1. Reasons for Enactment

Until now, Korea has operated a centralized power system in which large-scale power plants are built and developed in coastal areas and electricity is delivered via long-distance grids to be consumed in metropolitan and other regions located away from power generation sites.

However, it is now necessary to promote distributed energy, where electricity is produced and consumed within regions with a focus on power plants situated in close proximity to the place of consumption instead of remotely located large-scale power plants. Building large-scale power plants and long-distance grids in response to growing energy demand poses several limitations, such as vulnerabilities in risk management and social conflict caused by low levels of community acceptance, making it necessary to lay the groundwork for a stable and balanced supply of energy through the expansion of distributed energy.

This highlights a need to promote the consumption of locally produced energy, which resulted in the enactment of the Special Act on Promotion of Distributed Energy (Promulgation No. 19437; enacted on June 13, 2023; enforced on June 14, 2023) and accordingly, this Decree prescribes matters delegated by the Act and matters necessary for the enforcement thereof.

2. Major Provisions

A. Prescribe the scope of distributed energy, and size and other requirements for small to medium nuclear power generation businesses (Articles 2 through 5)

B. Prescribe procedures necessary for the formulation and enforcement of distribution energy promotion master plans and action plans, and matters for fact-finding surveys to determine the extent of distributed energy promotion (Articles 6 to 7)

C. Prescribe registration requirements for distributed energy business entities, and disposition criteria for each violation that may be committed by distributed energy business entities (Articles 8 to 9)

D. Prescribe the scope of persons subject to compulsory installation of distributed energy equipment, matters to be included in equipment installation plans, regional and yearly installation quotas, review standards and procedures, etc. (Articles 10 through 19)

E. Specify details of the distribution network management policies of electric distribution business entities, information to be shared between electric distribution business entities and distributed energy business entities, details of fact-finding surveys for expanding the distribution networks of electric distribution business entities, etc. (Articles 20 through 23)

F. Prescribe penalty surcharge criteria and calculation methods for each violation that may be committed by electric distribution business entities, matters that may be requested from electric distribution business entities in order to supervise power distribution, etc. (Articles 24 through 27)

G. Prescribe regions and business entities subject to power system impact assessments, detailed assessment criteria, assessment procedure, and matters necessary for designating power system impact assessment agents (Articles 28 through 35)

H. Prescribe matters necessary for follow-up, including procedures and requirements for designating special distributed energy zones, efforts to be made by electric distribution business entities to promote special zones, etc. (Articles 36 through 52)

I. Designate an institution to calculate the benefits of distributed energy, and specify support necessary to increase the benefits and costs, etc. that may be subsidized to promote distributed energy businesses (Articles 53 through 64)

J. Prescribe the types of and eligibility for insurance to be purchased by distributed energy business entities, and specify prohibited acts for distributed energy business entities and acts that may undermine orderliness in distribution as stipulated in the Act (Articles 65 through 67)

K. Specify criteria for delegation of authority, imposition of administrative fines, and other matters concerning supplementary provisions to the Special Act (Articles 68 to 69)