‘clean and safe’ energy. The vow came particularly when fears of fine particulate matter (PM2.5) pollution and the potential risks of a nuclear power plant accident resulting from the 2016 earthquake with a local magnitude (LM) of 5.1 that occurred on the Korean Peninsula which had been known as one of the least earthquake-prone countries in the world began to spark public concerns over environmental and health safety. South Korea’s energy policy since then has narrowed down to curtailing its reliance on nuclear energy while expanding electricity generation from renewable sources to be in keeping with the world’s commitment to increasing the share of renewables. Since Korea has maintained the leading position in nuclear technologies, such turnabout has proved a historic turning point that created a seismic shift in Korea.

Wind and Solar Resources Development to Reach 20% Renewable Energy Target by 2030

The South Korean government unveiled its energy draft in 2017, called the “Action Plans for Renewable Energy 3020,” which entails guidelines to drive up the share of power generation derived from natural sources from 7.6 percent to 20 percent by the end of 2030.

The primary goal of the action plans is to set a 20 percent renewable energy target by 2030, reaching 95 percent of new electricity generation in the overall supply from clean energy sources like (photovoltaic, PV) solar or wind power in consideration of business fundamentals such as power system stability and security, businesses’ energy distribution capabilities and potential capacity to meet the growing demand for renewables in Korea.

Accordingly, renewable energy production in Korea is forecast to total 63.8 GW by the year 2030, adding 48.7 GW over the 2018-2030 period from 15.1 GW level in 2017.

Most of the increase is likely to come from solar and wind. Solar (PV) energy is set to make up 63 percent (30.8 GW) of the production, whereas wind is to represent 34 percent (16.5 GW) of the overall renewable power generation capacity. And the “Third Energy Master Plan” further elaborates upon plans to raise the share of renewable energy in power generation up to 30-35 percent by the end of 2040.

Solar panel installation in Korea has grown much faster and wider than the initial target thus far since the 2017 energy policy has been laid out, but things are not quite the same for wind turbines as some of large-scale wind power development projects have yet to put through. Fortunately, the administration’s strong ambitions to spur facilitating more wind farms nationwide are anticipated to help fuel the widespread adoption of wind power generators in Korea.

Action Plans for Renewable Energy 3020

* Source: Ministry of Trade, Industry and Energy (MOTIE), “Action Plans for Renewable Energy 3020”

Post COVID-19: Green New Deal and Carbon Neutrality by 2050

The government rolled out the Korean New Deal in July last year. With the Green New Deal, one of two main pillars of the Korean Version of the New Deal centered on the Green and the Digital New Deal, the authorities will further stimulate investment in the renewable energy sector in the short run.

The Green New Deal outlines a set of policies largely aiming at expanding investments in clean energy schemes to ramp up wind, solar and hydrogen energy capacity. The scope of the initiative, however, isn’t merely limited to renewable energy expansion, but rather focusing a lot more on turning the green energy business into a new growth driver, thereby creating quality energy jobs.

Green New Deal - South Korea’s Renewable Energy Policy

Type	Major investment projects and improvement in legislation	Budget (KRW 1 trn)		Jobs (unit: 10,000)
		20 (Supplementary budget) to ’22	’20 (Supplementary budget) to ’25	’20 (Supplementary budget) to ’25
Wind	- Help conduct feasibility assessment to substantiate business viability and measure wind direction and speed across up to 13 districts nationwide to find the best possible places to form large-scale offshore wind farms (mounted on both floating and fixed- bottom turbines) - Systematically develop demonstration complexes	4.5 (National budget 3.7)	11.3 (National budget 9.2)	3.8
Solar	- Implement a profit-sharing system to encourage civic engagement in a community - Expand subsidized loans for farming communities and industrial clusters - Provide solar incentives offered to energy self-sufficient households or commercial buildings to encourage installation of residential renewable energy system (200,000 households)
Hydrogen	- Facilitate the concept of the “hydrogen city” - Develop core technologies commercially applicable to the full lifecycle of hydrogen economy ranging from production to end-user consumption
A Fair transition to clean energy	Provide bailout programs for companies at risk of downsizing in the oil and gas sector to help them switch to renewable energy business

* Source: Korean New Deal Policy (※ The budget and employment target on the table is based on data sources on overall policy information)

Moreover, Korea has reaffirmed its commitment to the global transition towards sustainable and clean energy, while inspiring civic engagement for environmental sustainability by announcing the “Carbon Neutrality Action Plan 2050,” an official statement to achieve a goal of net-zero carbon emissions by 2050 at the end of 2020.

Technically, the solar (PV) value chain in Korea, on the whole, has been pretty well structured. In addition, tougher and more expansive environmental regulations which have come into effect across the manufacturing industry (to meet global requirements) such as emissions certification and minimum energy efficiency standards have started to demand higher technological capabilities of those who are interested in entering the Korean market.

Chances are the wind energy industry in Korea, though less developed than the PV sector, is going to scale up the supply chain growth involved in production and distribution in cooperation with a variety of multinational corporations under the state-led policy to advance large-scale renewable power generation. On the back of such efforts, foreign investment in the wind energy sector in Korea is expected to heat up.

Meanwhile, the hydrogen industry, which still in its infant stage globally, is predicted to be a future game changer on the way to the global energy transformation, which appears to be pushing the Korean government to take a more aggressive approach in technology development and investment in the hydrogen energy sector on the one hand, and to expand technology partnerships with the world’s leading companies on the other hand.

The renewable energy industry is part of emerging business sectors that have enormous potential to create new business models by converging with ICT or pioneering technologies of Industry 4.0. As such, Korea is taking further steps to streamline industry mandates and make full use of digital technologies so as to identify dynamic entrepreneurial opportunities as well as innovative models. On this path toward the global energy transition, we look forward to witnessing more and more global business leaders armed with brilliant ideas and technological expertise coming into Korea.

By Ilhyun Cho( ihcho@keei.re.kr)
Korea Energy Economics Institute

The opinions expressed in this article are the author’s own and do not reflect the views of KOTRA