Accelerating Korea’s Energy Transition: A New Balance of Renewable Energy and Nuclear Power by 2025
Editor
Korea’s energy transition is reaching a new turning point in 2025. According to the government’s 15th Basic Plan for Electricity Supply and Demand, the goal is to expand the share of renewable energy generation to 30.6% and maintain nuclear power at 32.4% by 2038. This signifies rapid growth in the renewable energy sector compared to the 2024 figures of 9.4% for renewables and 31.8% for nuclear power. Notably, the plan is to expand solar power capacity from the current 25GW to 108GW by 2038, more than quadrupling it, and to increase wind power from 2GW to 36GW, an 18-fold increase.
The background of these policy changes includes the pressure to achieve the 2030 Nationally Determined Contribution (NDC) target and the need to strengthen energy security. Korea has pledged to the international community to reduce greenhouse gases by 40% compared to 2018 levels by 2030, with the power sector contributing 44.4% to this reduction. According to the Ministry of Trade, Industry and Energy, Korea’s energy self-sufficiency rate in 2024 is 20.9%, significantly below the OECD average of 70.2%, making the expansion of renewable energy an essential task for energy security.
The growth of the domestic renewable energy market is also evident in the scale of investment. According to statistics from the Korea Energy Agency, investment in the renewable energy sector in 2024 increased by 23% year-on-year, reaching 18.5 trillion won, and is expected to exceed 22 trillion won in 2025. Investment in the offshore wind sector is particularly surging, with a total of 25 offshore wind farms under development, including the 8.2GW project in Sinan, Jeollanam-do, with a total investment of 85 trillion won.
Technological Innovation and Market Expansion in the Solar Industry
Korea’s solar industry is enhancing its global competitiveness through technological innovation. Hanwha Solutions (Seoul headquarters) began producing solar cells with an annual capacity of 2.1GW at its Dalton, Georgia, USA plant in the fourth quarter of 2024. The efficiency of products using next-generation heterojunction (HJT) technology reaches 24.1%, a top industry level. This is 2-3 percentage points higher than existing PERC technology, allowing for more power generation from the same area and reducing installation costs.
The improved technological competitiveness of domestic solar module manufacturers is also reflected in export performance. According to data from the Korea International Trade Association, exports of solar cells and modules from January to October 2024 increased by 41% year-on-year, reaching 3.4 billion dollars. The market share in North America has significantly expanded, benefiting from the U.S. Inflation Reduction Act (IRA) incentives and tariffs on Chinese products. For Hanwha Solutions, North American sales accounted for 67% of total solar business sales in 2024 and are expected to exceed 70% in 2025.
Structural changes are also occurring in the domestic solar power business market. The installation trend is shifting from land-based solar on mountains or farmland to floating solar and building-integrated photovoltaics (BIPV). Korea Water Resources Corporation plans to install a total of 2.1GW of floating solar on dams and reservoirs nationwide by 2025, with 1.2GW already completed and in commercial operation. Floating solar offers 5-10% higher generation efficiency compared to land-based solar and is expected to help conserve water resources by reducing evaporation.
The Rise of Offshore Wind and Changes in the Industrial Ecosystem
The offshore wind sector has become a key pillar of Korea’s renewable energy policy. The Sinan offshore wind project in Jeollanam-do is scheduled to be completed with a capacity of 8.2GW by 2030, equivalent to eight nuclear power plants. The total project cost is 48.5 trillion won, and upon completion, it will produce 24.3TWh of electricity annually, enough to power approximately 8 million households. Doosan Enerbility (Changwon headquarters) plans to supply 1,025 units of 8MW offshore wind turbines for this project, with offshore wind sales in 2024 increasing by 89% year-on-year to 1.2 trillion won.
The growth of the offshore wind industry is also providing new opportunities for related parts and service companies. Hyundai Heavy Industries (Ulsan headquarters) maintains the top global market share in the construction of wind installation vessels (WIV), with a total contract value of 1.8 trillion won for six wind installation vessels ordered in 2024. The next-generation large installation vessels capable of installing 15MW turbines create high added value of 300 billion won per vessel, with full-scale deliveries starting in 2025.
The development of offshore wind farms is also noted for its impact on local economic revitalization. In Sinan County, Jeollanam-do, local tax revenue increased by 156% year-on-year to 84.7 billion won in 2024 due to the offshore wind project, with an estimated 23,000 direct and indirect jobs created. Additionally, compensation for fishery losses paid to fishermen, amounting to 18 billion won annually, contributes to diversifying the income of local fishermen as fishing activities are restricted in areas around offshore wind farms.
However, challenges such as environmental impact and fishery conflicts still exist in the development of offshore wind. According to the Ministry of Environment’s guidelines for environmental impact assessment of offshore wind, it is recommended to increase the distance between turbines from the existing 800m to 1,200m to minimize impacts on bird migration routes and habitats. This has led to some projects experiencing a 15-20% reduction in planned generation capacity, affecting project economics.
The rapid growth of the energy storage system (ESS) market is also a notable change. With the increasing need to ensure grid stability due to the rise in renewable energy generation, ESS installation capacity is rapidly expanding. Samsung SDI (Suwon headquarters) recorded a 67% year-on-year increase in ESS battery sales in 2024, reaching 4.1 trillion won, with a significant increase in orders for large-scale grid-connected ESS projects. Korea Electric Power Corporation plans to build a total of 4.7GWh of grid-connected ESS nationwide by 2025, with 70% of these facilities linked to renewable energy generation sites.
New changes are also being detected in the nuclear power sector. In December 2024, the government announced the ‘Korean Small Modular Reactor (SMR) Technology Development and Demonstration Roadmap,’ officially commencing SMR development with the aim of commercialization in the early 2030s. Doosan Enerbility is collaborating with NuScale Power in the U.S. to develop a 77MW SMR module, with plans to complete technology demonstration by 2028. SMRs offer the potential for use as dedicated power sources for medium-scale power demands or industrial complexes, with construction periods shortened to 3-4 years and initial investment costs reduced by over 30% compared to large nuclear power plants.
The overseas expansion of domestic energy companies is also accelerating. SK Innovation (Seoul headquarters) completed the expansion of its battery separator plant in Georgia, USA, in 2024, securing a production capacity of 130 million square meters annually, equivalent to 1.3 million electric vehicles. POSCO Holdings (Pohang headquarters) also strengthened the stability of its battery raw material supply chain by acquiring a 15% stake in a lithium mine in the Pilbara region of Australia for 3.9 billion dollars. These overseas investments are evaluated as strategic moves to secure global competitiveness in the domestic battery and renewable energy industries.
Korea Electric Power Corporation is significantly increasing its grid investment in response to the expansion of renewable energy. The 2025 transmission and distribution facility investment plan is set at 7.2 trillion won, an 18% increase from the previous year, with 2.8 trillion won allocated to smart grid construction and renewable energy-linked transmission line construction. The third submarine cable construction (200MW) connecting Jeju Island to the mainland is scheduled to begin in the second half of 2025, enabling the transmission of surplus renewable energy from Jeju to the mainland.
Challenges arising during the energy transition process also warrant attention. The issue of power supply imbalance due to the intermittency of renewable energy generation is intensifying, with the curtailment time for renewable energy increasing by 34% year-on-year to 1,247 hours in 2024. This occurs when renewable energy generation exceeds power demand at specific times, necessitating unavoidable measures to ensure grid stability. Korea Electric Power Corporation is expanding its demand response (DR) program to address this issue, planning to increase DR contract capacity to 4.2GW by 2025.
Discussions on reforming the electricity tariff system are also becoming active. Currently, Korea’s electricity rates are relatively low at 67% of the OECD average, but there is growing demand for tariff adjustments to reflect the costs of grid investment and environmental costs associated with renewable energy expansion. The Ministry of Trade, Industry and Energy is considering the introduction of a time-of-use tariff system in the first half of 2025, aiming to lower electricity rates during the day when renewable energy generation is high and increase rates during peak times to level power demand.
Korea’s energy transition is entering a phase of substantial change starting in 2025. Renewable energy generation has begun to show visible results, exceeding 15% of the total, and the related industrial ecosystem is rapidly growing. The full-scale development of offshore wind and large-scale ESS markets is providing new growth drivers for the domestic energy industry. However, addressing challenges such as ensuring grid stability, minimizing environmental impact, and securing economic viability will be key to the successful completion of the energy transition. When government policies, private investment, and technological innovation are harmoniously combined, Korea can solidify its position as a leading nation in global energy transition.
