On February 27, 2025, the (current) 22nd National Assembly of the Republic of Korea (“Korea”) passed the Special Act on the Expansion of the National Power Grid (the “National Power Grid Act”). The National Power Grid Act was passed together with the Special Act on the Promotion of Offshore Wind Power Distribution and Industrial Development[1] and the Special Act on High-Level Radioactive Waste Management, which received bipartisan support as a collective policy package to address the challenges facing Korea’s energy industry. The three Acts (including the National Power Grid Act) are widely expected to finalized and promulgated during March 2025.
In the context of the National Power Grid Act, it should be noted that the Electric Power Source Development Promotion Act (the “EPSDP Act”) has been in place in order to enable the Korean government to “fast-track” the development of certain power generation or transmission projects deemed to be of strategic importance.[2] The EPSDP Act provides a framework for an accelerated permitting process for such projects, including deeming that certain regulatory permits have been obtained if the Ministry of Trade, Industry and Energy (“MOTIE”) has approved the implementation plan for that project. The purpose of the National Power Grid Act is not to replace the existing EPSDP Act, but rather to provide a further streamlined path to facilitate projects which seek to upgrade and enhance transmission and substation facilities.
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Summary of Key Provisions |
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Description |
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The fast-track elements of the National Power Grid Act are only applicable to projects undertaken by Korea’s state-owned utility, Korea Electric Power Corporation (“KEPCO”). This is in contrast to the EPSDP Act under which the fast-track advantages are accessible by both private companies and state-owned enterprises, such as KEPCO. |
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To expedite the development process, the National Power Grid Act provides for the following mechanisms which extend the scope of the existing framework provided by EPSDP Act.
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The National Power Grid Act seeks to assist in garnering local residents’ support for applicable projects by providing (i) legal grounds for KEPCO to pay increased compensation to local residents in the sale of their real property to KEPCO which is needed for transmission line construction projects; and also (ii) recognizing the right of owners of land situated below overhead transmission lines being developed under the National Power Grid Act to sell such land to KEPCO. |
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The National Power Grid Act is limited in its application to projects which meet the following criteria:
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Implications |
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KEPCO-led project developments: The fast-track development mechanism provided by the National Power Grid Act only applies to grid enhancement projects which are being developed by KEPCO, and not by private companies. Therefore, whether the Act will be successful in achieving real and tangible expansion in grid infrastructure in Korea will be, to a large degree, contingent on KEPCO to develop the projects under the auspices of the new legislation.
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Shortened development/construction periods for projects: It has been reported that the fast-track development mechanisms provided by the National Power Grid Act could result in a reduction of the construction period for such grid enhancement projects by an average of four years (i.e., to a projected average of nine years from the current average of around 13 years). Needless to say, this would be welcome news for developers of greenfield power generation projects (particularly, renewables) and users of large-volumes of electricity such as data centers, who have been experiencing drawn-out development timelines due to grid congestion challenges.
As is typical in Korean legislation, the National Power Grid Act is generally drafted at a very high level of detail, and more specific provisions are usually set out in the related Enforcement Decree to be prepared by the MOTIE and the Office of the President, hence it would be important to monitor news relating to the Enforcement Decree publication and any related public comments period.
[1] For further details on the Special Act on the Promotion of Offshore Wind Power Distribution and Industrial Development, please see our recent newsletter (Link).
[2] The EPSDP Act does not specify the criterion to be designated as a strategically important project which is largely at the discretion of MOTIE, however, in practice, such projects have been those included in the energy policy plans announced by the MOTIE.
[3] This is in comparison to the EPSDP Act whereby projects approved under the EPSDP Act can be eligible to have been deemed to have obtained a total of 16 permits and licenses.
