{"id":142618,"date":"2026-06-11T09:33:31","date_gmt":"2026-06-11T09:33:31","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=142618"},"modified":"2026-06-11T11:51:09","modified_gmt":"2026-06-11T11:51:09","slug":"south-korea-renewable-energy","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/south-korea-renewable-energy\/","title":{"rendered":"South Korea: Renewable Energy"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-142618","comparative_guide","type-comparative_guide","status-publish","hentry","guides-renewable-energy","jurisdictions-south-korea"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">D&amp;A LLC<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/05\/DA_logo.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">D&amp;A LLC<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/05\/DA_logo.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Renewable Energy laws and regulations applicable in South Korea<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have an established renewable energy industry? What are the main types and sizes of current and planned renewable energy projects? What are the current production levels? What is the generation mix (conventional vs renewables) in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea has an established and growing renewable energy industry, although renewable energy continues to account for a modest share of Korea\u2019s overall electricity generation mix.<\/p>\n<p>According to the Statistics of Electric Power, published by Korea Electric Power Corporation (\u201cKEPCO\u201d) in May 2025, new and renewable energy sources as defined under the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy (the &#8220;Renewable Energy Act&#8221;) collectively generated approximately 63.2 million MWh in 2024, accounting for approximately 10.61% of total electricity production.<\/p>\n<p>Solar energy was the dominant source at 5.49%, followed by bioenergy at 2.13%, fuel cells at 1.26%, hydro at 0.72% and wind at 0.57%.<\/p>\n<p>Korea&#8217;s generation mix remains heavily weighted toward conventional sources, with nuclear, coal and LNG collectively accounting for the majority of total electricity production in 2024.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are your country's net zero\/carbon reduction targets? Are they law or an aspiration?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea&#8217;s carbon reduction targets are established under the Framework Act on Carbon Neutrality and Green Growth for Coping with Climate Crisis (the &#8220;Carbon Neutrality Act&#8221;), which entered into force in March 2022. The Act sets carbon neutrality by 2050 as a national policy objective and requires the government to establish and implement national greenhouse gas reduction targets and related policy roadmaps. Korea has adopted a target of reducing greenhouse gas emissions by 40% by 2030 compared to 2018 levels \u2014 from 727.6 million tons to 436.6 million tons.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a legal definition of 'renewable energy' in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea\u2019s primary legislation governing renewable energy is the Renewable Energy Act, under which \u2018renewable energy\u2019 is defined as energy converted from renewable sources, including solar, wind, hydro, marine, geothermal, bioenergy, energy from renewable waste materials, and hydrothermal and air source energy.<\/p>\n<p>Notably, the Renewable Energy Act governs both \u2018renewable energy\u2019 and \u2018new energy\u2019 within a single statutory framework. New energy, which includes hydrogen, fuel cells and coal gasification, is treated as a distinct category from renewable energy as it is derived from the conversion of existing fossil fuels or through chemical reactions rather than from naturally renewable sources. Under the Renewable Energy Act, hydrogen energy is categorized as new energy rather than renewable energy, irrespective of its production method.<\/p>\n<p>However, amendments promulgated in March 2026 will separate \u201crenewable energy\u201d from \u201cnew energy\u201d and transfer hydrogen- and fuel cell-related provisions to the Hydrogen Economy Promotion and Hydrogen Safety Management Act (the \u201cHydrogen Act\u201d) once they take effect. Accordingly, for forward-looking purposes, hydrogen and fuel cells should be treated separately from renewable energy.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Who are the key political and regulatory influencers for renewables industry in your jurisdiction? Is there any national regulatory authority and what is its role in the renewable energy market? Who are the key private sector players that are driving the green renewable energy transition in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Regulatory Authorities and Market Structure<\/strong><\/p>\n<p>The Ministry of Climate, Energy and Environment (\u201cMCEE\u201d) is the principal government authority overseeing renewable energy policy in Korea. The Electricity Regulatory Commission (\u201cERC\u201d), which operates under the MCEE, is responsible for electricity market regulation, including licensing of electricity businesses, authorization of business transfers, approval of transmission and distribution tariffs, and approval of power market operation rules.<\/p>\n<p>Korea&#8217;s renewable energy market is primarily structured around the Renewable Portfolio Standard (&#8220;RPS&#8221;), a mandatory mechanism under the Renewable Energy Act requiring supply obligors to either generate a prescribed proportion of their electricity from renewable sources or acquire Renewable Energy Certificates (&#8220;RECs&#8221;) from renewable energy generators. Under the RPS, power generators with installed capacity of 500,000 kW or greater, excluding renewable energy facilities, are designated as supply obligors.<\/p>\n<p>The Korea Power Exchange (\u201cKPX\u201d) serves as the operator of the electricity market, through which power generators trade electricity on a centralized pool basis, and as the independent system operator responsible for the stability and real-time management of the power system. KPX also operates the RECs trading market under the RPS scheme, through which renewable energy generators sell RECs to supply obligors. Separately, the New and Renewable Energy Center (&#8220;NREC&#8221;), under the Korea Energy Agency, issues RECs and administers the K-RE100 trading market through which renewable energy generators sell RECs directly to corporate electricity consumers.<\/p>\n<p><strong>Private Sector<\/strong><\/p>\n<p>The key private sector players driving Korea&#8217;s green renewable energy transition fall into three categories. First, privately-owned power generators designated as RPS supply obligors, including large domestic conglomerates with captive power generation capacity and independent power producers, are required to meet annual renewable supply obligations, making them core participants in the renewable energy market. Second, major Korean conglomerates and their affiliates are increasingly engaging as demand-side participants, driven by global RE100 commitments, under which companies commit to sourcing 100% renewable electricity, and ESG considerations, creating growing corporate demand for renewable energy procurement. Third, international developers have entered the Korean market to advance large-scale wind projects, with a growing presence in the offshore wind sector.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the approaches businesses are taking to access renewable energy? Are some solutions easier to implement than others? If there was one emerging example of how businesses are engaging in renewable energy, what would that be? For example, purchasing green power from a supplier, direct corporate PPAs or use of assets like roofs to generate solar or wind?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korean businesses primarily access renewable energy through three mechanisms: green premium payments, procurement of RECs, and corporate power purchase agreements (\u201cPPAs\u201d).<\/p>\n<p>Of these, the green premium is the most straightforward to implement. Under this mechanism, businesses pay an additional premium to KEPCO on top of their regular electricity bills to be recognized as having used renewable energy. Its simplicity and relatively modest cost make it the most widely adopted method to date.<\/p>\n<p>REC procurement offers an alternative route, through which businesses purchase certificates from renewable energy generators to demonstrate the use of renewable energy, through the trading market administered by NREC under the K-RE100 scheme.<\/p>\n<p>Corporate PPAs are the most complex to implement, requiring direct contractual arrangements between businesses and renewable energy generators. Nonetheless, they represent the most notable emerging trend in Korea&#8217;s renewable energy market, driven by RE100 commitments and ESG considerations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has the business approach noticeably changed in the last year in its engagement with renewable energy? If it has why is this (e.g. because of ESG, Paris Agreement, price spikes, political or regulatory change)? What are the key developments in renewable energy in your country over the last 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. While Korean businesses have no legal obligation to procure renewable energy, pressure from three sources has made renewable energy procurement commercially significant: global customers seeking renewable energy sourcing commitments from their supply chains in line with RE100 goals; ESG disclosure requirements from investors and financial institutions; and the EU\u2019s Carbon Border Adjustment Mechanism (\u201cCBAM\u201d), which imposes carbon costs on exports to Europe.<\/p>\n<p>For energy-intensive industries such as semiconductors, batteries, steel, petrochemicals and automotive manufacturing, procurement of renewable energy is becoming increasingly important to remain competitive in global markets.<\/p>\n<p>Over the past 12 months, key developments include continued government support for offshore wind and utility-scale solar, ongoing efforts to resolve grid interconnection delays, and growing interest in co-locating battery energy storage systems (\u201cBESS\u201d) with renewable energy projects to address intermittency and grid stability concerns.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How visible and mature are discussions in business around reducing carbon emissions; and how much support is being given from a political and regulatory perspective to this area (including energy efficiency)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Discussions around carbon reduction have become mainstream across Korean businesses.<\/p>\n<p>At the regulatory level, the government has announced policy initiatives aimed at accelerating renewable energy deployment. In April 2026, the MCEE announced plans to deploy 100 GW of renewable energy capacity by 2030, raising the renewable energy share in power generation to over 20%, to phase out all 60 coal-fired power plants by 2040, and to reform the RPS scheme into a long-term fixed-price market to drive down generation costs.<\/p>\n<p>Reflecting a pragmatic approach to energy security \u2013 driven in part by surging electricity demand from AI data centers and semiconductor industries \u2013 the government has simultaneously announced plans to proceed with the construction of two new large-scale nuclear reactors and one small modular reactor (\u201cSMR\u201d), targeting completion in 2037-2038.<\/p>\n<p>In February 2025, the National Assembly passed three significant energy-related laws: the Special Act on Expansion of the National Power Grid (\u201cNational Power Grid Act\u201d), the Special Act on the Promotion of Offshore Wind Power Distribution and Industry Development (\u201cOWP Promotion Act\u201d), and the Special Act on the Management of High-Level Radioactive Waste.<\/p>\n<p>On energy efficiency, the government is piloting the Energy Efficiency Resource Standard (\u201cEERS\u201d), under which energy suppliers are assigned annual energy-saving targets and are expected to achieve them through investments in efficiency improvements at customer facilities. Amendments to the Energy Use Rationalization Act to enable full-scale implementation are currently under consideration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are rights to explore\/set up, interconnect or transfer renewable energy projects, such as solar or wind farms, granted? How do these differ based on the source of energy, i.e. solar, wind (on and offshore), nuclear, carbon capture, hydrogen, CHP, hydropower, geothermal; biomass; battery energy storage systems (BESS) and biomethane?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Common Framework<\/strong><\/p>\n<p>To develop a power generation project in Korea, irrespective of the energy source, a generation business license (\u201cGBL\u201d) must be obtained from the MCEE under the Electric Utility Act, following deliberation by the ERC. For small-scale projects with a capacity of 3,000 kW or less, the relevant local government has authority to grant the GBL.<\/p>\n<p>Beyond the GBL, the construction of power facilities requires a development permit, a building permit under the Building Act, and a construction plan approval under the Electric Utility Act. Where a project is located in regulated areas \u2013 such as agricultural land or public water bodies \u2013 additional permits must be secured.<\/p>\n<p>Grid interconnection approval must be obtained from the relevant transmission or distribution system operator, typically KEPCO.<\/p>\n<p>To transfer a power generation business, or to transfer shares resulting in a change of control in a power generator with a capacity of 20,000 kW or greater, MCEE approval is required.<\/p>\n<p><strong>Source-Specific Requirements<\/strong><\/p>\n<p><em>Renewable energy (solar, wind, hydropower, geothermal, biomass)<\/em><\/p>\n<p>In addition to the GBL, facilities must obtain confirmation of REC issuance eligibility from the NREC to qualify under the RPS scheme. Solar power generation projects are subject to a transfer restriction: absent justifiable reasons, the project or shares may not be transferred prior to the commencement of commercial operation.<\/p>\n<p><em>Offshore wind<\/em><\/p>\n<p>In addition to the requirements above, offshore wind projects are now subject to the OWP Promotion Act, which introduced a government-led, zone-based planning model and streamlined approval procedures.<\/p>\n<p><em>Nuclear<\/em><\/p>\n<p>In addition to the GBL, construction and operation of nuclear reactors and associated facilities require separate construction and operation permits from the Nuclear Safety and Security Commission (\u201cNSSC\u201d) under the Nuclear Safety Act. Any transfer involving a nuclear power plant additionally requires prior consultation with the NSSC.<\/p>\n<p><em>CHP (Combined Heat and Power)<\/em><\/p>\n<p>CHP facilities supplying heat to multiple customers are not subject to the GBL regime. Instead, an integrated energy business permit must be obtained from the MCEE under the Integrated Energy Business Act. ERC deliberation is required in this process as well.<\/p>\n<p><em>Carbon capture<\/em><\/p>\n<p>Underground storage of carbon dioxide streams requires permission from the MCEE under the Carbon Capture, Utilization and Storage Act. For offshore underground storage, additional approval from the Minister of Oceans and Fisheries is required under the Act on the Management of Marine Debris and Marine Pollution Deposits.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the government directly involved with the renewables industry (auctions etc)? Are there government-owned renewables companies or are there plans for one?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>While the government does not directly develop or operate renewable energy projects itself, it remains central to the structure and operation of Korea\u2019s renewable energy market through state-owned and state-controlled entities.<\/p>\n<p>Under the RPS scheme, KEPCO\u2019s generation subsidiaries (\u201cGenCos\u201d), as designated supply obligors, are required to meet annual renewable supply obligations, either by generating renewable energy directly or by procuring RECs. Beyond this, the NREC operates a competitive fixed-price bidding system through which renewable energy developers are selected and enter into 20-year REC supply contracts with supply obligors at a price determined through competitive bidding.<\/p>\n<p>With the passage of the OWP Promotion Act, the government has taken a more direct role in offshore wind development, leading site designation and planning processes rather than leaving project initiation entirely to the private sector.<\/p>\n<p>There is no dedicated government-owned renewable energy company, nor are there announced plans to establish one.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide a brief overview of key legislation and regulation in the renewable energy sector, including any anticipated legislative proposals.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea\u2019s renewable energy sector is governed primarily by two framework statutes \u2013 the Renewable Energy Act and the Electric Utility Act \u2013 which together establish the legal basis for renewable energy development, market operation and grid regulation.<\/p>\n<p>The Renewable Energy Act defines the scope of new and renewable energy, establishes the RPS scheme and governs the issuance and trading of RECs. Under the Act, the government is required to formulate a basic plan for the development, utilization, and dissemination of new and renewable energy technologies every five years. The 5th Basic Plan (2020\u20132034), announced in December 2020, set a target of 25.8% new and renewable energy share in total power generation by 2034. The government commenced preparation of the 6th Basic Plan in September 2025, with the updated plan expected to reflect the government&#8217;s policy direction of renewable energy-focused energy transition.<\/p>\n<p>The Electric Utility Act provides the regulatory framework for electricity supply and demand planning, licensing of electricity businesses, approval of construction plans for electric facilities and the operation of the power market. Korea\u2019s power market currently operates on a cost-based pool system, under which the System Marginal Price (\u201cSMP\u201d) is determined by reference to assessed variable costs and the marginal generating unit required to meet demand, rather than by pure price bidding.<\/p>\n<p>Beyond these framework statutes, a series of targeted special acts enacted in early 2025 are reshaping the regulatory landscape. The National Power Grid Act, effective from September 2025, establishes a statutory framework for designated transmission projects and introduces streamlined procedures for grid infrastructure development, recognizing grid capacity as a structural prerequisite for energy transition. The OWP Promotion Act, effective from March 2026, introduces a government-led, zone-based planning model for offshore wind development, replacing the previously fragmented permitting regime with an integrated approval process. The Special Act on Promotion of Distributed Energy (\u201cDistributed Energy Act\u201d), effective since June 2024, supports localized energy generation and introduces grid impact assessments to integrate distributed resources into grid planning. The Hydrogen Act provides the statutory basis for hydrogen production, safety regulation and the gradual integration of hydrogen into Korea\u2019s energy system. Its role will be further expanded under amendments promulgated in 2026, which will transfer certain hydrogen- and fuel cell-related provisions from the Renewable Energy Act to the Hydrogen Act.<\/p>\n<p>Looking ahead, the MCEE announced in April 2026 plans to reform the RPS scheme into a long-term fixed-price contract market and to phase out all 60 coal-fired power plants by 2040. The 12th Basic Plan for Electricity Supply and Demand, currently under preparation, is expected to provide the next major planning anchor for the sector.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any government incentive schemes promoting renewable energy (direct or indirect)? For example, are there any special tax deductions or subsidies (including Contracts for Difference) offered? Equally, are there any disincentives?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The RPS scheme is the primary government mechanism for promoting renewable energy. Under the RPS scheme, the NREC operates a competitive fixed-price bidding system through which selected renewable energy developers enter into 20-year REC supply contracts with supply obligors, providing long-term revenue certainty. There is no project-specific production tax credit or tax deduction scheme dedicated solely to renewable energy generation projects. However, generally applicable tax incentives may apply depending on the nature of the investment and the taxpayer. The feed-in-tariff system, which preceded the RPS scheme, was replaced in 2012. A limited form of feed-in-tariff for small-scale solar projects (100 kW or below), commonly referred to as the Korean-style FIT, was introduced in 2018 but has since been discontinued.<\/p>\n<p>The government has also announced plans to expand green finance support for renewable energy projects, including loan subsidies, interest support and guarantees, alongside a phased reallocation of fossil fuel subsidies toward renewable energy.<\/p>\n<p>For clean hydrogen power generation, the Clean Hydrogen Energy Portfolio Standard (&#8220;CHPS&#8221;), introduced under the Hydrogen Act to support clean hydrogen power generation through a competitive bidding-based procurement mechanism, has faced implementation challenges. The 2025 CHPS bidding round was cancelled following the government\u2019s policy reassessment, with revised criteria under development.<\/p>\n<p>On the other hand, two structural challenges function as market disincentives. First, wholesale electricity prices have been declining as renewable capacity expands, reducing revenue for developers without long-term fixed-price contracts. Second, output curtailment has increased significantly, spreading from Jeju Island to mainland regions, resulting in lost generation revenue for affected developers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How does the structure of the natural gas industry in your country impact the price of electricity? Are there any plans to de-link the price of renewable electricity from gas prices? Are there plans in your jurisdiction to keep open coal plants originally scheduled for retirement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea\u2019s wholesale electricity price is set by the SMP, a marginal pricing mechanism operated by KPX. Under this mechanism, the SMP is determined by reference to the marginal generating unit required to meet demand during the relevant trading period, taking into account assessed variable costs and system constraints. As the share of coal-fired generation has declined, LNG plants have increasingly become the marginal price-setting generators, meaning that fluctuations in international gas prices \u2013 to which Korea is heavily exposed as a near-total importer of natural gas \u2013 are now more directly transmitted into domestic electricity prices.<\/p>\n<p>There is no explicit policy to fully de-link renewable electricity from gas prices. However, Korea has been progressively reducing renewable energy developers\u2019 exposure to market price volatility through fixed-price competitive auctions and corporate PPAs. A substantial portion of electricity transactions remains linked to the SMP-based wholesale market, and a fully decoupled structure has not yet been achieved.<\/p>\n<p>On coal, the government\u2019s core policy direction is phase-out, not extension. The government has announced its intention to phase out all 60 coal-fired power plants by 2040. Retirement schedules may be adjusted in individual cases to ensure grid stability during the transition, but this is understood as a transitional measure rather than a policy to extend coal-fired generation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the significant barriers that impede both the renewables industry and businesses' access to renewable energy? For example, permitting, grid delays, credit worthiness of counterparties, restrictions on foreign investment, regulatory constraints on acquisitions; disputes\/challenges?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Permitting, stakeholder acceptance and grid constraints are the primary barriers to renewable energy development in Korea.<\/p>\n<p>On permitting, viable sites for solar projects are limited. Korea\u2019s mountainous terrain, which covers a substantial portion of its landmass, is subject to strict development restrictions, and agricultural land regulations impose additional limitations. Local government setback requirements from residential areas, roads and waterways further narrow viable locations. Onshore wind faces similar terrain restrictions, particularly in the most wind-rich areas along the East Coast.<\/p>\n<p>For offshore wind, the OWP Promotion Act, effective from March 2026, replaced the previous fragmented permitting system \u2013 under which developers competed to secure site priority by racing to install wind measurement equipment within overlapping development zones \u2013 with a government-led, zone-based planning model. Stakeholder acceptance, particularly coordination with fishing communities, remains a prerequisite for zone designation under the new framework.<\/p>\n<p>Grid constraints have emerged as a structural bottleneck, with insufficient transmission capacity leading to increasing output curtailment. The National Power Grid Act provides a statutory framework to accelerate grid infrastructure development, though grid capacity constraints are expected to remain a medium-term challenge.<\/p>\n<p>Under the RPS scheme, the primary REC offtakers are GenCos, whose creditworthiness is not a material concern. As corporate PPAs expand, however, the creditworthiness of corporate counterparties will become an increasingly relevant consideration.<\/p>\n<p>There are no sector-specific foreign ownership restrictions generally applicable to renewable energy projects, although generally applicable foreign investment, national security and licensing requirements may apply.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key contracts you typically expect to see in a new-build renewable energy project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A new-build renewable energy project in Korea typically involves the following key contracts: an REC offtake agreement, an engineering, procurement, and construction (\u201cEPC\u201d) agreement, an operations and maintenance (\u201cO&amp;M\u201d) agreement, a grid connection agreement, and project financing documents. Where multiple investors are involved, a shareholders\u2019 agreement is also standard.<\/p>\n<p>The REC offtake agreement is the primary revenue contract. Renewable energy developers generate two revenue streams: electricity sold through KPX at the prevailing SMP, and RECs sold to supply obligors. To stabilize total revenue, renewable energy developers typically enter into fixed-price contracts under which the combined value of SMP and REC price is predetermined \u2013 either through NREC\u2019s competitive fixed-price bidding system, which offers 20-year fixed-price contracts, or through bilateral negotiation with supply obligors.<\/p>\n<p>Corporate PPAs have been introduced as a statutory exception to the general rule that electricity must be traded through KPX. Two structures are available: a third-party PPA, intermediated by KEPCO, and a direct PPA between the renewable energy developer and the corporate offtaker. Both are increasingly used as RE100 compliance tools. Virtual PPA structures are under discussion, but the regulatory framework remains at a developmental stage.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on the import or export of renewable energy, local content obligations or domestic supply obligations? What are the impacts (either actual or expected) in your jurisdiction of the implementation of the Net Zero Industry Act (EU) Regulation 2024\/1735 or the \u201cforeign entity of concern\u201d regulations in the U.S.?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea does not have a cross-border electricity trading market for renewable electricity. As regards renewable energy equipment and components, there are no general renewable-sector-specific import or export restrictions, subject to generally applicable trade controls.<\/p>\n<p>That said, quasi-local content measures apply to wind projects, including the following. First, under the Rules on the Issuance and Trading Market Operation of Renewable Energy Certificates, wind projects are required to use facilities that have obtained KS (Korean Industrial Standards) certification. Second, a supplementary REC weighting for offshore wind projects with a domestic component utilization rate exceeding 50% was introduced, but subsequently removed in April 2023, following concerns over potential discrimination against foreign companies. Additionally, the evaluation criteria for wind project developers in the fixed-price bidding system include an assessment of contribution to the domestic industrial ecosystem, innovation capabilities, and domestic investment and job creation.<\/p>\n<p>The EU\u2019s Net Zero Industry Act does not directly apply to Korea\u2019s domestic renewable energy market. However, as the EU increasingly incorporates non-price criteria, such as supply chain resilience and sustainability, into renewable energy procurement, Korean manufacturers of solar panels, wind turbines and batteries seeking access to EU markets may need to adapt their practices accordingly.<\/p>\n<p>Korean companies are not themselves subject to restriction under the U.S. foreign entity of concern (\u201cFEOC\u201d) regulations, as Korea is not a \u2018covered nation.\u2019 However, Korean companies with meaningful exposure to supply chains touching covered nations may need to navigate the FEOC rules carefully to preserve eligibility for relevant U.S. incentive programs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How has deployment of renewables been impacted in the last year by geopolitical uncertainties and other non-country specific factors: For example, the conflict in the Middle East, financing costs, changing tariff regimes, supply chain or taxes or subsidies (e.g. the impact of the One, Big, Beautiful Bill on the tax credits and other incentives created by the Inflation Reduction Act in the U.S.)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea&#8217;s renewable energy deployment has continued to expand over the past year, though several external factors have shaped market conditions.<\/p>\n<p>First, project development costs have remained elevated. Cumulative effects from post-pandemic supply chain disruptions, the war in Ukraine, and the high-interest rate environment of 2023\u20132024 have kept equipment, material and financing costs above pre-pandemic levels.<\/p>\n<p>Second, supply chain conditions have shown both positive and negative trends. Lower-cost Chinese modules, which account for a substantial share of Korea\u2019s module imports, have reduced solar installation costs. At the same time, China&#8217;s tightened export controls on rare earth elements and critical minerals, introduced in 2025 amid U.S.\u2013China trade tensions, have raised concerns over inputs essential for wind turbines and batteries, prompting the Korean government to launch a dedicated rare earth supply chain task force.<\/p>\n<p>Third, changes to U.S. clean energy incentives under the One Big Beautiful Bill Act of July 2025, which amended the Inflation Reduction Act, have primarily affected Korean companies&#8217; U.S. operations rather than domestic deployment in Korea.<\/p>\n<p>Fourth, the recent geopolitical tensions in the Middle East, including risks relating to the Strait of Hormuz, have underscored Korea&#8217;s structural vulnerability to fossil fuel supply shocks. While the direct impact on near-term project deployment has been limited, the crisis is expected to add momentum to Korea&#8217;s renewable energy transition.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Could you provide a brief overview of the major projects that are currently happening in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, offshore wind is the most active area of policy and project development in Korea, supported by government momentum but progressing slowly on the ground.<\/p>\n<p>Korea has set a target of over 25 GW of cumulative offshore wind capacity by 2035, with an interim target of 10.5 GW in construction or operation by 2030. To support this, the government is focusing on building the foundational infrastructure \u2013 ports, installation vessels and financing mechanisms \u2013 needed to enable annual deployment of 4 GW from 2030 onwards. The OWP Promotion Act introduced a government-led, zone-based planning model to streamline permitting, and a dedicated Offshore Wind Promotion Unit has been established to provide project-level support.<\/p>\n<p>Despite this momentum, commercial deployment has progressed more slowly than policy ambitions. Commercial offshore wind capacity remains limited compared with the large volume of permitted or proposed projects. Military operability review has historically been the most significant bottleneck, prompting the Ministry of National Defense to establish a dedicated Renewable Energy Cooperation Team in February 2026. The combination of military clearance issues, broader regulatory uncertainty and a challenging global offshore wind environment has also led to project withdrawals by several foreign developers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are the business models in the renewable energy sector in your jurisdiction adapting to the increasingly significant pace of deployment of BESS? What percentage of deals are standalone, co-located or hybrid? How is the implementation of these business models impacting financing structures?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Korea&#8217;s renewable energy business models are beginning to shift in response to the policy-driven expansion of BESS, with standalone BESS emerging as a major new development model, supported by dedicated government procurement.<\/p>\n<p>Co-located models pairing solar generation with BESS were historically common, supported by REC weighting incentives that operated from 2016 until their phase-out at the end of 2020. Since then, standalone BESS has emerged as the primary development model, driven by the Centralized ESS Contract Market operated by KPX \u2013 a competitive bidding mechanism awarding 15-year fixed-price contracts. The 11th Basic Plan for Electricity Supply and Demand targets cumulative procurement of 2.22 GW of standalone BESS by 2029, and the nationwide bidding round in 2025 awarded 563 MW. Hybrid structures combining renewable generation, BESS, corporate PPAs and Virtual Power Plant (&#8220;VPP&#8221;) participation are also emerging, though Korea&#8217;s VPP market remains at an early stage, with pilot programs concentrated in Jeju.<\/p>\n<p>Deal-level breakdown statistics are not regularly published, but new development activity has shifted decisively towards standalone BESS, while the existing installed base largely reflects the legacy of co-located projects supported by the former REC weighting regime.<\/p>\n<p>These shifts have reshaped financing structures. Whereas traditional renewable energy projects with long-term REC offtake or fixed-price arrangements generally benefit from predictable cash flows that support project financing, BESS projects may involve greater revenue uncertainty, particularly where they rely on merchant revenues, arbitrage opportunities or ancillary service payments rather than long-term contracted revenues. As a result, lenders tend to place greater emphasis on the existence of contracted cash flows and overall revenue stability as key elements in assessing bankability, which often leads to more conservative financing terms. The 15-year fixed-price contracts under the Centralized ESS Contract Market have materially improved cash flow visibility and are contributing to more favorable financing conditions for standalone BESS.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is required in your jurisdiction to facilitate confidence in new development and financing in newer areas like offshore wind or hydrogen?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Confidence in new development and financing in newer areas generally requires a stable and predictable regulatory framework, revenue mechanisms that adequately reflect project economics, and supporting infrastructure for deployment at scale. While Korea has made significant policy progress across offshore wind, hydrogen and SMR, several conditions remain to be met.<\/p>\n<p>For offshore wind, while permitting has been streamlined under the OWP Promotion Act, pricing under the fixed-price bidding system has yet to consistently reflect actual project costs, and supporting infrastructure such as ports, installation vessels and grid capacity remains insufficient for large-scale deployment.<\/p>\n<p>For hydrogen, the statutory framework is in place, but an economically viable business model has yet to fully emerge. The CHPS was introduced to support clean hydrogen power generation, but the 2025 CHPS bidding round was cancelled pending revised criteria. The cost of domestic green hydrogen production also remains too high to be commercially competitive.<\/p>\n<p>For SMR, confidence will depend on regulatory approval and the successful operation of a first commercial unit. The government has announced plans to construct one SMR alongside two new large-scale nuclear reactors, targeting completion in 2037-2038, with construction and operation permits to be obtained from the NSSC under the Nuclear Safety Act.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are renewables projects commonly financed in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Renewable energy projects in Korea are predominantly financed through project finance. Lenders typically require a stable revenue stream secured through an REC offtake agreement or a PPA, together with performance guarantees from EPC contractors, availability or performance undertakings from O&amp;M contractors, and, where necessary, credit support from sponsors or other creditworthy parties.<\/p>\n<p>Corporate financing is also used, particularly by RPS supply obligors raising capital to meet their annual renewable supply obligations.<\/p>\n<p>Government green finance support, through loan subsidies, interest support and guarantees, is being expanded as a complementary funding source.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is the rising demand for data centres impacting the grid and electricity prices for consumers?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Existing data centers contribute to grid congestion in Korea, particularly in the Seoul metropolitan area. They are not the direct cause of recent industrial electricity price increases, but they add to the long-term demand growth that puts upward pressure on rates over time.<\/p>\n<p><em>Grid impact<\/em><\/p>\n<p>About 70% of Korea&#8217;s data center capacity sits in the Seoul metropolitan area. Between August 2024 and June 2025, KEPCO reportedly received 290 applications for new data center power supply, with 195 (67%) applications relating to the metropolitan area and representing approximately 20 GW of requested capacity. Under the grid impact assessment introduced by the Distributed Energy Act, effective since June 2024, only a limited number of metropolitan-area applications have passed the assessment.<\/p>\n<p><em>Price impact<\/em><\/p>\n<p>Industrial electricity rates rose seven times between 2022 and 2024, primarily due to KEPCO\u2019s accumulated losses and fuel-cost pressures. Data centers are better understood as a contributing factor to long-term demand growth and grid investment requirements, rather than as the direct cause of recent tariff increases.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5383<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/142618","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=142618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}