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As Middle East gas supply disruption bites, South Korea pivots to renewable energy
10/4/2026
News
South Korea has been one of the countries most heavily affected by the Iran/US-Israel war, according to a new report by Wood Mackenzie, but recently-announced government plans to increase the country’s share of renewables may reduce its vulnerability.
More than half, 54%, of South Korea’s electricity generation depends on imported coal and gas, according to the report, The great power divide: the Middle East crisis is splitting global power markets into winners and losers. That percentage is only exceeded by Japan, at 64%. (In Europe, Italy is the most affected country, at 47%.)
The report estimates cost rises in two scenarios. In the base case scenario, it predicts costs to rise in those three countries by $4.3/MWh. In the high fuel price sensitivity case, costs are forecast to rise by $14.4/MWh in South Korea, $17/MWh in Japan and $22.4/MWh in Italy. The base case assumes geopolitical de-escalation enables fuel price moderation in the latter half of 2026. The high case predicts that current elevated price levels persist through 2026. (For comparison, the report’s high case also predicts UK prices to rise by 27% to $14.3/MWh.)
‘These cost increases represent significant policy challenges, requiring governments and utilities to navigate difficult trade-offs between financial support mechanisms, regulatory interventions and retail tariff adjustments,’ said Allen Wang, Vice President Head of Asia Pacific Power and Renewables Research for Wood Mackenzie.
In the specific cases of coal-importing countries like South Korea, beyond the pain of higher prices, the analysis also points out that the price rises could affect the reliability of its energy system. The authors report: ‘South Korea faces the most acute exposure, with import-linked thermal capacity equivalent to 87% of peak demand.’
In 2024, South Korea’s electricity generation mix was 30% nuclear, 30% coal, 28% gas, 9% renewables, 1% oil, 1% hydropower and 1% other, according to the latest Energy Institute’s Statistical Review of World Energy. The country imported 63.6bn m3 of natural gas (as LNG) in 2024, ranking it third largest globally after China (105.2bn m3) and Japan (89bn m3). In the same year, South Korea consumed the same amount: 63.6bn m3. South Korea’s total coal imports amounted to 3.07 EJ in 2024, ranking it fourth largest in the world after China (11.62 EJ), India (5.3 EJ) and Japan (4.35 EJ). In the same year, South Korea consumed 2.85 EJ of coal.
The Wood Mackenzie report points out that, in contrast to Japan and South Korea, both China and India’s coal-fired power stations can be fed by mostly domestic resources.
The authors continue: ‘The government has already implemented electricity conservation policies and emergency fiscal support to reduce peak demand. The crisis is also accelerating a strategic shift, with energy security now rivalling climate policy as a driver of generation investment decisions.’
In early April, the South Korean Ministry of Climate, Energy and Environment reportedly announced plans to increase the share of power generation from renewables, particularly solar and wind power, to 100 GW by 2030, representing a share of 20%. This will involve shutting down 60 coal-fired power plants by 2040, supporting a transition to hydrogen-based steelmaking, electrifying naptha crackers and facilitating a shift to 40% electric or hydrogen-based vehicles by 2030, according to a Japan Wire/Kyodo News report.
The Wood Mackenzie report also pointed out that other countries, notably the US and Brazil, are essentially immune from the current war, thanks to their own domestic energy resources.
