South Korea’s 11th power plan makes partial progress towards decarbonisation

South Korea finalised its 11th Basic Plan for Long-Term Electricity Supply and Demand (BPLE) in February 2024. The Plan ‘makes some progress toward the country’s decarbonisation goals, reflecting calls to reduce fossil fuel dependency in the power generation mix while increasing the use of carbon-neutral energy’, according to the latest analysis by the Institute for Energy Economics and Financial Analysis (IEEFA).

The 11th BPLE is expected to pave the way for South Korea’s green energy transition in association with the recently passed Energy Trifecta Bill, which includes the National Grid Expansion, Special Offshore Wind Power, and High-Level Radioactive Waste Management bills.

The Plan also seeks to achieve the country’s decarbonisation goals by quadrupling renewable energy capacity to 121.9 GW by 2038, compared to 30 GW in 2023. However, it fails to triple capacity by 2030, as pledged at the 2023 United Nations Climate Change Conference (COP28), notes IEEFA. New (includes fuel cells, integrated gasification combined cycle (IGCC), and waste-to-energy) and renewable sources of energy are expected to account for 21.72% of the generated energy mix (GWh) in 2030, rising to 32.95% in 2038 under the 11th BPLE.  

In 2024, the share of renewable energy in South Korea’s power mix surpassed the 10% threshold for the first time. However, the country is lagging some 15 years behind the global average of around 30% renewable energy generation, says IEEFA.  

According to the Energy Institute’s Statistical Review of World Energy 2024, renewables generated 52 GW of South Korea’s electricity in 2023, some 8.4% of the nation’s total 617.9 GW of power generation.

Meanwhile, LNG-fired power is forecast to rise from 43.2 GW in 2023 to 58.8 GW in 2030 and 69.2 GW in 2038, at which point natural gas will contribute 10.55% of the generated energy mix. Coal is expected to account for 10.06% in 2038, with hydrogen and ammonia-based power generation contributing a further 6.23%.  

The Plan also outlines an increase in nuclear capacity from 24.7 GW in 2023 to 28.9 GW in 2030 and 35.2 GW in 2038. In the long term, there is anticipated to be a focus on small modular reactors (SMRs). Nuclear is expected to account for 35.24% of the generated energy mix in 2038.  

Pumped storage, oil and ‘other’ forms of energy will account for remaining 4.95% of the generated energy mix in 2038.

The increase in nuclear generation forms part of the government’s strategy to meet additional power demand expected from the artificial intelligence (AI) and semiconductor sectors, according to IEEFA. It notes that this strategy differs from other countries that have rapidly adopted renewable energy to power their AI and semiconductor sectors while accounting for stronger carbon neutral and decarbonisation regulations.

International decarbonisation requirements, such as the RE100 initiative, Europe’s Carbon Border Adjustment Mechanism (CBAM), and various Scope 1, 2, and 3 reporting regulations, are increasing, continues IEEFA. It has previously highlighted that using LNG-fired electricity and heat to fuel semiconductor clusters and AI data centres could expose South Korea to substantial trade and finance risks amid strengthening decarbonisation trends.

Semiconductors make up more than 20% of South Korea’s total exports. The US is the fifth largest export destination for South Korean semiconductors and is home to 428 member companies of the RE100 climate group. As a result, there would be ‘significant consequences’ if major US companies were to switch away from South Korean chip suppliers in search of lower embedded carbon for their products, warns IEEFA.

Korea’s new offshore wind power regulatory landscape

In related news, earlier this year South Korea passed the Special Act on the Promotion of Offshore Wind Power Distribution and Industrial Development (OSW Promotion Act).

The Act aims to create a more streamlined approach to the country’s offshore wind power development licensing and permitting process. It will replace the current ‘open door’ policy, under which site selection and early-stage project development is left largely to the project developers, with a government-directed and facilitated process.  

According to Korean legal firm Kim & Chang, offshore wind power developers that have already achieved a certain level of project development may continue developing their projects under the previous regulatory regime. However, they will be able to apply for inclusion under the Act’s new government-designated development zone scheme, should they wish. Offshore wind projects selected to participate in government-designated power generation zones are expected to benefit from a fast-track licensing and permitting process. This will be overseen by a new, ‘one-stop’ authority, the OSW Power Generation Committee.

Certain provisions under the OSW Promotion Act will also establish grounds for preferential support to offshore wind projects developed by state-owned enterprises and quasi-governmental institutions, adds the legal firm.

Deep Wind Offshore and KHNP announce new offshore wind partnership  

More recently, global offshore wind developer Deep Wind Offshore has signed a partnership agreement with Korea Hydro and Nuclear Power (KHNP).

The partnership is to jointly develop the Admiral Lee and Abalone projects, contributing to South Korea’s offshore wind power expansion policy. The two offshore wind farms will each have a capacity of up to 1.5 GW.

Owned by Knutsen Group, Deep Wind Offshore currently has 3 GW of wind projects under exclusive development offshore South Korea. KHNP is the nation’s largest power generation company, producing approximately 30% of South Korea’s electricity through an energy mix that includes nuclear, hydro and solar power.  

Vena Energy invests in Yokji offshore wind project

Finally, Vena Energy, a leading green energy solution provider in the Asia-Pacific region, has announced a $200mn (KRW 280bn) investment in the Yokji offshore wind project, located in South Gyeongsang Province. It has a planned capacity of 384 MW.  

Vena Energy is also developing the 500 MW Taean wind project offshore South Korea. It is set to begin construction by the end of next year, in partnership with Copenhagen Infrastructure Partners (CIP).