Renewable Integration is the Next Step for Korean Smart Grid Success

  • Progress continues to be made on the Korean Smart Grid Roadmap 2030, which aims to create a nationwide Smart Grid.
  • The Ministry of Trade, Industry, and Energy aims for renewables to comprise at least 30 percent of Korea’s energy mix by 2036.
  • The Korean Smart Grid will need to integrate more renewable energy sources in the coming years.

With progress being made on the Korean Smart Grid Roadmap 2030, the next major obstacle is solving challenges related to increasing renewable inputs into the grid. Asian Insiders’ partners in Korea, Hannes Humala and Sean Han, explore the current situation, South Korea’s need to pivot to renewables, and what opportunities exist.

South Korea has been at the forefront of Smart Grid development globally. In 2010, the government drafted the Korean Smart Grid Roadmap 2030, which outlined a series of goals that would lead to the completion of the world’s first national-level smart grid construction.

The roadmap had five implementation focus areas: smart power grid, smart consumer, smart transportation, smart renewables, and smart electricity service. It was estimated these plans could reduce approximately 230 million tonnes of greenhouse gas emissions.

There have been several success stories from the Smart Grid roadmap, such as smart meter deployment. Nationwide device coverage is expected in the next couple of years. Additionally, South Korea is seen as a leader in battery energy storage systems (ESS), continues to develop a demand response (DR) market, and is making strides in hydrogen and fuel cell applications in transport.

Smart microgrids are another intriguing advancement. Early on, the country launched several test projects to connect renewable energy sources with the existing grid on islands, industrial sites, and other select locations. After positive results, more than 1,250 microgrids and energy storage systems (ESS) have been rolled out with a total storage capacity of 4.3 GWh.

Korea Smart Grid needs more renewables

While the Korea Smart Grid has picked low-hanging fruit in terms of reducing greenhouse gas emissions, the innovation won’t reach its full potential until more renewables are integrated into the system at a national level.

The current state of energy in South Korea highlights just how pressing this need is. The country was the seventh-largest energy-consuming nation globally in 2022 yet renewables made up only a small percentage of that. Solar and wind account for less than ten percent of energy generated while nuclear, coal, and LNG comprised more than three-quarters of all power produced.

In the 10th Basic Plan on Electricity Supply and Demand released last year, the Ministry of Trade, Industry, and Energy (MOTIE) set a target for renewables to comprise at least 30 percent of Korea’s energy mix by 2036. This was pushed back from the original target of 2030.

If South Korea is to reach its pledge of achieving carbon neutrality by 2050, scaling up renewable energy production and successfully integrating this into a nationwide Smart Grid should be a priority.

There is another reason to take action besides achieving environmental goals. A reliance on imported energy means the country is highly vulnerable to supply disruptions and price swings. This came to pass in 2022 when soaring LNG prices saw South Korea incur an additional USD17 billion in electricity costs, according to the Institute for Energy Economics and Financial Analysis.

The situation proved problematic for the state-owned energy utility Korea Electric Power Corporation (KEPCO), which now faces debts of approximately USD47 trillion. Despite having some of the highest electricity costs in the world, the government has been unable to increase consumer rates, causing losses to mount.

Upcoming challenges can provide opportunities

With more renewable energy set to be integrated into the Korean Smart Grid over the next decade, firms with technologies and knowledge in this area have an opportunity to help the country overcome potential challenges.  

In particular, issues related to volatility, intermittency, and imbalance in supply and demand that occur when renewable energy deployment increases will need to be addressed.

This will be a new obstacle for South Korea but one that has been overcome in several parts of Europe, including the Nordics. The experience of firms in this segment can not only help the country avoid common mistakes but possibly expedite the entire process as well. Most notably, there is a need to integrate renewable energy into power systems without risking reliability or increasing costs.

What is needed in South Korea?

  • Grid optimisation before reinforcement before expansion (GORE) will be needed to limit necessary investments and decrease public opposition.
  • Congestion management in a way that minimises curtailment of renewables.
  • Long-term grid planning that factors in the impact of increased renewable incorporation.
  • Supply and demand forecasting.
  • Demand response (DR) market development.
  • Continuing to increase energy storage.

This is not comprehensive but can be used as a starting point for opportunities in South Korea related to the Smart Grid and the integration of renewables. There is also potential for those developing virtual power plants (VPP) technologies, electric vehicle charging infrastructure, or other innovations that can help fill gaps in the market.

What to watch out for

Public acceptance of renewables, in general, is low when compared to other developed economies. The tide has begun to turn in recent years with the Korea Energy Agency having engaged local stakeholders to ensure better acceptance of solar and wind projects.

Additionally, energy prices are a touchy issue in the country. Political challenges have hampered reaching a consensus on changing state-controlled electricity rates. Without this, promoting renewable energy is problematic since it may increase consumer costs.

South Korea’s power grid is an isolated system with no cross-border transmission lines. Plans for the Asia Super Grid are no longer on the Renewable Energy Institute’s agenda after being announced in 2011. Elsewhere, the UN Economic and Social Commission for Asia and the Pacific is developing a roadmap for a ‘Green Power Corridor’ in Northeast Asia.

Final thoughts on the Korea Smart Grid

With energy-related debts soaring and the clock ticking on carbon neutrality goals, the Korean Smart Grid provides a sound platform for efforts to be built upon. Companies with the tools and knowledge to support the rapid integration of renewable energy into the power grid can play a key role in these efforts.

To learn more about current opportunities, schedule a no-obligation call with Sean Han, Managing Partner – Korea: sean.han(at)asianinsiders.com or Hannes Humala, Korea Partner: hannes.humala(at)asianinsiders.com

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