South Korea could be more ambitious with renewables target in 9th Basic Plan

South Korea could be more ambitious with its 9^th Basic Plan’s 2030 renewables capacity target, according to research by Wood Mackenzie.

South Korea’s 9th Basic Plan for Long-term Electricity Supply and Demand 2020-2034 is a roadmap for the country’s power sector over the next 15 years. Announced in this new plan, the government expects renewables capacity to account for 34% of the country’s total power capacity by 2030.

Wood Mackenzie Asia Pacific Head of Power and Renewables, Alex Whitworth said: We think South Korea’s renewables capacity could hit 72 gigawatts (GW), making up 38% of total power capacity by 2030. This means investments in renewable power capacity would rise 53% from US$5.8 billion estimated in 2020 to an average of US$8.9 billion per year in the decade to 2030.”

Solar and wind are big winners in the new plan with a target of 34 GW and 18 GW by 2030, respectively. There are 16 GW of solar and wind capacity in the immediate pipeline according to the 9th Plan, equivalent to the current combined solar and wind capacity. Nearly 40% of South Korea’s 11 GW wind pipeline is offshore. Wood Mackenzie believes that the solar target will be easily exceeded as capacity reaches 52 GW by 2030, while wind capacity will fall short of the target with 17 GW.

As more renewables take market share away from conventional fuels, LNG’s role will change from mid merit to peaking, therefore impacting gas plant economics. Gas generation costs are expected to rise as average utilisation for gas plants drop. Under the 9^th Plan, gas power capacity is expected to surge 40% to 57 GW by 2030 and 59 GW by 2034. However, Wood Mackenzie expects targets for new gas plants and coal-to-gas switching by 2030 to be challenging.

The latest plan confirms South Korea’s expansion of 7.3 GW of coal power in the short-term which is a major driver of increasing carbon emissions. This will bring coal capacity up to 40.6 GW by 2024 from 36 GW today. In the long-term, coal capacity will decline to 33 GW by 2030 and 29 GW by 2034 due to retirements.

Whitworth added: “To meet its net-zero target by 2050, South Korea needs an even more ambitious approach especially in the decarbonisation of its power industry. Despite new plans to expand renewables share, we still expect a 7% rise in power sector carbon dioxide emissions from 2020 to 251 million tonnes by 2030.”   

Longer-term, South Korea has plans to become a hydrogen society. It has a domestic fuel cell manufacturing base and a 15 GW deployment target by 2050. A 50-megawatt hydrogen-based fuel cell power plant started production last year, with the aim to become a leader in exporting fuel cell electric vehicles and largescale stationary fuel cells. Local companies are investing in electrolyser manufacturing and expanding refuelling network and transport infrastructure.

Wood Mackenzie Asia Pacific Head of Markets and Transitions, Prakash Sharma said: “The immediate focus is to meet demand with conventional hydrogen available from petrochemical facilities. Ultimately, South Korea is well-positioned to transition towards low-carbon hydrogen.   

“We expect South Korea’s low-carbon hydrogen demand to reach 1.2 million tonnes (Mt) by 2030. To reach its net-zero ambitions by 2050, the figure would grow ten-fold to 12 Mt. South Korea is moving quickly to unlock hydrogen demand. Strategic policies are being put in place to develop new use cases in road transport, steelmaking and power generation sectors.

“Domestic hydrogen production, however, will not be enough and imports will meet up to 80% of total demand in South Korea by 2050. Potential exporters include Australia, Saudi Arabia among others.”

Wood Mackenzie will be organising the inaugural Power and Renewables Asia Pacific Conference on June 22-24.