South Korea is undergoing major transformations in the energy department.
The new government under President Moon has pledged to implement a new national energy plan that drastically reduces fossil fuels and nuclear energy and promotes renewable energy growth.
The 3rd National Energy Basic Plan, announced by the Korean government in June 2019, promotes massive systemic changes, along the entire production/consumption energy chain.
“The government plans to strengthen the demand management by sectors such as industrial, transportation, and construction. It also plans to streamline the price system, improve energy consumption efficiency by 38% and reduce demand by 18.6% by 2040.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
Through this renewable energy plan, South Korea also seeks to raise its electricity production by renewables to up to 35% of the total power generation in 2040, improve overall energy efficiency and promote the deployment of renewable energy.
“To achieve all this, the government plans to expand the proportion of distributed power in areas near demand, such as renewable energy and fuel cells, develop the prosumer by increasing the use of private solar cells (e.g. for household use), fuel cells for homes and buildings, and activate the power brokerage market.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
The New & Renewable Energy (NRE) industry is set to be one of the nation’s new growth engines, stimulating the economy and encouraging new, efficient and cost-effective solutions to be brought to light.
“It will foster future energy industries such as the renewable energy-hydrogen-efficiency linkage. The traditional energy industry will have higher value-added and nuclear industry will maintain the core ecosystem of the power industry. By 2040, there will be a supply of 2.9 million hydrogen cars with established 10.1GW fuel cells. The production method for green hydrogen will also be diversified.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
In terms of infrastructure, the plan is to improve the power-gas-heat market system to accelerate energy transfer and establish an energy big data platform to promote new industries. This will require maintenance of the real-time supplementary service operation system, reinforcement of the differential compensation for eco-friendly power capacity charges, compensation of the direct import system of gas and will also introduce an individual rate system together with an inter-regional heat link incentive.
This plan puts renewable sources on the map, expanding the country’s energy portfolio to include waste to energy, photovoltaic, hydro, biomass, offshore wind, marine and natural gas sources.
“The Renewable Energy 3020 Implementation Plan, released by South Korea’s Ministry of Trade, Industry and Energy, is to increase renewable energy’s share from 7% to 20% by 2030 by providing 48.7GW of new generating capacity. The main renewable energy sub-sectors for the new production plants will be solar energy (30.8GW, 63%) and wind energy (16.5GW, 34%). By adding the new capacity of 48.7GW, the government aims for 63.8GW of renewable energy sources by 2030. In order to achieve the goal, the government announced new tasks regarding expanding PV in urban areas, expanding agricultural PV usage and large-scale projects.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
This significant change on the Korean electricity agenda opens up an entire range of business opportunities in the New Energy Industry, as these new policies lead to cost reductions, an entirely new taxation system and fast development of technology.
“European companies may enter South East Asian markets with Korean companies since there are many opportunities in providing the technologies to fight and respond to climate change in South East Asia. […] In addition, by collaborating with Korean companies, European companies can also develop advanced technologies that could lead to new business generation back on the European markets.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
In this landscape, European companies that develop competitive clean energy solutions can easily be introduced to the market.
Several sub-sectors could be of interest for European energy solution providers. At present, most opportunities lie in emerging fields like photovoltaic, wind, hydropower, geothermal energy production, as well as other downstream management systems, energy efficiency and conservation.
“When it comes to wind energy, of the 16.5GW of new energy to be installed by 2030, 12GW is focused on offshore wind power projects. Therefore, there will be opportunities for the European companies in the offshore segments, especially floating offshore wind.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
Similarly, new opportunities will arise in the solar power sub-sector.
South Korea is one of the world leaders in the PV sector. However, there are numerous opportunities for European companies that can come up with innovative technologies, energy-efficient PV modules, or technologies of recycling and reprocessing of PV.
Under the Renewable Energy 3020 Implementation Plan, the government aims to increase solar energy up to 57% of the total green energy production by 2030. 19.9GW is to be expanded through residential and private solar power generation and 10GW will be expected to grow from solar farms.
“In addition to this, the Seoul Metropolitan Government has a master plan to generate 1GW of capacity with the residential solar power by 2022. The city government plans to help 1 million households install miniature PV panels.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
Other opportunities exist for European companies that have the technology and the business model of reusing Energy Storage System (ESS) batteries, and companies that use Vehicle to Grid (V2G) technologies.
Hydrogen energy is also essential in the new plan, opening up new opportunities for European companies in the field.
“The government’s plan focuses on increasing production of hydrogen-powered fuel cell electric vehicles, expanding the supply of fuel cells and building a system of producing and supplying hydrogen. The government aims to utilize 5.86 million tons of hydrogen by 2040, especially in the form of hydrogen vehicles and fuel cells.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
Other energy sub-sectors with abundant opportunities for European companies target solutions for the direct trading of energy between prosumers and consumers through new and innovative technology such as AI, house smart metering systems that could link with smartphones and would be able to monitor in real time the power consumption of electrical devices, representative technologies of the EU circular economy, and building management solutions, for example those targeting heat recovery technologies.
Companies focused on solutions designed for very specific issues of the Korean energy market will also have a chance to make a difference in Korea.
According to expert YoungJin Lee, due to abrupt electricity consumption in recent years, to a staggering 4.5% annually (well above the OECD average of 0.7%), Korea now has a need for Energy Demand Management Solutions, particularly for Demand Response, Virtual Power Plant and others.
Korea’s long-pending issue with atmospheric aerosol particles (also called Fine Dust), caused by coal power plants and diesel engines, opens new opportunities for European companies providing recycling technologies for aged coal power plants and technologies for reducing fine dust emissions from coal power plants, like those used at the Danish Avedøre Biomass Power Station south of Copenhagen.
With a rapidly growing ESS industry, Korea has also faced many challenges to safely expand its installation capacity. Fire accidents caused by defective battery protection systems, improper operation management, and faulty installations of the systems have affected the industry.
“The government plans to improve the quality of the ESS industry ecosystem to solve safety issues. In order for the ESS industry to continuously grow, the government will provide short-term incentives and support the new demand. European companies that have developed technology in the next-generation batteries with low fire risk and Power Conversion System (PCS) technologies that could improve reliability and safety will have opportunities in the Korean market.” – YoungJin Lee, expert in Green Energy Technologies in Korea.
Regardless of sub-sector, the key factor for companies looking to secure a spot on the market is partnering with the right local companies.
To help European companies that produce solutions for the renewable energies sector, EU Gateway │Business Avenues organises an EU-funded business mission to Seoul from 3-7 February 2020.
This mission is tailormade to facilitate the matching of European companies with the right potential partners and customers on the Korean market. The EU package includes an exhibition event with pre-arranged and spontaneous meetings, a site visit and a networking event, logistical and financial support.
Interested in this EU-funded opportunity? Apply online by 18 October 2019.