Abolishing REC and spot markets, shifting to competitive auctions and regional rate systems
The government is undertaking major structural reforms across power markets, power grids and energy industry supply chains to usher in an era of 100GW renewable energy by 2030. Rather than simply increasing renewable energy supply, the goal is to lower generation costs, expand grid capacity and develop solar, wind, small modular reactors (SMR), high-voltage direct current (HVDC) and energy storage systems (ESS) into export industries.
Under the Korean Green Transition (K-GX) strategy, the government plans to expand renewable energy from the current level of approximately 37GW to 100GW by 2030. Specifically, the targets are 87GW for solar, 9GW for wind and 4GW for other sources.
To achieve this, the government will identify GW-scale solar projects in areas with available grid capacity and utilize policy siting through rooftop installations, agrivoltaics and floating solar. For wind, supply will be expanded through large-scale planned siting and licensing support, while offshore wind infrastructure including support ports and dedicated installation vessels will be expanded.
Cost competitiveness is also critical. The government has set a target to lower solar generation costs from the current 150 won per kWh to 100 won by 2030 and 80 won by 2035. To achieve this, the renewable energy supply system will be completely overhauled for the first time in 15 years. The Renewable Portfolio Standard (RPS) and spot market will be abolished, and from 2027 a unified fixed-price bidding system through competitive auctions will be introduced to drive price competition. This is also intended to reduce the problem of increased settlement costs that occurred in the existing spot market.
Expanding offshore wind supply chains and fostering next-generation solar and SMR
The government has also announced plans to significantly strengthen the power grid to accommodate 100GW of renewable energy. HVDC and distribution-level ESS will be expanded and existing transmission lines will be replaced with higher-capacity versions to secure transmission capacity. A special purpose vehicle (SPV) will be established this year to pursue a demonstration project for subsea HVDC between Saemangeum and Seohwaseong, and a direct current (DC) industry will be developed to supply power generated at renewable energy facilities directly to large-scale demand centers.
In particular, the government will pursue plans to directly connect generation and demand sites by utilizing MVDC in artificial intelligence data centers and industrial complexes and LVDC in universities, military bases and villages. A Korean-developed artificial intelligence model called "Korean Kraken" will also be developed to optimize the operation of distributed resources including renewable energy, ESS and electric vehicles (V2G). Development will begin in 2027 and demonstration with actual flexibility resources and integrated operations will be conducted from 2028 onwards.
Power markets and rate systems will also change to align with renewable energy expansion. Electricity forecasts reflecting price signals during periods of renewable energy oversupply will first be introduced in Jeju, followed by phased market reforms through demand bidding and price bidding systems. An ESS central contracting market will be operated annually to secure flexibility resources needed for the grid, and an industrial regional electricity rate system will be established that takes transmission costs and regional balanced development into account.
For solar, next-generation technologies such as tandem cells and perovskite will be developed and domestic production capacity will be expanded. For wind, 20MW-class mega turbines and floating offshore wind technology will be secured while production bases for core components will be established. Plans include building a full-stack supply chain that bundles related infrastructure including dedicated offshore wind installation vessels.
In the nuclear sector, the SMR industry will be fostered as a new green industry. The introduction of the i-SMR first unit by 2035 will be pursued, and SMR production capacity will be built alongside reactor type diversification. Doosan Enerbility plans to establish a dedicated SMR foundry factory in Changwon to build capacity for producing more than 20 units annually by 2030.
Localizing key materials including HVDC subsea cables and expanding ESS and battery demand
In the power equipment industry, localization of next-generation power technologies including HVDC will be pursued. Technology development and production facility expansion for key materials including GW-class large-capacity HVDC subsea cables, transformers and transmission lines will be promoted, and KEPCO will also construct large-scale transmission, substation and distribution facilities to align with the renewable energy era. The government is positioning the power equipment industry as a next-generation export industry through these efforts.
The ESS and battery industry will also benefit from new markets created by renewable energy expansion. Alongside demonstration and commercialization of next-generation batteries, domestic production capacity will be expanded by leveraging demand from the ESS central contracting market, transmission grids and island regions. A pilot line for sodium-ion battery-based ESS will be established in Ochang and demonstration in Jeju will also be pursued. This is a strategy to secure new supply chains in the ESS market currently dominated by Chinese LFP products.
Original Korean article: Electric Times
English brief by Korea Wind Intelligence, koreawindintel.com
