Quick Look: Renewable Energy Development in South Korea

Developers, manufacturers, investors and other renewable energy industry stakeholders need to know where the next big market is going to be so that they can adjust their business decisions accordingly.

Since 2003, global consultancy Ernst & Young has released its Country Attractiveness Indices, which gives a numerical ranking to 30 global renewable energy markets by scoring renewable energy investment strategies and resource availability. The indices are updated on a quarterly basis and the most recent report can be found here.

Here is the firm’s assessment of South Korea.


South Korea aims to generate 5% of energy from renewables by 2011, increasing to 11% by 2030. This is compared with a current figure of 2.4%, therefore achievement of these targets would more than double energy from renewables by the end of next year.

South Korea already has FITs in place for wind and solar power; however, from 2012 these will be replaced by a Renewable Portfolio Standard (RPS), approved by the South Korean Assembly in March 2010. This RPS will require 14 state-run and private power utilities with capacity in excess of 500MW to generate 4% of energy from renewable sources by 2015, increasing to 10% by 2022. This program, which will become effective in 2012, will mandate 350MW/year of additional RE to 2016, and 700MW/year to 2022.

South Korea’s Government has announced that a total KRW40t (€25.8b, US $34.2b) will be invested in RE by 2015. This includes KRW22.4t (€14.4b, US $19b) to be invested by the nation’s 30 largest industrial groups by 2013. The Government will contribute approximately KRW7t (€4.5b, US $5.96b) and the remaining KRW10.6t (€6.8b, US $9b) coming from other areas of the private sector. South Korea has already seen substantial financial investment in RE in recent years, including KRW2t (€1.3b, US $1.7b) from Government in the last two years.

Further, all RE technologies receive a 5% tax credit, and in 2009, import duties were halved on all components/equipment used in RE power plants. The Government also provides subsidies to local governments of up to 60% for the installation of renewable facilities, as well as offering low interest loans (5.5%-7.5%) to RE projects, including a 5-year grace period followed by a 10-year repayment period.


Wind power is currently supported through a FIT of KRW107.29 (€0.07, US $0.09)/kWh, decreasing annually by 2% from October 2009. However, this FIT will be replaced by the RPS from 2012 onwards. It is estimated that South Korea has potential reserves of 186.5TWh per annum. The current installed capacity is around 348MW and there is a substantial project pipeline including Hyundai Heavy Industries’ 200MW wind farm due to be operational by 2012 and costing KRW500b (€322m, US $426m).

The country has also seen investment by turbine manufacturers in a bid to develop a strong domestic supply chain. Samsung has already started operations, with scope to produce turbines with 500MW per year in generation capacity.

Offshore wind

South Korea aims to be the world’s third largest offshore wind power generator. At the end of Q3, it was announced that the country will launch a KRW9.2t (€5.9b, US $7.8b) offshore wind farm project in the Yellow Sea. An initial testing phase will install 20 5MW turbines by 2013, but the site will have an estimated generating capacity of 2.5GW by 2019 and it is reported that domestic companies will build the 500 turbines required.


Solar FITs were first adopted in 2006 and were considered to be quite generous. A decision was made in 2008, however, to reduce the rate by up to 30% as a way of encouraging local production. Rates now range from KRW572 (€0.37, US $0.48)/kWh for systems smaller than 30kW to KRW509 (€0.33, US $0.43)/kWh for those larger than 1MW capacity.

As with wind, the solar FIT scheme will be replaced in 2012. In addition to the RPS enforcement, utility companies will be given a separate solar energy production quota of 120MW in the first year, gradually increasing to 200MW in 10 years, after the rules are enacted.

Grid-connected solar PV totalled 430MW at the end of 2009, including Samsung‘s 18.4MW plant and Conergy‘s 19.6MW plant (reported to be Asia’s largest in 2008). The European PhotoVoltaic Industry Association (EPIA) has estimated the country’s solar PV market could grow to 1.3GW by 2013, and the current pipeline includes SunEdison’s 400MW of solar plants to be built across the country,


It has been estimated that South Korea has a small-scale hydro potential of up to 1.5GW, and that 198MW could be generated by 2012. Installed capacity represents less than 5% of the domestic potential, indicating significant untapped resources. The project pipeline includes five small hydro plants as part of the Four Rivers Project.

For more information on renewable energy development in South Korea, contact the report’s author Young Il Choung.


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