Pursuant to the Electricity Business Act, the Ministry of Trade, Industry and Energy (the “MOTIE”) is required to establish, every two years, a basic plan for electricity supply and demand (“Basic Plan”) which includes the basic direction of electricity supply and demand for 15 years and the long-term prospects of electricity supply and demand.  MOTIE announced its 10th Basic Plan on January 13, 2023.  The main details of the Basic Plan relating to renewable energy sources and reorganization of the electricity market are as follows.

Electricity Target Demand and Energy Generation Target Outlook

The electricity target demand set out in the 10th Basic Plan takes into account the trends in continuous electrification and data center growth.  The target facilities capacity is projected to be 143.9GW.
 
In terms of energy generation volume, renewable energy is expected to increase steeply and coal is expected to decrease sharply.  Nuclear power and LNG are expected to decline slightly.  In 2036, the energy mix is expected to consist mostly of the following sources: renewable energy, LNG, nuclear power and coal.  Below is the detailed forecast up to 2036.
 

Energy Generation Volume and Proportion Forecast by Energy Sources (Unit : TWh)

Renewable Energy Key Policy Direction

Although the proportion of renewable energy has decreased compared to the 9th Basic Plan in order to set reasonable goals and balance the energy sources in line with the new administration’s energy policy direction, the capacity of renewable energy in 2030 is still expected to be 72.7GW.  This requires an additional 39.9GW to the current capacity.
 
In terms of the systems, the government plans to consider expanding the introduction of the wind power bidding market and converting the RPS system into an auction system.  As these are expected to lead to changes in the renewable energy market, we will monitor and follow up on any new developments.  In addition, as (i) requirements for examination of the grid connection system will be strengthened when granting electricity business licenses, (ii) the unlimited access system for capacity of 1MW or less solar power will be re-examined, and (iii) local residents’ receptivity will be emphasized by reforming the residents participation scheme and establishing guidelines to enhance residents’ acceptance, it would be necessary to review the details of these anticipated changes when implementing a new project.
 
Meanwhile, the government plans to revise the systems to cope with volatility in renewable energy output, including output control standards and procedures.  In order to allow grid connection to power producers with immediate need for grid connection, the government will also consider terminating grid connection contracts with power producers who have not progressed for a considerable period after applying for grid connection.

Electricity Market Reform

The electricity market will be diversified by introducing a long-term contract market for low-carbon power sources (such as hydrogen and ESS), a real-time market that can reflect supply and demand conditions in real time, and an auxiliary service market that commercializes and trades reserve power.  In addition, the introduction of the price bidding pool (PBP) and two-way bidding is expected to strengthen the pricing function and the activation of third-party PPA and direct PPA is expected to boost competition in the electricity market.