Korea

Risk mitigation elements in the design of power purchase agreements

Related policy guide sections

• Power purchase agreements
• Direct power purchase agreements
• Off-taker risk mitigation

Since the introduction of the Renewable Portfolio Standard (RPS) system in 2012, power utilities with a generating capacity of 500MW or more (as of 2023, six KEPCO subsidiaries and 21 private power producers) have been required to achieve a statutory share of renewable energy generation by year (i.e. 13.5 per cent in 2024 and 15 per cent in 2026). To achieve this, the obligated utilities above need to either build their own renewable energy plants or buy renewable electricity from private renewable developers under a long-term contract (normally 20-year). However, the share of renewable energy obligations for utilities is low, which does not encourage the rapid deployment of renewable electricity. 

The policy is now shifting away from the traditional RPS quota mechanism toward a more centralized Competitive Bidding Market (auction-based procurement) for long-term PPAs covering both solar and wind. This transition reflects a move from utility-focused quota enforcement to government-led contracting designed to manage renewable supply, system stability, and integration outcomes through standardized, long-term procurement. As a result, the main instrument for scaling renewables is increasingly the state’s auction framework for long-term offtake (rather than incremental tightening of obligated utility shares under the RPS), with the RPS playing a more residual or complementary role within the broader procurement architecture.

Medium Barriers

KEPCO's six subsidiaries generate more than two-thirds of the country's electricity, so the main offtakers in long-term contracts are six power utilities in which KEPCO has a 100% stake. Although KEPCO's credit rating has recently been downgraded, it has not affected its renewable energy purchases.

Counterparty default risk remains low, but the main risk has shifted to grid connection and transmission delays. Developers increasingly face offtake failure in practice—projects may be unable to commission on time or deliver contracted power because grid access is not available when needed.

Medium Barriers

The renewable PPAs are not indexed to inflation. The inflation rate in Korea was relatively stable over the past five years (between 0.5 and 3.6%) and therefore does not constitute a major risk

Low Barriers

PPAs are not indexed to other currencies. Payments are made in Korean won

Medium Barriers

Large-scale power generation facilities, including nuclear, coal, and natural gas power plants, as well as renewable energy generation facilities, are constantly being added and generating power, while transmission lines are at the same level as 15 years ago. Therefore, curtailment of renewable energy power is expected to be a very serious problem in the future. For example, in Jeju Island, where the share of renewable energy facilities exceeds 40 per cent, 132 times (total 29 GWh) of curtailment occurred in 2022. As of 2023, there were no established measures to compensate for curtailment.

However, the policy framework began to shift in 2024. With the launch of the Jeju pilot Renewable Electricity day-ahead market in February 2024 and the enactment of the Distributed Energy Activation Special Act in June 2024, a framework for real-time pricing and (for participating bidders) curtailment compensation has been introduced. This signals a move away from non-compensated curtailment toward a market-based, bid-driven approach, although grid constraints remain the underlying driver of curtailment risk.

Medium Barriers

Private sector and foreign ownership of power generation assets is allowed in Korea.

Low Barriers

The Korea Energy Agency conducts auctions twice a year, but the volumes are not provided in advance. Irregular bids are offered by the obligated utilities to need to fulfill the RPS mandate.

An important exception has emerged for offshore wind. Following the Offshore Wind Competitive Bidding Roadmap (August 2024), the government has begun publishing a rolling three-year auction schedule with indicative volumes for offshore wind. While overall auction volumes can still vary, this has materially improved short-term predictability for this segment. A longer-term offshore wind development roadmap extending to 2035 is expected to be announced within 2026.

Medium Barriers

In 2018, the South Korean government had implemented a FIT scheme for solar PV under 100kW to help small-scale solar power developers generate stable revenue and ease the process of selling electricity, but in July 2023 the government abolished the FIT scheme due to the uncontrolled increase in the number of developers, grid and supply problems, and various irregularities in the application of the FIT. As of May 2024, there is no FIT scheme in Korea.

High Barriers

The Korea Energy Agency conducts auctions twice a year to help RPS obligated utilities easily find renewable energy projects and make long-term contracts with them, but the auctioned volumes were less than 2 GW, which are not sufficient enough to lead the rapid deployment. Separately, an auction method is used to optimise payments for renewable elelctricity sales. Renewable energy developers that do not have PPA agreements with RPS obligated utilities receive one REC for every MWh of renewable electricity sold, with different weights to compensate for the different production costs of different technologies and scales. (For example, Solar PV above 3MW has a weighting of 0.8, earning 0.8 RECs for every MWh of electricity sold; solar PV below 100kW and onshore wind have a weighting of 1.2, earning 1.2 RECs for every MWh of electricity sold; and a wood pellet plant has a weighting of 0.5, earning 0.5 RECs for every MWh of electricity sold.) Renewable energy developers can trade the RECs they receive after selling renewable electricity in the REC bidding market, but prices fluctuate widely depending on the demand from obligated operators willing to purchase RECs, making renewable investment uncertain.

Offshore wind: Although central and local governments have announced plans to expand offshore wind, deployment has lagged due to transmission constraints and local opposition (including from fishing communities). Historically, the Korea Energy Agency has not offered offshore wind auctions on the same basis as other technologies. More recently, however, auction design has become more technology-specific: the offshore wind market has been segmented, with separate bidding markets for fixed-bottom and floating offshore wind to reflect different cost structures and support technology adoption.

Medium Barriers

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Since October 2021, direct PPAs between renewable energy developers and electricity consumers have been possible. In January 2024, the PPA supply was around 3 GWh. To accelerate the direct (corporate) PPA market, the government has introduced subsidy programmes (operational since 2024) to support the payment of grid usage fees for companies, particularly SMEs, seeking to meet RE100 commitments through PPAs.

Low Barriers

For net-metering, the electricity consumer who installs the renewable energy facility pays less for the final electricity bill by the amount of surplus renewable electricity. In the case of excess electricity trade, despite the success of some pilot projects, only KEPCO is allowed to sell electricity, and it is not possible to create a separate tariff plan, so the trade of excess electricity is not very common yet. Given the very low electricity tariff in South Korea, the net-metering scheme paying the electricity bills less is not enough to motivate electricity consumers to install small-scale renewable facilitates.

With the enactment of the Distributed Energy Activation Special Act (June 2024), restrictions on selling excess electricity have been lifted within designated “Specialized Zones.” Prosumers in these zones are now legally permitted to engage in peer-to-peer (P2P) trading of surplus renewable electricity, moving beyond simple net-metering toward more market-based local trading models.

Low Barriers

The government had started to promote small-scale solar power for self-consumption since the end of the 1990s, meaning that self-consumption was allowed from the beginning of the deployment of renewable energy facilities in Korea. In addition, even after the sale of renewable energy power was allowed in 2002, the government has continued to promote small-scale solar power for self-consumption purposes. Facilities that have received government support of 30 to 50 per cent or more of the total cost of renewable energy facilities can only be used for private consumption.

Low Barriers

In response to the widespread deployment of small-scale solar panels for self-consumption purpose, the government introduced a net metering system in 2005. Through several amendments, surplus power from solar installations of 1 MW or less and other renewable generators of 10 kW or less can be sent to the distribute grid operated by KEPCO. In addition, since December 2018 it is allowed solar panel of 1 MW or less to trade surplus power with neighbours through aggregators.

More recently, the excess-electricity landscape has been evolving toward a “Virtual Power Plant (VPP)” model. As of late 2025, aggregated small-scale resources (under 1 MW) are not only trading surplus electricity but are increasingly participating in market-based mechanisms by bidding into the wholesale market (initially through the Jeju pilot). This reflects a policy shift from largely passive net-metering compensation toward incentives for active market participation and system support.

High Barriers

There is no tax credit for investments in renewable energy. Grants of max. 1,000 USD per kW are available for the installation of PV on single houses (up to 2.0 kW) or apartment buildings (up to 30 KW). Grants vary depending on capacity and module technology/performance.

Medium Barriers

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15-year low-interest loans of up to 30 billion Korean won (about 20 million USD) for the installation of renewable energy facilities such as PV or wind turbines only for self-sufficient purpose. The amount of loans varies depending on the financial condition of the applicant. In addition to small-scale loans, the Korean government launched the 'Future Energy Fund' in 2024, targeting KRW 9 trillion in financing to support large-scale renewable projects, specifically aiming to de-risk offshore wind financing.

High Barriers

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There is no carbon tax in South Korea yet. This was further supplemented by Decision No. 01/2022/QD-TTg, which mandated a list of sectors and facilities to conduct greenhouse gas inventories.

High Barriers

Emissions trading: South Korea has been operating an emissions trading market since 2015, the first in East Asia. However, the total carbon emissions cap is not significantly different from the company's actual emissions, and 90 per cent of each company's emissions allowances are allocated free of charge (only 10 per cent are paid for). For this reason, the carbon price on the emissions trading market is more or less about 10 euros. In the power sector, the 90 per cent free allowance means that the carbon price has not had a significant impact on coal and natural gas power costs, with coal-fired power still remaining the cheapest source of electricity.

As of late 2025, the finalisation of the 4th ETS Phase (2026–2030) indicates a move toward a stricter emissions cap and a gradual reduction in free allocation. However, given the large structural cost gap between coal and gas generation in Korea, even a tighter ETS is unlikely to materially alter dispatch order or fuel switching in the power sector under plausible carbon price levels.

High Barriers

Since November 2020, the Renewable Energy Concentrated Complex Planning has been in effect, which provides up to 0.1 additional REC weighting for renewable energy complexes (more than 40MW) that are developed by local governments by identifying locations. However, as of the end of 2023, no new renewable energy projects have been developed through this planning, and it is being used to proactively limit the development of additional renewable energy projects in certain areas due to congestion in the transmission and distribution grid.

Since 2025, Offshore wind designations have accelerated—Jeonbuk Southwest (1GW) was designated a Concentrated Complex (Feb 2025) and Sinan (3.2GW) followed (Apr 2025); Incheon (2GW) is pursuing designation (planned submission Sep 2025); and Yeosu is aiming to become the first state-led “Preliminary District” under the upcoming offshore wind special act. Grid connection is now the binding constraint. Most Honam substations (Jeonnam/Jeonbuk) were classified as “Grid Management Substations” in May 2024, restricting new connections until transmission upgrades are completed post-2031, delaying delivery even for designated projects.

High Barriers

The increasing deployment of solar PV has led to complaints from nearby residents. In response, a total of 128 local governments have adopted restrictive regulations that require renewable energy plants, especially solar PV, to be built remotely from residential areas (for instance, more than 1 km from roads or 1 km from residential areas). These distancing restrictions represent a major hurdle for the swift expansion of renewable power generation in Korea.

• South Korea's laws state that the country should strive to increase the penetration of renewable energy, but there is no requirement to prioritise installation. Under the Distributed Energy Act, which will take effect in June 2024, local provinces with less than 100 per cent electricity self-sufficiency will be required to supply a certain percentage of their electricity consumption from distributed energy sources, including solar PV.

While local distancing restrictions persist, the Ministry’s 2026 Work Report signals a shift in approach, with the government planning to pursue improvements to solar PV separation-distance regulations in Q1 2026.

High Barriers

in May 2021, a special law for offshore wind promotion, including a planned siting scheme, was proposed, but as of May 2024, it has not been passed in the National Assembly Korea, meaning that the marine space for offshore wind installations has not yet been classified.

With the Act’s entry into force, the framework shifts from a business-led model to a state-led “Planned Location” system, under which the government designates “Preliminary Districts” to systematically manage marine space and classify zones for offshore wind installations.

High Barriers

The siting process is set out clearly in the Electricity Business Act and related regulations. In practice, however, securing a development activity licence still hinges on managing local opposition, which can be time-demanding and costly and may incentivise informal compensation arrangements. These frictions raise project costs and delay timelines, even as the government has tightened licence revocation rules to deter speculative site pre-emption (two years for PV, four years for onshore wind and five years for offshore wind).

In recent efforts to improve public acceptance on RES facilities, the government has institutionalised a “Resident Participation Scheme” that provides additional RECs for projects with community investment, and local governments are increasingly deploying profit-sharing models to secure consent. Sinan County is a leading case, having implemented the “Sunlight Pension” (solar PV) and “Wind Pension” (offshore wind) to distribute project profits directly to residents; variations of this model are now being adopted by other municipalities, including Yeosu.

Medium Barriers

Due to factors such as small land parcels in private hands, steep increases in land prices, and stringent regulations on agricultural land leasing, leasing of land has proven challenging. Consequently, renewable energy developers tend to purchase the relevant sites before proceeding with their projects.

High Barriers

Depending on the size of the power generation facility, the law specifies the permits required from the central government or local government. For example, a power generation business licence (central government for more than 3MW or local government for less than 3MW) and a small-scale environmental impact assessment (if the site area is more than 5,000 square metres).

Low Barriers

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For small-scale power generation facilities, a power generation business permit and a development activity permit by the local municipality are required, but the number of permits will also increase, as permits prescribed by relevant laws must be obtained in advance, depending on the size of the site area (5,000㎡ or more) or the type of site (agricultural land, grassland, forest, etc.). In particular, wind power projects require more complex processes, with around 14 permits and 10 approvals.

The Special Act on Offshore Wind Energy (effective March 2026) is intended to streamline offshore wind permitting by consolidating key reviews under a state-led committee, reducing duplicative procedures and materially lowering the regulatory burden for offshore projects.

Medium Barriers

Since 2019, the Korea Energy Agency has been operating a one-stop shop to expedite renewable energy permitting processes, but it is not considered to be very effective. In particular, offshore wind power has been the subject of significant complaints from project developers, and a special law for offshore wind power has been proposed to establish and operate a one-stop shop exclusively for offshore wind power, but not enacted yet.

As of 2026, this has now been addressed through the Special Act on Offshore Wind Energy, which has been passed and is set to take effect in March 2026. The Act provides a clear legal basis for a more functional “one-stop shop” for offshore wind—anchored in an Offshore Wind Power Committee under the Prime Minister or the newly established Ministry of Climate, Energy and Environment (MCEE)—with the explicit aim of consolidating coordination and resolving the shortcomings of the previous framework.

High Barriers

Renewable power had long been granted unconditional priority over other generators in the dispatch order. In recent years, however, curtailment of renewable generation has become more frequent due to transmission and distribution congestion, particularly in regions with high renewable penetration such as Jeju Island and parts of the Honam area. These developments have prompted disputes over curtailment measures, including discussions on compensation and system improvements, and have also led to administrative lawsuits and constitutional petitions filed by some renewable power producers against KEPCO and government authorities.

Amid the rapid growth of renewable energy and operational challenges for grid stability and system management, the government has been reviewing and amending the Electricity Market Operation Rules to introduce a clearer framework for the dispatch and curtailment of renewable generation. As part of this reform, renewable electricity is expected to participate in a bidding system to determine dispatch order, similar to conventional power generators.

A pilot scheme has been implemented in Jeju Island since 2024, and—depending on its results—nationwide expansion is currently expected in the first half of 2026.

High Barriers

Economic dispatch had been previously in operation primarily based on short-run marginal costs, largely driven by fuel costs. However, in order to reflect environmental considerations such as greenhouse gases and fine dust problems, the economic dispatch rule has been improved to incorporate ETS compliance costs into SMP calculation of emissions allowance costs under the ETS from January 2022. However, the fuel cost for electricity generation such as coal and natural gas has risen sharply due to the energy crisis, while the carbon price is very low due to the 90% free allocation of emission allowances, so the inclusion of environmental costs has had a limited impact on changing the dispatch order of coal and natural gas.

High Barriers

South Korea's dispatch rules are primarily based on each generator's fuel and environmental costs, and there are no "take or pay" contracts for fossil power plants. However, in recent years, the country has been facing increasingly severe fine particulate matter problems, and since 2019, it has implemented shutdowns or capacity limits on a subset of older coal-fired power plants during winter to early spring.

Low Barriers

With only a single wholesale electricity market and a relatively small share of renewable generation (less than 10%), output forecasting has historically not been a major issue in South Korea, and it is not specifically addressed in the current market rules. However, with the expansion of solar and wind power—particularly in regions such as Jeju Island and the southwestern area where grid constraints have emerged—the accuracy and utilization of generation forecasts have become increasingly relevant for system operation. Nevertheless, existing market rules and regulations do not explicitly establish formal obligations or detailed procedures for renewable generators’ output forecasting.

High Barriers

Although the law was recently amended to allow aggregators to operate, the role of aggregators is very limited due to the single wholesale electricity market in Korea, especially when it comes to forecasting electricity output.

Medium Barriers

There is currently no nationwide, explicit forecast error penalty scheme; however, the Jeju renewable bidding pilot introduces imbalance penalties based on deviations from dispatch schedules, and similar rules are planned for a gradual rollout.

Medium Barriers

In South Korea, renewable energy output forecasting has been promoted through a forecasting-and-settlement scheme, which allows both individual generators and aggregators (utilizing aggregated resources) to participate. A pilot initiative was launched in 2020, and the scheme has been in operation since October 2021. Under this scheme, solar and wind resources meeting the eligibility criteria (initially focused on those exceeding 20 MW) submit day-ahead forecasts to KPX (Korea Power Exchange) and may receive settlement incentives when their actual output falls within a specified error band. In parallel, with the introduction of market reforms piloted in Jeju Island, the role of forecasting is increasingly being linked to market-based settlement and compliance mechanisms, and the original incentive scheme is being phased out as renewable bidding arrangements are introduced.

High Barriers

Since 2016, South Korea has provided additional Renewable Energy Certificate (REC) weighting for energy storage systems (ESS) installed in conjunction with renewable facilities to address intermittency and support the development of the domestic battery industry. As a result, ESS installations expanded rapidly, reaching approximately 9,863 MWh by 2021. However, concerns emerged as some operators engaged in excessive charging and discharging of ESS to increase REC revenues, and a number of fire incidents were reported. In response, the government scaled back the original REC-based incentive scheme after 2021. Rather than completely halting support for ESS, policy has since shifted toward revising incentive structures and strengthening safety and operational standards.

Medium Barriers

While South Korea has not traditionally provided explicit flexibility payments for dispatchable renewable generation, the renewable bidding pilot introduced in Jeju in 2024 allows certain solar and wind plants registered as “dispatchable renewable energy generators” to participate in the day-ahead and real-time markets and, in some cases, in ancillary service markets. Through these mechanisms, dispatchable renewable generators may earn revenues linked to their ability to adjust output and provide system flexibility. The government intends to use the Jeju pilot as a reference model when considering a potential nationwide rollout.

High Barriers

Since 2019, Korea has operated a power brokerage market that allows aggregators to combine small-scale renewables, loads, and ESS into VPP-type portfolios. These arrangements remain pilot- and operator-specific rather than a uniform nationwide VPP incentive scheme, but they do provide emerging incentives for flexibility via virtual power plants.

High Barriers

Under the current plan, 28 aging coal units (approximately 14.1 GW) are scheduled to be replaced with LNG-fired capacity by 2036. However, according to the 11th Basic Plan for Electricity Supply and Demand, coal units reaching the end of their operational life after 2037 are no longer primarily intended for simple gas conversion. Instead, policy emphasis is shifting toward replacement with non-carbon resources such as pumped storage, hydrogen, and other carbon-free generation options.

Medium Barriers

Since November 2014, South Korea has offered financial incentives for demand-side flexibility through a Demand Response (DR) program. In practice, the volume of DR resources contracted in the market remains relatively modest. In addition, low retail electricity prices limit the strength of economic incentives for participation. As a result, the DR program has so far contributed only limited reductions in overall electricity consumption and peak demand, although it continues to function as a supplementary tool for system reliability and demand-side flexibility.

Medium Barriers

South Korea provides incentives and price signals for charging electric vehicles (EVs) during off-peak periods, primarily through time-of-use (ToU) electricity tariffs. Under this system, lower electricity prices are offered during off-peak hours (e.g., nighttime) to encourage EV charging when overall system demand is lower. However, while these ToU tariffs provide basic incentives for off-peak charging, they do not yet constitute a comprehensive smart-charging framework or fully system-responsive EV flexibility.

Medium Barriers

South Korea’s wholesale power market currently operates primarily through a day-ahead market. However, as the expansion of renewable energy has led to congestion in transmission and distribution networks and more frequent curtailment events, revisions to the power market operation rules have been undertaken to introduce elements of a real-time market and ancillary services markets. These reforms are led by the Korea Power Exchange (KPX), under government oversight.

A pilot program incorporating real-time and ancillary service market has been implemented on Jeju Island since 2024. Depending on the results of the pilot, as well as subsequent regulatory decisions and system readiness, the introduction of similar market mechanisms at the national level may be considered in the future.

Medium Barriers

Balancing and ancillary service markets are not yet fully implemented nationwide, but they are being actively tested through pilot programs.

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South Korea applies time-differentiated electricity pricing through KEPCO’s TOU tariffs for many industrial, commercial, and some residential/EV customers, with higher rates during peak hours and lower rates at off-peak times and by season. However, TOU has so far delivered only modest peak-shaving and load-shifting effects, reflecting its largely static design and limited price differentials.

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Every two years, KEPCO publishes a 15-year Long-term Transmission and Substation Facility Plan, which sets out planned investments in transmission lines and substations, while distribution network planning is conducted separately under a five-year mid-term framework. Based on the electricity demand forecast of the Basic Electricity Supply and Demand Plan, the plan divides the country into six regions and 42 sub-regions, and presents the construction plan for the planning period (15 years) based on a comprehensive comparison of technical, constructability, and economic factors.

Low Barriers

The overall grid expansion plan is aligned with national renewable energy targets. However, the government's grid construction plans have been delayed by 14 months to a maximum of about 10 years due to complaints against construction, difficulties in securing sites, and delays in approvals. According to media reports citing KEPCO-related statistics, as of May 2025, the total capacity of renewable energy projects applying for grid connection amounts to 35.8 GW. Of this, 26.9 GW has been successfully connected to the transmission and distribution network and commenced operation, while the remaining 8.9 GW (approximately 25% of the applied capacity) remains on standby due to transmission grid constraints.

High Barriers

Every two years, KEPCO announces a five-year Long-term Distribution Facility Plan that includes plans for distribution network expansion .

Low Barriers

As KEPCO is the sole transmission and distribution grid operator, it is considering cross-country grid integration between regions through a long-term transmission and distribution grid plan.

Medium Barriers

Although non-discriminatory access is guaranteed in principle, the rapid deployment of small-scale renewable energy facilities especially in rural areas that are not well served by transmission and distribution networks has led to a number of corruption issues surrounding the order of transmission line access. According to media reports citing KEPCO-related statistics, as of May 2025 the total capacity of renewable energy projects applying for grid connection amounts to 35.8 GW. Of this, 26.9 GW has been successfully connected to the transmission and distribution network and commenced operation, while the remaining 8.9 GW (approximately 25% of the applied capacity) remains on standby due to transmission grid constraints.

High Barriers

Since 2003, private individuals have been allowed to trade directly electricity without going through KEPCO. However, because KEPCO has a well-developed nationwide distribution network, it is very rare for private individuals to build their own grid and sell electricity.

High Barriers

The transmission and distribution grid usage fee is 12.9 won per kWh, accounting for approximately 7% of the electricity bill, based on an average electricity tariff of 183.5 won per kWh last year, but KEPCO does not charge this fee to power generators. However, with the rapid expansion of renewable energy facilities, it is necessary to expand transmission and distribution grid facilities, so it is pointed out that the transmission and distribution grid usage fee should be realised and charged to power generators.
• Payment for using the electricity grid (wheeling): not introduced in Korea, yet.

Medium Barriers

Grid connection is allowed on a first-come, first-served basis, and if the grid is insufficient, renewable project developers will have to wait until the grid is expanded. KEPCO is not responsible for compensation for delays in the expansion of the grid network. In addition, Korea operates a conditional connection scheme, under which renewable generators may be connected beyond the allowable capacity of distribution lines on the condition that they comply with curtailment instructions when grid congestion or operational constraints arise.

Medium Barriers

Because small renewable energy facilities, such as rooftop PV, must be connected to the distribution grid, the regulations and procedures are relatively straightforward compared to larger power plants that require connections to the transmission grid.

Low Barriers

KEPCO has always borne the costs of connecting renewable energy facilities of 1MW or less to the grid, but from November 2024, renewable energy operators will have to bear all costs if there is a shortage of available capacity.

High Barriers

From 2012 to 2016, the Korean government implemented a support project for smart grid deployment, deploying about 50,000 AMI (Advanced Metering Infrastructure - bi-directional meters) and 54 MWh of ESS. Since then, the government has continued to promote support policies to expand the deployment of smart grids, but the results have been marginal.

Medium Barriers

From 2012 to 2016, the Korean government implemented a support project for smart grid deployment, deploying about 50,000 AMI (Advanced Metering Infrastructure - bi-directional meters) and 54 MWh of ESS. Since then, the government has continued to promote support policies to expand the deployment of smart grids, but the results have been marginal. In addition, as part of the Green New Deal, the government implemented a subsidized AMI rollout program from 2021 to 2023, under which 1.65 million out of approximately 5 million apartments relying on manual meter reading were upgraded with AMI.

Medium Barriers

The KPX (Korea Power Exchange) has been acting as the control centre for grid integration of renewables and it romotely controls output of renewable generation.

Low Barriers

In accordance with the Ministry of Trade, Industry and Energy's Notice on 'Standards for Maintaining Power System Reliability and Electricity Quality', renewable energy power generators shall provide power generation facility characteristics, output information, forecasting information, power plant weather information, and any other necessary information for output monitoring, forecasting, evaluation and control of renewable power generators to power exchanges and transmission and distribution companies.

Low Barriers

In accordance with the Ministry of Industry's Notice "Standards for Maintaining Power Grid Reliability and Electricity Quality" and related rules, power grid operators are required to implement measures to ensure the stable operation of the power grid through output monitoring, forecasting, evaluation and control of renewable power generators such as wind and solar power.

Low Barriers

Since 2010, KEPCO has been supporting AMI rollout, reaching approximately 20.5 million households by the end of 2024, out of a total of approximately 33.8 million households.

Low Barriers

In 2025, the South Korean government announced plans to phase out coal-fired power plants. As a result, 28 of the country’s 59 coal-fired units are scheduled to be phased out by 2036 through conversion to LNG-fired generation. In addition, 12 units are planned to be converted between 2037 and 2038 to pumped-storage hydropower, hydrogen-fired generation, or ammonia co-firing. Despite these measures, 22.2 GW of coal-fired capacity is expected to remain in operation after 2038, for which no concrete plan has yet been announced.

Medium Barriers

No new coal-fired power plants have been permitted since 2017, but new natural gas plants have been allowed to replace older coal-fired plants.

High Barriers

Since 2015 the Korea Emission Trading System is in place, but the carbon price is not high enough to make coal-fired power plants uneconomic. The fuel tax system has been reformed in 2018 to improve the economics of natural gas-fired power plants, but coal-fired power plants are still much more economical.

High Barriers

In 2020, South Korea declared its goal of achieving carbon neutrality by 2050. Under the 2030 Nationally Determined Contribution (NDC) plan, the government set a target to reduce greenhouse gas emissions by 40% relative to 2018 levels. More recently, the 2035 NDC plan established emission reduction targets ranging from 53% to 61% by 2035, depending on the scenario.

Medium Barriers

Despite declaring a goal of carbon neutrality by 2050, the energy sector's GHG reduction pathway falls far short of meeting the Paris Agreement's objectives. In particular, renewable electricity supply targets have been highly influenced by political decisions. For the 2030 target, the share of renewable electricity was set at 30.2% in 2020, but this was reduced to 21.6% in 2023. Although the 11th Basic Plan for Electricity Supply and Demand (announced in 2025) outlines a plan to install 78 GW of renewable capacity, recent assessments suggest that achieving the 2035 NDC targets would require approximately 100 GW of renewable capacity by 2030. However, the government has yet to present a concrete implementation plan to bridge this gap.

High Barriers

South Korea's national target is to generate 21.6 percent of its electricity from renewable sources by 2030. According to the 11th Basic Plan for Electricity Supply and Demand (11th BPLE), the share of renewable energy generation is set to increase from 8.4% in 2023 to 18.8% in 2030, and further to 29.2% by 2038. Regarding installed capacity, the plan aims to expand renewable energy facilities from 30 GW in 2023 to 121.9 GW by 2038—approximately a fourfold increase. For 2030, the target is set to exceed 78 GW.

Medium Barriers

Every two years, the Korean government publishes an electricity supply plan for the next 15 years (the National Electricity Supply and Demand Plan), which revises the long-term renewable energy penetration targets, i.e., they are adjusted to an achievable level as the target year approaches. In other words, the mid- to long-term penetration targets are more or less indicative.

High Barriers

As of late 2025, the government is gradually shifting its policy focus towards "Competitive Bidding Markets" (Auctions) alongside the existing RPS framework. By securing long-term fixed-price contracts through competition, this approach aims to manage costs more effectively and reduce the financial burden on KEPCO.

High Barriers

The biennial Electricity Supply and Demand Plan includes renewable energy penetration targets for the next 15 years. According to the latest plan,
• 2030 Target: The renewable energy share is set at 18.8% (120.9 TWh), with a capacity target of 78 GW.
• Long-term Target (2038): The planning horizon has been extended to 2038. The new target is 205.7 TWh (Share: 29.2%) with a capacity of 121.9 GW.

High Barriers

South Korea's renewable energy penetration targets only exist for the power sector, with no specific targets for heating, cooling, transport or industry.

High Barriers

South Korea's national target for the renewable energy share is set at 18.8% (120.9 TWh), with a capacity target of 78 GW.

High Barriers

Under the current plan, South Korea aims to install 55.7 GW of solar PV and 18.3 GW of wind power by 2030. Compared with the targets in the 10th Basic Plan, the solar PV target has been increased by 9.2 GW, while the wind power target has been reduced by 1 GW. The government has placed greater emphasis on solar PV—such as industrial rooftop, floating, and parking-lot installations—due to its relatively easier deployment, which has widened the gap between solar and wind expansion.
Looking further ahead, the plan sets 2038 targets of 77.2 GW for solar PV and 40.7 GW for wind power.

Medium Barriers

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Based on the latest "2025 Plan for Deployment of Environment-Friendly Vehicles" (Ministry of Environment, March 2025), South Korea has established clear statutory targets:
1. ZEV Deployment Targets: The government has confirmed a cumulative target of 4.5 million Zero-Emission Vehicles (ZEVs) by 2030 (4.2m EVs and 0.3m Hydrogen vehicles).
2. ZEV Mandate for OEMs: From 2026, the existing "Low-Emission Vehicle Supply Target" will be restructured into a mandatory supply ratio focused on ZEVs for vehicle manufacturers and importers.
3. Renewable Fuel Standard (RFS): Implemented since July 2015, this policy mandates biodiesel mixing ratios for transport fuels. According to the current schedule, the obligation ratio is set at 4.0% for 2024–2026, rising to 4.5% in 2027, and reaching 5.0% from 2030 onwards.

Medium Barriers

Concrete targets were once established under the "1st Basic Plan for Implementation of the Hydrogen Economy" (Nov 2021).

1. Ambitious targets set (2021): At the time, the government set an ambitious target to expand domestic hydrogen usage to 3.9 million tonnes and increase domestic clean hydrogen production to 1 million tonnes by 2030.

2. Implementation gap (Why high risk):
• Coal-Reliant Demand: The demand side is currently dominated by "Ammonia Co-firing" in coal power plants (2.4% generation share), criticised for delaying coal phase-out.
• Market Failure: The recent cancellation/delay of the Clean Hydrogen Power Bidding (CHPS) highlights the critical gap between these previous targets and current market reality.

High Barriers

South Korea has recently strengthened its institutional framework for monitoring the progress of the energy transition. Following amendments to the Carbon Neutrality Act and a major government reorganisation effective from 1 January 2026, the former 2050 Carbon Neutrality Commission has been reorganised and expanded into the National Climate Crisis Response Committee, which now serves as the central coordinating body overseeing the implementation and monitoring of the energy transition.

In addition, the government has consolidated relevant policy functions by restructuring the Ministry of Environment into the Ministry of Climate, Energy and Environment, integrating climate and energy responsibilities to improve policy coordination and monitoring. Alongside these institutional arrangements, the Ministry of Trade, Industry and Energy (MOTIE) continues to play a key role in energy sector policy, while the Korea Energy Economics Institute (KEEI) periodically publishes statistics and analytical reports on developments in the energy sector.

High Barriers

Public participation in energy project development in South Korea has traditionally been limited, with engagement often occurring only at the implementation stage. In practice, local communities have often had limited influence over project decisions and have sometimes expressed opposition after projects began affecting local areas.
However, the institutional framework for siting and consultation has recently evolved, particularly with the Special Act on Offshore Wind Energy (effective in March 2026). Under the new state-led “Planned Location” system, the establishment of a Public-Private Council (Min-Gwan Council) is required before an offshore wind zone is designated. This mechanism allows local residents, fishery representatives, and other stakeholders to participate in discussions at the planning stage.
In addition, the act introduces an institutionalised Resident Participation Scheme, which includes profit-sharing mechanisms intended to enhance local consultation and improve community acceptance of renewable energy projects.

High Barriers

In response to growing local opposition to renewable energy projects, the government has given additional REC weighting to community-led generation projects since 2016. The policy has evolved into practical profit-sharing models. A prime example is Sinan County, which recently released a "Future Profit Map" projecting that total dividends paid to residents from "Sunlight and Wind Pensions" will reach 3 trillion KRW. This model, covering 1.8 GW of solar and 8.2 GW of wind projects, effectively converts local opposition into support by ensuring substantial long-term income for the community.

Low Barriers

Under the 2024 revised criteria, additional REC weighting is granted to renewable energy projects that include community investment based on the share of total project expenses contributed by local residents. The incentive structure consists of four REC weighting tiers, designed to differentiate and reward higher levels of community participation. These incentives apply to solar PV projects of 500 kW or more and wind power projects of 3,000 kW or more.

Low Barriers

In 2022 and 2023, the Green Energy Strategy Institute (GESI), an independent energy policy think tank, studied the socio-economic impacts of offshore wind, onshore wind, and small-scale solar power

Medium Barriers

Socio-economic effects are generally not a primary factor in contracting renewable energy generation or in electricity sales. However, certain policy mechanisms incorporate broader considerations. For example, government support programs for solar power take into account the lifecycle greenhouse gas emissions of solar modules when selecting eligible products, thereby encouraging lower-carbon manufacturing.
In addition, socio-economic criteria play a more explicit role in the Wind Power Competitive Bidding Market, where industrial and economic contributions—such as the use of domestic supply chains, job creation, and local investment—are included as non-price evaluation criteria in the selection of project operators.

High Barriers

Trade unions and civil society organisations have been calling for this, but it is not yet institutionalised.

High Barriers

All workers at the Taean coal-fired power plant, which is scheduled for closure in 2025, have been reassigned to other facilities. However, most of these workers were relocated to LNG-fired power plants or other coal-fired power plants, making the measures largely temporary. To date, there is no government-led plan to facilitate a transition toward clean energy technologies following the phase-out of fossil-fuel power plants.

High Barriers

According to the 11th Basic Plan for Electricity Supply and Demand announced in 2025, three coal-fired units scheduled for retirement between 2037 and 2038 are planned to be converted to pumped-storage hydropower, while some others are planned to be converted to hydrogen-fired power generation. However, the majority are planned to be converted to LNG-fired generation, and there are no plans to transition these facilities to renewable energy technologies such as solar or wind power.

High Barriers