Renewable Energy in Korea to triple by 2030
In the past decade, renewable energy in Korea has been extremely underdeveloped compared to many western countries, and Korea has been criticized for heavy reliance on nuclear and fossil fuels for long. Recent drive towards greener – cleaner energy sources is live and active in Korea as well.
The government of South Korea, Asia’s fourth-largest economy, has released its power plan in 2017 through 2030, which aims to triple renewable energy in Korea by 2030.
The main drivers are bad air quality, negative association to nuclear power and global warming. Some estimates are saying that solar and wind will take up to 11% of the energy mix, while the remaining share is to be shared by alternative renewable sources. Total renewable energy capacity by 2030 is expected to be around 60.5 gigawatts.
Riding on the trend we have noted several European and North American wind power companies setting up their Korean operations, usually in the form of subsidiary, during 2019. Denmark, Netherlands, Canada, USA and the UK are home for some of the companies who have entered the markets recently. We have not noted an influx of wind power specialized service companies, however, operators and investment companies are currently coming in.
Who are the winners?
Big winners are of course solar and wind power industries, while some part of the energy mix will be covered by alternative renewable energy sources. In wind power, the core winners are wind turbine manufacturers, turbine component manufacturers, wind power support system providers, wind power installation companies, wind power service companies as well as material suppliers to any of the areas mentioned before.
Domestic companies have some know-how in many of the areas, however, they are not known to be the top-tier companies in the industry. Decade a-go many Korean conglomerates in heavy industries established their wind turbine manufacturing as a sub-division in their internal organization of which pretty much all of the sub-divisions have been discontinued. This opens at least short-term opportunities, possibly long-term success, for foreign companies in this area.
Any of the following companies would have potential markets in Korea
- power structure manufacturers and engineering companies,
- rotor blade manufacturing, engineering, and testing companies,
- gearbox manufacturers and engineering companies,
- rotor hub manufacturers and engineering companies,
- generator manufacturers and engineering companies,
- power converter manufacturers and engineering companies,
- transformer manufacturers and engineering companies and other sub-component manufacturers (pitch and yaw systems, brake systems, nacelle housings, main shafts, rotor bearings, mainframe etc.)
- or any component and material suppliers to any of the above-mentioned areas
Solar power has similar opportunities for foreign companies – local domestic manufacturers have exited the manufacturing of materials and components for solar cells due to prolonged cheap Chinese supply.
Nevertheless, there are still many areas where Korean companies will be successful – software, control system, installations, support equipment providers and service companies to name a few. Foreign companies can find business opportunities in these areas by partnering with local companies in forms of JV and other deeper partnerships.
Due to Korea’s mountainous landscape and heavy level of urbanization, renewable energy production will probably focus on offshore areas and possibly in case of solar, to under-utilized urban locations.
Installations in mountains are often hard and costly due to steep mountain faces and heavy cutting of forests needed for installations. Innovative ways to find installation locations can be a competitive advantage for companies in these industries. As an example, a plan was announced in July 2019 to build a record-setting 2.1GW floating solar power plant which requires $3.9 billion investment from the private sector.
Waste-to-energy is also a hot topic in Korea as it is estimated to be 10% lower than solar power.
South Korea is working its way to becoming a zero-waste society, aiming to achieve a 3% landfill rate and 87% recycling rate by 2020.
This ratification is set to be extended to the year 2025 due to conflicts and setbacks between stakeholders. The South Korean government hopes to increase the percentage from well below 10% to 20% by 2050. There are some companies from such as Agriprotein, which are looking into Korea to set up facilities to produce proteins for animal use from food waste in Korea.
Biomass Energy saw a steep increase, mainly in form of wood pellets, in the last years due to government regulation that forced all major utilities (and ones operated by local governments) to use 10% (by 2022) of all energy production to be carbon neutral.
Wood pellets being the easiest and most available energy source to use, most facilities began using this energy source. The Demand for Wood Pellets for Electricity will be 2.88 Million Tons in South Korea by 2020.
Last year KOSPO’s 2,200-MW Green Power Plant utilizing CFB technology originating from Finland (currently owned by Sumitomo after purchase from Forster Wheeler) uses High-Moisture Indonesian Coal and biomass as a fuel. It’s still the world’s largest CFB plant.
How can you profit from this?
If you are interested in finding more about opportunities in renewable energy in Korea – contact us. Depending on your current activities or knowledge on Korea we can guide your way to develop your presence and sales channels in Korean markets. The number one key to success in any business in Korea is that you must be active in the market.
You need to have either an active local partner or your own operations in Korea to persuade the Korean side (public or private) to consider your product or solutions.
Even top-tier global companies in their industries have failed by trying to conquer Korean markets without a solid presence here.
With us, you can start with quantifying the addressable market size for your company which will be the basis of any further investment decision towards Korean markets. We do this by digging through key numbers affecting your business and equating this to an accurate and deeper estimation of market potential.
Close relationships with key players in the field, including public side, EPCs (such as Hyundai E&C, Hyundai Engineering, Samsung C&T, Samsung Engineering, Hanwha E&C, POSCO E&C etc.), system integrators, service and material providers and other stakeholders is absolutely a requirement for success.
Knowing your position in the value chain will make it easier to target the correct division of EPC, system integrators or any other company in the value chain. Foreign companies can participate in public bidding quite easily in Korea – usually, a local company (subsidiary) will take part in the bidding.
Key takeaways from this article:
- Renewable energy in Korea will see strong growth in the coming years.
- There are wide range of business opportunities in renewable energy in Korea for foreign companies.
- Many foreign equipment manufacturers have recently entered the markets.
Working with us you’ll gain access to our expert team. Our market expansion services will help you to enter the Korean renewable enegrgy market