Markets
Renewable Energies & Hydrogen Strategic Markets
South Korea
Energy Sector:Offshore Wind, Hydrogen
Category:Strategic Markets
Region/Province:n.a.
Today, South Korea’s power generation is still heavily dependent on fossil fuels, with more than 60% of the electricity generated from gas and coal. Developing low-carbon technologies including both nuclear and renewable energy has been defined as the focus of the energy policy to help South Korea to reach its target of climate neutrality by 2050. In 2023, nuclear power contributes to almost 30% of country’s electricity generation, making itself the most important low-carbon energy source. Renewables, on the contrary, play a relatively minor role. The combined share of solar and wind in electricity generation accounts for around 5.5%.
The 10th Basic Plan for Long-term Electricity Supply and Demand (BPLE) of South Korea’s government targets the expansion of renewable energy to 22% by 2030 and 30% by 2036. At the same time, the share of coal should go down to under 20% and less than by 15% by 2036 and part of the electricity will be generated from hydrogen and ammonia. The BPLE also predicts a build-out of electricity generation capacity from 139GW at the end of 2022 to 239GW in 2036 in a way to meet the increasing power demand. Specifically, South Korea plans to expand 44GW of solar power and 32GW of wind energy.
The pathway towards energy transition involves some major challenges for South Korea. From the geographic perspective, there is limited land available for installing renewable energy facilities, as 70% of country’s area is covered by mountains. Furthermore, South Korea’s location without access to neighboring electricity markets makes it difficult to balance out the power fluctuations in the variable renewable energy generation. After the Fukushima nuclear disaster, public acceptance of renewable energy has significantly increased, but it is still relatively low compared to many other industrial countries.
Wind Energy
By the end of 2022, South Korea has installed 102 onshore wind farms with a total capacity of about 1.6GW. To date, offshore wind has been a minor contributor to South Korea’s renewable energy generation. A major challenge is the opposition of the local finishing industry. The lengthy permitting process also adds to the reasons why there have been delays in large offshore wind projects and almost none of them are installed yet.
Within the scope of BPLE, South Korea aims to expand 14GW of offshore wind by 2030. Currently, there is a pipeline of around 30 offshore wind projects with most of them be built in the regions of Ulsan, Sinan and South of Jeolla. Leading European wind companies, e.g. Equinor, COP and TotalEnergies are involved in some projects off the coast of Ulsan. German energy group RWE has entered a partnership with Hyundai Engineering and Construction in 2023 to jointly develop offshore wind and hydrogen in South Korea. In April 2024, RWE acquired an Electricity Business License (EBL) from the Ministry of Trade, Industry & Energy of South Korea to develop the 495MW of Seohae offshore wind project.
The South Korea’s offshore wind industry is mainly featured by small and medium-sized turbine and component manufacturers and suppliers. National turbines account for a high percentage of the total installed 1.7GW wind energy facilities by 2021. However in terms of capacity, they still lag behind those produced by the leading European manufacturers which have rolled out 14MW or larger ones in the same period. Moreover, the production costs of national turbines are estimated to be more than 30% higher than those of leading international companies.
Hydrogen
South Korea has announced its Hydrogen Economy Roadmap that aims to bring almost 3 M fuel cell electric cars to the streets and build at least 1,200 refilling stations by 2040. The plan also targets increasing domestic annual consumption to 5.3 M tons in the same period.
South Korea has launched a funding system to support the power generation from hydrogen. As part of this system, electricity producers are obligated to purchase power from hydrogen through auctions. South Korea’s Ministry of Trade, Industry and Energy (MOTIE) aspires to auction volumes of 1,300 gigawatt hours per year as of 2025 for hydrogen from fossil fuels-based production. Auctions for electricity from clean hydrogen with a yearly volume of 3,000 – 3,500 gigawatt hours will follow as of 2027.
Many Korean industry and energy companies have made the announcements to build hydrogen production facilities. Korean national gas corporation KOGAS plans to work with Siemens Energy to implement a demonstration project of green hydrogen production and supply. Korea’s leading chemical company Lotte Chemical decided to produce 1.2 M tons of clean hydrogen per year by investing 4.3 B US dollars by 2030. In the port city Ulsan, Hyundai Heavy Industries, Korea National Oil Corporation and SK Gas and other companies have joined forces to work on a production plant for green hydrogen using electricity from offshore wind energy.
To reach the net-zero target, South Korea will need to import large amounts of hydrogen – a challenge is faced by Germany as well. A number of collaboration agreements have been signed with countries mainly in southeastern Asia and the Middle East. In the project “Sarawak H2buscus”, Samsung Engineering and POSCO aim to produce blue and green ammonia, green methanol and hydrogen in collaboration with the federal state Sarawak in Malaysia. Those green energy products will be used for petrochemical, steel production and power generation. A similar project is being discussed between GS Energy and ADNOC which will see blue ammonia production in the United Arabic Emirates. From a medium-term perspective, production, transport and import of green and blue ammonia as well as blue hydrogen will be at the heart of energy trading between Korea and overseas partners.
The power sector in South Korea is one of the most crucial ones regarding greenhouse emissions reduction. The Korean government has decided to gradually co-fire hydrogen with natural gas in the country’s fossil fuel power plants. Specifically: Co-firing 20% of hydrogen is aimed for coal-fired power plants by 2027. In 2028, the share of co-fired hydrogen in gas power plants will increase to 50%.
Korean-German Energy Partnership
In December 2019, Germany and South Korea signed a joint agreement to establish the German Korean Energy Partnership. Both countries agreed to strengthen collaboration on various topics such as expansion and system integration of renewable energies and acceptance of innovative technologies. Overall, the partnership is designed to facilitate high level political exchange and business cooperation to accelerate the energy transition in Germany and South Korea. There are three working groups responsible for the content-related work of energy partnership. Renewable energy deployment, system integration, green hydrogen and power-to-x are the key elements, among other things.
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The article includes facts and figures taken from the following sources:
- Lowcarbonpower
- Statista
- GTAI
- International Energy Agency
- adelphi
- Agora Energiewende
- Oav
- Hydrogeninsight
- Exportinitiative Energie/BMWK