Wind Power Industry

An Expert's View about Energy in South Korea

Posted on: 16 Jan 2012


Korea is the world’s 10th largest energy consumer with virtually no domestic energy sources of its own. It imports 97% of its energy resources, and is currently the 6th largest oil importer in the world. To reduce its heavy energy dependency on foreign fossil-fuels, the Republic of Korea Government (ROKG) has launched a series of plans and initiatives to promote the domestic development and use of new and renewable energies. Among others, wind power industry, especially offshore, is growing at a fastest rate thanks to Korea’s fully developed steel industry and open access to ocean wind. Boosted by the government initiatives, Korean industry is increasing investment in wind farm construction, product manufacturing, and research & development. Though the overarching goal is to support production of Korean-made technologies, we continue to see imports of advanced technologies, providing good business opportunities for U.S. wind power companies with innovative technologies.

Market Demand

The highlight of ROKG’s policy initiatives to foster renewable energy is Korea’s new National Energy Plan announced in August 2008. Dubbed the “Low Carbon, Green Growth Plan,” it is Korea’s first long-term energy plan with the goal to serve as the governing policy for energy generation and use for the next 20 years. According to the Plan, ROKG will increase the ratio of renewable energy generation out of the entire energy generation from 2.4% to 11% by 2030. By subsector, specifically; 1) the generation capacity of photovoltaic power will grow from 80 MW to 3,504 MW (44 times); 2) wind energy will grow from 199 MW to 7,301 MW (37 times); 3) bio energy from 1,874 KGcal to 36,487 KGcal (19 times); 4) and geothermal energy from 110 KGcal to 5,606 KGcal (51 times).

Since renewable energy technologies remain commercially disadvantageous against the conventional power generation technologies, they still heavily rely on government policies to secure sufficient demand. The ROKG’s principal policy drivers are basically two-fold: 1) provide financial incentives such as subsidiaries, low interest loans, tax reduction/exemption, and feed-in-tariffs to power utilities using renewable energy, and 2) mandate that power utilities generate a certain portion of their power from renewable energy, known as the Renewable Portfolio Standard (RPS).

Starting January 2012, RPS will begin to function as the primary vehicle for industry development while the feedin- tariff will start to phase out. The current RPS goal is that each of major electric utility generates two per cent of their entire electric power generation from renewable energy sources in 2012, and raises the criteria over the ten years to reach 10 per cent in 2022.

Market Data

Korea’s energy consumption has gradually increased over the last decade. In 2009, the total energy consumption was estimated at 243 million tons of oil equivalent (TOE, equivalent to 11.630 MW/h), which put Korea in the 10th place in terms of energy consumption in the world. To meet the demand, Korea imported energy sources including oil, natural gas, and coal, totaling some $91 billion and representing 28% of Korea’s total imports that year.

Out of all the primary energy consumption sources, oil, coal, and liquefied natural gas (LNG) accounts for 42.1%, 28.2%, and 13.9%, respectively. Nuclear accounts for 13.1%, with renewable energy and others covering the remaining 3%. According to the National Energy Plan, this energy mix will be substantially changed to promote renewable energy and nuclear energy while reducing the high dependency on fossil fuels.

Korea is a fully industrialized country, and its manufacturing base includes a large number of energy-intensive, heavy industries including shipbuilding, petrochemical, automotive manufacture, etc. The industry sector is the biggest energy user of Korea covering 58% of the national energy consumption. The transportation, the residential/commercial, and the public sector account for 20%, 20%, and 2%, respectively. Renewable energy has several sub-sectors. Waste-to-energy including energy derived from waste gas and industrial/municipal wastes, etc. is by far the biggest, representing two-thirds of total renewable energy generation in Korea. Small hydro energy and bio energy that is derived from bio diesel and landfill gas (LFG), etc. covers 10% each, and are followed by wind energy (2.4%), photovoltaic (2.0%), solar thermal (0.5%), and geothermal (0.4%).

The big portion of waste-to-energy is mainly attributable to Korea’s very strong regulations promoting waste recycling. Most solid wastes generated from industry and households are reused, recycled, or incinerated for energy use and volume reduction. Only a small amount of Korea’s wastes end up in landfills.

The remaining minor sub-sectors include fuel cells, tidal power, hydrogen power, etc. which currently represent a negligible part of renewable energy generation. However, these subsectors also pose strong potential to grow as ROKG is actively supporting R&D into renewable energy technologies.

Read the full market research report

Posted: 16 January 2012

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