South Korea picks solar, battery and EVs as key sectors in US$747 billion Green Industrial Plan

Aimed at driving investment and competitiveness in the manufacture and supply chain development of low-carbon technologies, the K-GX strategy also supports the government policy goal of reaching 100GW of renewable energy generation capacity in South Korea by 2030.

The government has selected 10 green industries in which to strengthen domestic production and enhance national competitiveness in those fields. Presentations were given on each industry, followed by presentations from four major domestic companies participating in those sectors.

Sectors:

• Electric vehicle
• Battery
• Solar power
• Wind power
• Small modular reactor (SMR)
• Power equipment
• Power semiconductor
• Heat pump
• Hydrogen
• Carbon capture utilisation and storage (CCUS)

The projects’ aims are to enhance self-reliance in clean energy supply chains, decarbonise national industries, electrify all modes of transportation and increase residential-scale adoption of clean energy technologies. 

The companies:

Hanwha QCELLS – tandem perovskite solar cell technology

POSCO Holdings – steel industry decarbonisation

LG Electronics – expansion of ‘GX’ strategy into residential sector

Samsung Electronics – expansion of ‘GX’ strategy into residential sector

Public money will be invested over a 10-year period, while private-sector investments totalling KRW220 trillion will be committed to the signature projects. Public money comprises KRW200 trillion in fiscal funds and KRW790 trillion in climate finance, MCEE said.

According to MCEE announcement materials, “bold tax incentives and regulatory improvements will be implemented in parallel” in the early stages of the K-GX strategy’s implementation.

Domestic production tax credits will be introduced for technologies including solar PV, wind and battery storage, leveraging the expansion of climate finance funding. Special regulatory zones and fast-track licensing support will be established for core GX technology companies.

Transmission upgrades and redesign to accommodate 100GW renewables by 2030

The government recognises that grid constraints have held back a rapid expansion in renewable energy adoption that Korea is otherwise seeing.

The southwestern Honam region, for example, will not be able to offer hosting capacity on transmission and distribution (T&D) networks for new grid-connected energy projects until after 2034.  

Just before the end of September, Minister Kim Sung-Hwan announced the MCEE’s Power Grid Innovation Plan at a State Council Meeting.

The plan would see the Korea Republic’s electricity grid and corresponding regulation undergo redesign through five strategies:

Flexible grid connections, where new generators will be prioritised based on available grid capacity and not the rated capacity. Non-firm access rules will be implemented, under which solar PV output can be temporarily curtailed to manage the system.

Currently, distribution lines may only host 14MW of solar capacity. This will increase to 16MW for non-firm access, while the hosting capacity at substations can be increased from 50MW to 60MW. In Honam, this could result in a 2.6GW expansion of grid hosting capacity without the need for T&D expansion, MCEE said.

Non-wires alternatives (NWA), whereby battery energy storage systems (BESS) play a role in deferring the need for T&D upgrades, will also be pursued. A familiar term for regular readers of Energy-Storage.news, this has been seen in various other markets, particularly at the distribution level, but also on a grand scale with projects like Germany’s transmission system ‘GridBoosters’.

Energy storage systems (ESS) will be deployed at strategic locations on distribution networks and at substations to mitigate grid congestion resulting from abundant daytime solar generation.

An additional 3GW of solar could be connected via distribution networks in grid-constrained areas and around 1.6GW at substations through this initiative, MCEE claimed.

Managing ‘fictitious and delayed’ projects awaiting connection through inspections of queues has already enabled 9GW of reserved grid capacity to be reclaimed, the Ministry said. Grid connection rights for delayed projects, including offshore wind, will also be deferred until the projects are ready for construction and connection, in an initiative that could free up a further 10 GW of hosting capacity in Honam alone.

Overhaul of grid connections for renewable energy will result in renewables being given priority dispatch over fossil fuels, reversing the current paradigm. The national grid could add a further 20GW of renewable energy capacity as a result. Meanwhile, as has also been seen recently in European markets such as Germany, grid connection rights will move from being issued on a first-come, first-served basis to prioritising a competitive bidding process from January 2027, enacted in tandem with reforms to the Renewable Portfolio Standard (RPS).

The cost-sharing system for renewable energy grid connections is also changing: developers connecting projects to the distribution grid currently pay for necessary network upgrades. Subsequent developers’ projects benefit from that initial investment.

Going forward, national power and grid company KEPCO will instead make the initial infrastructure upgrade investments. Subsequent developers then share the ongoing costs of upgrades.

“This plan is about making the most efficient use of the power grid we have now, rather than waiting for new grid infrastructure to be built,” Minister Kim Sung-Hwan said.

Central Contract Market BESS tender

Also last month, the MCEE opened its latest Central Contract Market procurement for energy storage, seeking resources totalling 1,180MW. To date, three Central Contract Market procurements have been held since 2023, resulting in 1,196MW of capacity awards.

Opened on 22 September, the procurement aims to support the deployment of 1,000MW of storage on the South Korean mainland and 80MW on Jeju Island by February 2029.

The tenders align with the national 2025 Basic Plan on Electricity Supply and Demand, which targets a generation capacity of 157.8GW, incorporating a 22% reserve margin, by 2038. That includes 115GW to 121GW of renewable energy.

By that time, Korea’s peak electricity demand is projected to reach 129.3GW by 2038 and the government aims for the share of carbon-free electricity to have reached 70.7% by that time, according to the Institute for Energy Economics and Financial Analysis (IEEFA).        

Machine translation of Korean language materials was used for portions of this article.