Green Energy Technologies Korea Market Study
NOVEMBER 2018
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The information and views set out in this study are those of the author(s) and do not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained therein. The contents of this publication are the sole responsibility of EU Gateway | Business Avenues and can in no way be taken to reflect the views of the European Union. The purpose of this report is to give European companies selected for participation in the EU Gateway | Business Avenues Programme an introductory understanding of the target markets countries and support them in defining their strategy towards those markets. For more information, visit www.eu-gateway.eu.
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EU Gateway to Korea
Central Management Unit
Korea Market Study
November 2018
Submitted to the European Commission
on 14 November 2018
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Table of Contents
LISTS OF TABLES ...... 7
LISTS OF FIGURES ...... 7
1 EXECUTIVE SUMMARY ...... 10
2 COUNTRY PROFILE ...... 19 2.1 GEOGRAPHY ...... 19 2.2 FINANCIAL AND ECONOMIC KEY DATA ...... 19 2.3 KOREAN ENERGY INDUSTRY ...... 22 2.3.1 Energy Consumption in South Korea ...... 23 2.3.2 Electricity Production in South Korea ...... 26 2.3.3 Renewable Energy in South Korea ...... 28
3 MARKET OVERVIEW AND EU ENTRY OPPORTUNITY IN SOUTH KOREA ...... 34 3.1 WIND POWER ...... 34 3.1.1 Market Overview ...... 34 3.1.2 EU Entry Opportunities ...... 39 3.2 SOLAR ENERGY ...... 43 3.2.1 Solar Thermal Energy Market Overview ...... 43 3.2.2 Solar Photovoltaic Energy Market Overview ...... 47 3.2.3 EU Entry Opportunities ...... 52 3.3 AEROTHERMAL ENERGY ...... 58 3.3.1 Market Overview ...... 58 3.3.2 EU Entry Opportunities ...... 60 3.4 GEOTHERMAL ENERGY ...... 62 3.4.1 Market Overview ...... 62 3.4.2 EU Entry Opportunities ...... 66 3.5 OCEAN ENERGY ...... 69 3.5.1 Market Overview ...... 69 3.5.2 EU Entry Opportunities ...... 72 3.6 HYDRO POWER ...... 74 3.6.1 Market Overview ...... 74 3.6.2 EU Entry Opportunities ...... 76 3.7 BIOENERGY ...... 77 3.7.1 Market Overview - focus biomass ...... 78 3.7.2 Market Overview - focus biofuel ...... 81
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3.7.3 Market Overview - focus biogas and landfill gas ...... 85 3.7.4 EU Entry Opportunities ...... 87 3.8 WASTE TO ENERGY - SEWAGE TREATMENT PLANT ...... 91 3.8.1 Market Overview ...... 91 3.8.2 EU Entry Opportunities ...... 94 3.9 OFF-GRID SOLUTIONS ...... 95 3.9.1 Market Overview ...... 95 3.9.2 EU Entry Opportunities ...... 97 3.10 MANAGEMENT & CONTROL SYSTEMS ...... 100 3.10.1 Market Overview ...... 100 3.10.2 EU Entry Opportunities ...... 102 3.11 ENERGY EFFICIENCY & CARBON SERVICES ...... 104 3.11.1 Market Overview ...... 104 3.11.2 EU Entry Opportunities ...... 107 3.12 ENERGY CONSERVATION ...... 109 3.12.1 Market Overview ...... 109 3.12.2 EU Entry Opportunities ...... 112
3.13 ENERGY CONSERVATION TECHNOLOGIES FOCUSED ON REDUCING CO2 EMISSIONS ...... 114 3.13.1 EU Entry Opportunities ...... 117 3.14 CARBON CAPTURE & STORAGE (CCS)...... 119 3.14.1 Market Overview ...... 119 3.14.2 EU Entry Opportunities ...... 121 3.15 COGENERATION ...... 123 3.15.1 Market Overview ...... 123 3.15.2 EU Entry Opportunities ...... 126 3.16 MOBILITY SOLUTIONS ...... 128 3.16.1 Market Overview – Focus Autogas Vehicles ...... 128 3.16.2 Market Overview – Focus Fuel Cell Vehicles and Infrastructure ...... 129 3.16.3 Market Overview – Focus Electric and Hybrid Vehicles ...... 131 3.16.4 Market Overview – Focus mobility as a service...... 133 3.16.5 EU Entry Opportunities ...... 134
4 OVERVIEW OF REGULATIONS ...... 136 4.1 NATIONAL POLICY SUPPORT ...... 137 4.1.1 Framework Act on Low Carbon Green Growth ...... 137 4.1.2 Energy Use Rationalisation Act ...... 137 4.1.3 The Act on the Promotion of the Development, Use, and Diffusion of New and Renewable Energy .... 138 4.1.4 NRE Standardisation Program ...... 138
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4.2 GREENHOUSE GAS REDUCTION ...... 138 4.2.1 Reporting System for Energy Intensive Business Entities ...... 138 4.2.2 Verification of GHG Emission Reduction ...... 138 4.2.3 Carbon Footprint Labelling...... 139 4.2.4 Green Building Certification ...... 139 4.2.5 Green Public Procurement (GPP) ...... 139 4.3 APPROVED EXPORTER STATUS UNDER THE EU-KOREA FTA...... 140 4.4 IMPORT REGULATIONS ...... 141
5 USEFUL RESOURCES ...... 144 5.1 RELATED ORGANISATIONS AND ASSOCIATIONS ...... 144 5.1.1 Governmental, Public Organisations and Associations ...... 144 5.1.2 Research Institutes ...... 144 5.1.3 Newspaper and magazines ...... 145 5.2 EXHIBITIONS AND CONFERENCES ...... 145
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Lists of Tables Table 1: Economic & Demographic Data 2012 to 2018...... 21 Table 2: Renewable Energy Certificate Weighting System by Energy Source and Criteria...... 33 Table 3: G-SEED Rating System (New Buildings)...... 116 Table 4: Main regulations and laws in the Green Energy Technologies sector...... 137
Lists of Figures Figure 1: Map of Republic of Korea ...... 19 Figure 2: KRW/EUR Exchange Rate Development (Source: www.xe.com)...... 21 Figure 3: South Korea’s total primary energy consumption by fuel type (2016) ...... 23 Figure 4: South Korea’s oil consumption by sector (million toe, 2016) ...... 24 Figure 5: South Korea’s coal consumption by sector (million toe, 2016) ...... 25 Figure 6: South Korea’s gas consumption by sector (million toe, 2016) ...... 25 Figure 7: South Korea’s electric power generation in 2017 (TWh) ...... 26 Figure 8: South Korea’s renewable energy consumption in 2016 (toe) ...... 28 Figure 9: “Renewable Energy 3020” implementation plan towards 2030 objectives ...... 30 Figure 10: “Renewable Energy 3020” implementation projects ...... 31 Figure 11: Wind energy consumption in South Korea (for commercial and individual usage).... 34 Figure 12: Wind power capacity in South Korea (MW)...... 35 Figure 13: Wind power sub sectors in which companies in South Korea are involved (2016) ... 35 Figure 14: Annual Korean wind power market volume (KRW billion) ...... 36 Figure 15: Annual wind power capacity installed in South Korea (MW)...... 36 Figure 16: Average annual wind speed in South Korea...... 39 Figure 17: “Renewable Energy 3020” implementation plan for wind power towards 2030 objectives ...... 40 Figure 18: Solar thermal energy consumption in South Korea ...... 43 Figure 19: Annual solar thermal capacity in South Korea (m2)...... 43 Figure 20: Solar thermal energy sub sectors in which companies in South Korea are involved (2016) ...... 44 Figure 21: Annual Korean solar thermal energy market volume (KRW billion) ...... 44 Figure 22: Annual solar thermal energy capacity installed in South Korea (m2)...... 45 Figure 23: Solar Photovoltaic System ...... 47 Figure 24: Solar photovoltaic energy consumption in South Korea (for commercial and individual usage) ...... 48 Figure 25: Solar photovoltaic power capacity in South Korea (GW)...... 48 Figure 26: Solar photovoltaic sub sectors in which companies in South Korea are involved (2016) ...... 49 Figure 27: Annual Korean solar photovoltaic power market volume (KRW billion) ...... 50 Figure 28: Annual solar photovoltaic power capacity installed in South Korea (MW)...... 50
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Figure 29: “Renewable Energy 3020” implementation plan for solar photovoltaic power towards 2030 objectives ...... 53 Figure 30: Housing type in South Korea (2015) ...... 59 Figure 31: Total energy consumption by heating system in South Korea (toe, 2015) ...... 59 Figure 32: Geothermal energy consumption in South Korea (toe) ...... 63 Figure 33: Geothermal power capacity in South Korea (MW)...... 63 Figure 34: Geothermal sub sectors in which companies in South Korea are involved (2016) ... 64 Figure 35: Annual Korean geothermal power market volume (KRW billion) ...... 64 Figure 36: Annual geothermal power capacity installed in South Korea (MW)...... 65 Figure 37: Ocean power energy consumption in South Korea (toe) ...... 69 Figure 38: Ocean power capacity in South Korea (MW)...... 70 Figure 39: Hydro power energy consumption in South Korea (for commercial and individual usage) ...... 74 Figure 40: Hydro power capacity in South Korea (MW)...... 74 Figure 41: Bioenergy consumption in South Korea ...... 77 Figure 42: Bioenergy power capacity in South Korea (GW)...... 78 Figure 43: Biomass energy consumption in South Korea ...... 79 Figure 44: Biomass power capacity in South Korea (GW)...... 79 Figure 45: Biomass sub sectors in which companies in South Korea are involved (2016) ...... 80 Figure 46: Annual Korean biomass energy market volume (KRW billion) ...... 80 Figure 47: Biofuel energy consumption in South Korea ...... 82 Figure 48: Biofuel power capacity in South Korea (GW)...... 82 Figure 49: Biofuel sub sectors in which companies in South Korea are involved (2016) ...... 83 Figure 50: Annual Korean biomass energy market volume (KRW billion) ...... 83 Figure 51: Biogas energy consumption in South Korea ...... 85 Figure 52: Biogas power capacity in South Korea (GW)...... 85 Figure 53: Annual Korean biogas energy market volume (KRW billion) ...... 86 Figure 54: Made-from-waste energy consumption in South Korea (for commercial and individual usage) ...... 91 Figure 55: Made-from-waste power capacity in South Korea (MW)...... 92 Figure 56: Made-from-waste energy sub sectors in which companies in South Korea are involved (2016) ...... 92 Figure 57: Annual Made-from-waste energy market volume (KRW billion) ...... 93 Figure 58: CO2 emissions in South Korea (million tons) ...... 114 Figure 59: Origin of CO2 in South Korea per sector (% of total fuel consumption, 2014) ...... 114 Figure 60: Concept of Carbon Capture and Storage (Source: Global CCS Institute) ...... 119 Figure 61: cogeneration energy consumption in South Korea ...... 123 Figure 62: Cogeneration power capacity in South Korea (MW)...... 124 Figure 63: fuel cell sub sectors in which companies in South Korea are involved (2016) ...... 124 Figure 64: Annual Korean fuel cell market volume (KRW billion) ...... 125 Figure 65: Number of vehicles running on autogas in South Korea...... 128
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Acronyms
BAU Business-As-Usual BTO Build-Transfer-Operate BTU British Thermal Unit (1 BTU= 1,055.86 joules) CHP Combined Heat and Power COP Coefficient of Performance COP Conference of Parties CCS Carbon Capture and Storage EFTA European Free Trade Association EGS Enhanced Geothermal System EMS Energy Management System ETS Emissions Trading Scheme ESCO Energy Service Company FTA Free Trade Agreement GCF Green Climate Fund GDP Gross Domestic Product GHG Greenhouse Gas GNI Gross National Income HPWH Heat pump water heater ICT Information and Communications Technology INDC Intended Nationally Determined Contribution IoE Internet of Everything KDHC Korea District Heating Corporation KEA Korea Energy Agency (former KEMCO: Korea Energy Management Corporation) KEEI Korea Energy Economics Institute KEITI Korea Environmental Industry & Technology Institute KEPCO Korea Electric Power Corporation KRW Korean Won LFG Landfill Gas LNG Liquefied Natural Gas MMt Millions of Metric Tons MOE Ministry of Environment MOTIE Ministry of Trade, Industry and Energy MSW Municipal Solid Waste NRE New and Renewable Energy OECD Organisation for Economic Cooperation and Development OTEC Ocean Thermal Energy Conversion PV Photovoltaic REC Renewable Energy Certificate R&D Research & Development RPS Renewable Portfolio Standards SMEs Small-and-Medium Sized Enterprises TOE Tonnage of Oil Equivalent UNFCCC United Nations Framework Convention on Climate Change
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1 Executive Summary South Korea has a population of 51.25 million people and covers an area of 100,364 km2. It had one of the world's fastest growing economies from the early 1960s to the late 1990s and has transformed from one of the poorest countries into a leading industrial nation. Nowadays, the country ranks 11th in the world by nominal GDP, 15th by purchasing power parity (PPP)1, is the 6th largest exporter and 11th largest importer in the world.2 The GDP growth is expected to hover around 3% in the current decade3. South Korea has a lack of natural resources and accordingly imports 97% of its energy sources.
South Korea is ranked among the top 10 emitters of greenhouse gases (GHG). Air pollution is a major problem and has to be reduced. According to the OECD forecasts, air pollution in South Korea will cause about 1,109 deaths per 1 million people in 2060, about three times the 359 deaths reported in 20104.
South Korea intends to reduce its greenhouse gas emission levels by 37% from business-as- usual projected levels (projections of emission levels without any carbon price scheme) by 2030, according to the submitted Nationally Determined Contributions (NDCs) at COP 21 in Paris in December 2016.
After his inauguration in May 2017, president Moon Jae-In, announced a major policy to phase out nuclear and coal power, and toward renewables and gas. The goal is to fight climate change, but also to develop renewables and associated industries as a new economic growth engine.
Fossil fuels generated about 68% of South Korea’s electric power in 2017, while 27% came from nuclear power and 5% from renewable sources, including hydroelectricity5. South Korea’s energy
1 https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html 2 https://atlas.media.mit.edu/en/profile/country/kor/ 3 http://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD/KOR 4 http://www.koreaherald.com/view.php?ud=20170612000833 5 https://www.kpx.or.kr/ - 2017 년 연간 전력시장 운영실적
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capacity coming from renewable energies represented 7.2% of the country’s final energy capacity, equal to 15.1 GW in 20176.
In 2016, energy made from waste and biomass represented respectively 63% and 20% of all consumed energy coming from renewables. Solar (including both photovoltaic and thermal) was 8%, hydro represented 4%, Wind 2.5%, fuel cell 1.7% while other renewable energy sources such as geothermal, ocean energy, IGCC represented in total 2.3%7.
With the 3020 Renewable Energy Initiative, which aims to raise the share of renewable energy generation from 7% to 20% of electricity supply by the year 2030, the Korean government plans to supply new renewables energy facilities with a new generating capacity of 48.7 GW8.
Focus will especially be towards wind and solar energy: 97% of the newly installed plants will be solar (30.8 GW, 63%) and wind (16.5 GW, 35%) power plants. On the other side, the government plans to reduce waste and bio – which are seen as less environmentally-friendly renewable energy – power generation rate to respectively 6% and 5% by 2030 compared to 26% and 16% in 20179.
Wind power generation In South Korea, as of 2017, the wind power generation capacity was 1.2 GW and represented 7.5% of all renewable energy capacity. In 2016, the sector generated a market of KRW 1,164.3 billion (EUR 895.4 million), with the tower segment being the most important sub market10.
The 3020 Renewable Energy initiative will offer opportunities to EU companies, especially in the offshore segment. Wind power capacity is planned to reach 17.7 GW in 2030 compared to 1.2 GW in 2017. In total, South Korea plans to install 16.5 GW (34% of the new capacity plan) of new wind power capacity by 2030. Among them, offshore wind power projects will account for 12 GW11.
6 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 7 http://kosis.kr/ 8 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 9 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 10 www.knrec.or.kr 11 http://english.hani.co.kr/arti/english_edition/e_national/825098.html
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Solar energy In 2016, the Korean solar thermal generation capacity was 1.85 million m2. The sector generated a market of KRW 26.6 billion (EUR 20.5 million) with the solar collector segment being the most important sub market12.
In 2016, the solar photovoltaic power generation capacity was 4.5 GW and therewith represented 32.5% of all renewable energy capacity. Since the introduction of the Renewable Portfolio Standard (RPS) in 2012, the generation capacity has seen a considerable growth. In 2016, the solar photovoltaic sector generated a market of KRW 7,024.7 billion (EUR 5,403.6 million)13.
The 3020 Renewable Energy initiative will offer opportunities to EU companies. Under the plan, the government hopes to increase solar energy by 2030 to 57% (36.5GW) of total green energy: 19.9 GW will be assumed by the expansion of urban-type, private solar power and 10 GW will be dedicated to the expansion of solar farms14.
Metropolitan cities also have programmes to enhance the installation of decentralised, small- scale, solar photovoltaic systems. Seoul has unveiled its “Solar City Seoul” plan15, which aims to produce 1 GW worth of solar energy – equivalent to the capacity of one nuclear reactor – by 2022. The city wants to expand the city solar photovoltaic capacity primarily through the installation of rooftop solar PV systems on buildings.
South Korea is among world leaders in the solar photovoltaic sector but the country shows some weaknesses in the downstream market, including business development, finance, construction, and maintenance, which will offer entry opportunities. Opportunities for EU companies will also lie in new premium technologies and cooperation with key local players for overseas markets.
12 www.knrec.or.kr 13 www.knrec.or.kr 14 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 15 http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3041048
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Aerothermal energy The Korean aerothermal market is still underdeveloped. Residential gas and oil boilers – South Korea is the 2nd largest gas boiler market country after China16 – are the mainstay of the heating space market and the characteristics of the country’s building stock create one of the main challenges with regards to the use of heat pumps.
The Korean heat pump market is expected to grow, especially in high-rise buildings and commercial buildings, and is also expected to be formed in the residential sector as an alternative for a boiler.
Geothermal energy South Korea is not located close to tectonic plate boundaries where geothermal resources are generated, thus generating geothermal energy has been difficult. In 2016, the geothermal power generation capacity was 979 MW. The sector generated in 2016 a market of KRW 122.4 billion (EUR 94.2 million)17.
With the geothermal power included in the Renewable Portfolio Standards (RPS), certain companies are obligated to produce a certain amount of electricity from New and Renewable Energy (NRE). Also, geothermal power received a significant boost for commercialisation by the introduction of Renewable Energy Credit (REC) and by giving geothermal energy weighted value of 2.0 for calculating the price per MWh of power generated.
Ocean energy In 2016, South Korea’s ocean power generation capacity was 255 MW, essentially produced by the 254 MW capacity Sihwa Lake Tidal Power Station18. Other facilities are testing facilities.
The Korean government has published the “Mid-Term and Long-Term Clean Ocean Energy Development Plan 2015-2025”, with the purpose to set up a relevant R&D support plan. With the 3020 Renewable Energy initiative, the government also plans to build new infrastructures
16 http://www.phamnews.co.uk/global-gas-boiler-sales-revealed/ 17 www.knrec.or.kr 18 www.knrec.or.kr
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including wave energy systems of 220 MW, hybrid power generation systems of 300 MW, and tidal energy systems of 700 MW. Partnering with Korean companies or R&D institutes in order to apply to such funding programmes will offer opportunities to EU companies and facilitate their entry to the Korean market.
Hydro power energy In 2016, the hydro power generation capacity was 1,790 MW and represented 13% of all renewable energy capacity19.
Within the 3020 Renewable Energy initiative, it is planned to develop an additional 0.5 GW of hydro power over the period 2018-203020. Considering this, business opportunities may not be found in the domestic market, but in the joint development of overseas, especially for developing countries, small hydropower projects.
Bioenergy In 2016, the bioenergy power generation capacity was 1.91 GW. Among sub-sectors, biomass power has the largest capacity with more than 1.04 GW (54%), followed by biofuel with 0.75 GW (39%) and biogas with 0.12 GW (7%)21.
In 2016, the biomass sector generated a market of KRW 91 billion (EUR 70 million) with wood pellets being the most important sub market. The biofuel sector generated a market of KRW 1,002 billion (EUR 771 million), with biodiesel being the most important segment. The biogas sector generated a market of KRW 3.4 billion (EUR 2.6 million) 22.
With the 3020 Renewable Energy initiative, priority will be given to wind and solar technologies, and the biomass power capacity is planned to increase by only 1 GW over 203023. However, bioenergy will offer opportunities to EU companies with expertise in small heat fission plants using wood, or in bio-heavy oil made of animal fat. EU companies with competitive advantage in
19 www.knrec.or.kr 20 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 21 www.knrec.or.kr 22 www.knrec.or.kr 23 http://english.hani.co.kr/arti/english_edition/e_national/825098.html
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technology and cost are likely to find also opportunities but in joint development with Korean companies, especially for developing countries, of landfill gas plants.
Waste to Energy - Sewage Treatment Plant In 2016, the made-from-waste power generation capacity was 3.79 GW – 92% from waste gas (3.5 GW) – and represented 27% of all renewable energy capacity. The sector generated a market of KRW 336.7 billion (EUR 259 million), with refined fuel oil being the most important sub market24.
With the 3020 Renewable Energy initiative, there is no plan to further increase made-from-waste power capacity. However, the sector will offer opportunities to EU companies with innovative solutions and more efficient solutions in terms of waste treatment management.
Off-Grid Solutions In South Korea, the Green Islands project is directly related to the promotion of off-grid systems with renewables, as its scope included 132 islands that have independent power systems.
With the 3020 Renewable Energy initiative will also offer opportunities – especially to EU companies involved in solar photovoltaic off-grid solutions – as the government wants to expand urban-type, private solar power in order to boost photovoltaic power in rural regions.
Management & Control Systems The Korean government’s plan is to have a nationwide smart electricity meter network by 2020. The installation of smart meters is expected to continue beyond the targeted deadline of 2020, due to lower than expected yearly installations. The Korean smart home market is forecasted to reach USD 5 billion by 2024 and the household penetration for smart home applications is expected to be around 45% by 202425.
24 www.knrec.or.kr 25 https://www.prnewswire.com/news-releases/south-korea-smart-home-market-2017-2024-household-penetration-for-smart-home-applications- is-expected-to-hit-above-45-300573827.html
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EU companies with advanced knowledge in AI, IoT and big data will also have opportunities to enter the Korean market by integrating these sciences with the entire energy cycle, including generation and consumption.
Energy Efficiency & Carbon Services In South Korea, the government is at the centre of energy efficiency management, related communications, and consulting. In recent years, the government has changed its approach to energy efficiency from supply-oriented policies to demand-oriented management.
The government has mandated energy-intensive companies to undertake energy audits on a regular basis in order to maintain competitiveness but also to improve their environmental performance.
Energy Conservation In 2018, the Korean government announced 1.8 GWh of energy went through Energy Storage Systems (ESS), which was more than the total supply of electricity over the past six years26. ESS is considered as a new growth engine with a huge market potential to effectively establish stable power demand and supply systems. It will offer opportunities to EU companies.
With the Renewable Energy 3020 initiative, ESS are planned to be installed in public institutions and EU companies will have a chance to successfully enter the Korean market by providing top level, high level technologies. Technology transfer can also offer opportunities to EU companies.
Energy Conservation Technologies Focused on Reducing CO2 Emissions
South Korea released some 588 million tons of CO2 into the atmosphere in 2016, compared to
27 580 million tons in 2015 . Production of electricity and heat is the main contributor of CO2 emissions, followed by transports, industries and construction, residential and commercial and
26 http://koreabizwire.com/use-of-energy-storage-systems-increases-dramatically/121557 27 data.worldbank.org
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public services. The Korean government targets a domestic reduction of 574 million tons of greenhouse gas based on business-as-usual (BAU) levels by 203028.
With the Korean government plans for energy saving, EU companies focusing on energy conservation, technologies focused on reducing CO2 emissions will have opportunities. Especially the smart building systems aiming at reducing CO2 emissions segment will offer opportunities to EU companies with high technological solutions such as remote condition monitoring for smart buildings, combining energy efficiency solutions and building facility management.
Carbon Capture & Storage (CCS) The Korean Government is currently revising its CCS Master Plan, which includes a large-scale CCS demonstration project operating by 2020, and commercial CCS deployment thereafter.
In general, it is considered that South Korea has reached an advanced level of technological maturity but is still behind those of leading countries in CO2 capture. Considering the Korean government’s ambitious goal and R&D efforts, global R&D partnerships and collaborations will offer opportunities to EU companies.
Cogeneration South Korea is among the world leaders in the use of fuel cells for power generation and developed innovative methods of power production. Fuel cells for power generation is an important market to South Korea and the industry targets to keep its technology leadership. In 2016, the cogeneration power generation capacity was 564 MW. In 2016, the fuel cell sector generated a market of KRW 300 billion (EUR 231 million), with power generation systems segment being the most important sub market29.
Opportunities will be offered to companies with high technological added value. Especially, the segment of hydrogen fuel cell stacks will offer opportunities to EU companies.
28 http://www.koreatimes.co.kr/www/nation/2018/06/113_251430.html 29 www.knrec.or.kr
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Mobility solutions South Korea is one of the largest autogas markets in the world. In 2016, 2,185,114 cars running on autogas were registered in South Korea, i.e. 10% of all vehicles30. Since 2017, anyone is allowed to own and drive an autogas vehicle. The Korean LPG industries estimates this reform will contribute to the net increase of LPG vehicles by releasing about 30,000 cars for purchase every year. The LPG demand is also estimated to expand by up to 7.5 million tons31.
Sales of eco-friendly cars32 in South Korea increased from 68,826 in 2016 to 97,486 units in 2017 representing a growth of 41.6%. Out of this almost 100,000 vehicles, 86% were hybrid cars as 14% were electric vehicles33.
The Korean government is encouraging the usage of hydrogen fuel cell electric vehicles in the country and aims at supplying 16,000 fuel cell vehicles by 2022 by increasing subsidies to encourage the purchase of fuel cell vehicles34. By 2022, KRW 2.6 trillion (EUR 2 billion) are planned to be invested jointly by the government and the industry35 in order to foster the building of plants for fuel cell vehicles and fuel cell stacks, and the deployment of fuel cell storage containers. The government has also planned to install 310 hydrogen stations in the country by 2022.
South Korea is speeding up its efforts to expand the charging infrastructure for electric vehicles. The government plans to increase the number of fast-charging stations from 1,508 as of June 2018 to 3,000 by the end of 2018. The number of fast-charging stations should reach 6,000 by 2020.
The Korean government is heavily investing on these technologies and opportunities will be offered to EU companies able to offer high technological advantages.
30 https://gazeo.com/up-to-date/news/2017/Will-Koreans-be-able-to-buy-private-LPG-cars,article,9815.html 31 https://gazeo.com/up-to-date/news/2017/Autogas-in-Korea-free-at-last,article,9867.html 32 eco-friendly vehicles include hybrids, plug-in hybrids and hydrogen-fuelled cars 33 http://www.theinvestor.co.kr/view.php?ud=20180114000263 34 http://www.ammoniaenergy.org/south-korea-to-launch-major-fuel-cell-vehicle-initiative/ 35 http://www.businesskorea.co.kr/news/articleView.html?idxno=23248
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2 Country Profile
2.1 Geography South Korea, also known as the Republic of Korea, has a population of 51.25 million people and covers an area of 100,364km2. The density per km2 is with 511 one of the highest in the world.
The capital of South Korea is Seoul; Seoul is not only the political centre but also the business and economic hub. Seoul has on its own already a population of about 10.3 million; together with the nearby cities, the agglomeration reaches a population of 25.6 million. The second population cluster is in the south of the Korean peninsula where the cities of Busan (3.5 million), Daegu (2.5 million) and Ulsan (1.2 million) are located.
Figure 1. Map of Republic of Korea. 2.2 Financial and Economic Key Data The Korean economy has grown impressively since the Korean War (1950 to 1953); during this period, the GDP per capita was only USD 79. South Korea had one of the world's fastest growing economies from the early 1960s to the late 1990s. It has transformed from one of the poorest countries into a leading industrial nation. The GDP expanded by an average of more than 8% per year from USD 2.7 billion (1962) to USD 230 billion (1989). Nowadays, South Korea, with a GDP of USD 1,411 billion, ranks 11th in the world by nominal GDP and 15th by purchasing power parity (PPP)36, and is the 6th largest exporter and 11th largest importer in the world37. The GDP growth
36 https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html 37 https://atlas.media.mit.edu/en/profile/country/kor/
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has slowed down to a level of around 4% in the first decade of this century and is expected to hover around 3% in the current decade38.
South Korea’s economy is highly trade dependent primarily due to the fact that South Korea has a lack of natural resources. Thus, raw materials, energy and food resources are predominantly imported. South Korea is a mountainous country with only 30% arable land areas.
In 2017, the overall unemployment rate was about 3.7%39. Unfortunately, the picture looks different in the age bracket from 15 to 29 where the unemployment was at 9.9%. The Korean government and the Bank of South Korea’s target is to keep inflation within a corridor of 2% to 4%.
South Korea’s population is expected to slightly increase in the next coming years to peak around 2040 before decreasing 40 . People aged 65 years and older account for 14.1% of the total population in 2017; this value is expected to increase to 14.4% by 2018. The population in the age bracket from 0 to 14 has a share of 13.6% in 2017, which will decrease to 13.5% in 2018. Consumer spending is expected to increase from USD 12,852 per person in 2016 to USD 13,341 in 2018 (+3,8%)41.
Economic & Demographic Data 2012 to 2018 Data type A 2012 A 2013 A 2014 A 2015 A 2016 A 2017 E 2018
Total population (million) 50.0 50.2 50.4 50.6 50.8 51.0 51.1 Population in working ages 36.6 36.7 36.8 37.0 37.0 37.0 36.9 % Middle and upper class 41.2% 41.4% 41.4% 41.4% 41.4% 41.4% 41.4% population % Population aged 65+ 11.8% 12.2% 12.7% 13.1% 13.5% 13.9% 14.4% % Population aged 50 to 64 19.5% 20.3% 20.8% 21.5% 22.0% 22.5% 23.0% % Population aged 25 to 49 40.1% 39.4% 38.8% 38.4% 37.9% 37.5% 37.2% % Population aged 15 to 24 13.5% 13.5% 13.4% 13.2% 13.0% 12.6% 12.1% % Population aged 0-14 15.1% 14.7% 14.4% 14.0% 13.7% 13.6% 13.5% % Population with higher 28.3% 28.6% 28.9% 29.3% 29.5% 29.8% 30.0% education degrees
38 http://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD/KOR 39 https://data.oecd.org/unemp/unemployment-rate.htm 40 http://www.worldometers.info/world-population/south-korea-population/ 41 http://kosis.kr/eng/
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Data type A 2012 A 2013 A 2014 A 2015 A 2016 A 2017 E 2018
Average number of children 0.5 0.5 0.5 0.5 0.5 0.4 0.4 per household GDP per capita (USD)42 24,358.8 25,890 27,811.4 27,105.0 27538.8 29,806.2 30,919 Consumer expenditure per 11,810.3 12,021 12,304.5 12,598.4 12,852.5 13,096.6 13,341.8 capita (USD) Table 1: Economic & Demographic Data 2012 to 201843. South Korea’s currency, the Korean Won (KRW), has been quite volatile in the recent past. In October 2011, the exchange rate to the EUR was around 1,600. For the last 2 years, the KRW/EUR kept moving between 1,250 and 1,350 KRW/EUR. The exchange rate on September 13, 2018 was 1,305.84 KRW / EUR.
Figure 2: KRW/EUR Exchange Rate Development (Source: www.xe.com).
The latest statistical indicators can be found on Statistics Korea (KOSTAT)44.
42 https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?end=2016&locations=KR-GH-JP&start=1960&view=chart 43 KOSIS Korean Statistical Information Service http://kosis.kr/eng/ 44 http://kostat.go.kr/portal/eng/index.action
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2.3 Korean Energy Industry South Korea is ranked among the top 10 emitters of greenhouse gases (GHG). According to the OECD forecasts, in South Korea, air pollution will cause about 1,109 deaths per 1 million people in 2060, about three times the 359 deaths reported in 2010. In 2016, premature deaths from outdoor air pollution accounted for 23 deaths per 100,000 capita45. Air pollution is a major problem and has to be reduced, in part, by co-operation with other countries in the region and through appropriate economic instruments.
The previous Korean government has sought to expand nuclear energy supply and industry while shortly after his inauguration in May 2017, president Moon Jae-In, announced a major policy shift away from nuclear and coal power, and toward renewables and gas in its 8th Basic Plan on Electricity Demand and Supply.
In order to implement this objective, the government proposed the 3020 Renewable Energy Initiative aiming to increase the share of renewable energy to 20% of electricity supply by the year 2030.
The 8th Basic Plan on Electricity Demand and Supply Every two years, the Korean government releases its plan on the electricity supply and demand for the next 15 years. The 8th Basic Plan on Electricity Demand and Supply (BPEDS) for the period from 2017 to 2031 was published in December 2017 46 and aims to take into account the commitments made at the Paris Agreement on Climate.
According to the 8th BPEDS, the peak electricity demand in 2030 is estimated at 100.5 GW, which is 11% lower than the 113.2 GW estimation made in the 7th Plan, as the economy is expected to grow at a slower pace than it was in 2015. The key policy target of the new administration is to phase out nuclear power and coal, to raise the share of renewables in electricity generation to 20% by 2030 compared to only 11.7% by 2029 in the previous BPEDS. The goal is to fight climate change, but also to develop renewables and associated industries as a new economic growth engine
45 http://www.koreaherald.com/view.php?ud=20170612000833 46http://english.motie.go.kr/en/tp/energy/bbs/bbsView.do?bbs_seq_n=605&bbs_cd_n=2&view_type_v=TOPIC&¤tPage=1&search_key_n =&search_val_v=&cate_n=3
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2.3.1 Energy Consumption in South Korea South Korea heavily depends on fossil fuel and nuclear energy and accordingly imports 97% of its energy sources.
In 2016, oil – petroleum, Liquefied Petroleum Gas (LPG) and other liquid fuels – represented 43% of all the country’s consumed energy, followed by coal (28%), natural gas (14%) and nuclear energy (13%) as renewable energy accounted only for 2%. In 2016, power generation from coal and nuclear power plants accounted for 70% of total power supply47.
Renewables Nuclear 4.9toe Energy 2% 36.7toe 13%
Natural Oil gas 122.1toe 40.9toe 43% 14%
Coal 81.6toe 28%
Figure 3 South Korea’s total primary energy consumption by fuel type (2016)48. In the recent past, power generation in South Korea has relied more on coal, as a result of reducing global coal prices that made imported coal less expensive than imported natural gas. However, as gas power generation has the ability of being able to quickly respond to changes in power demand (such as during extreme weather) it will remain an important element of the future energy policy. Natural gas also benefits from the public recognition as a cleaner power.
The demand for natural gas is expected to remain flat in the short-term but since President Moon Jae-in announced massive changes in the country’s energy policy, it is expected that the natural gas industry will further grow49.
47 http://kosis.kr 48 https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017- full-report.pdf 49 https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/121417-s-korea-unveils-power-mix-plan-for-2030-focused-on- renewables-lng
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Oil (petroleum, LPG and other liquid fuels) consumption South Korea used 2.8 million barrels per day of petroleum and other liquid fuels in 2016, and therewith is the 8th largest consumer in the world50. The country relies almost entirely on oil imports with 924 million barrels imported in 201651, making it the 5th largest importer in the world.
Residential· Commercial Public 5.7 1.4
Transportation 40.8 Industry 66.9
Figure 4 South Korea’s oil consumption by sector (million toe, 2016)52. About 58% of the petroleum products were consumed as primary energy by the industry sector, whereas over 36% were consumed by the transport sector.
Coal consumption With a negligible domestic production (1.4 million tons in 2016), the rise in coal consumption in South Korea (+4.6% CAGR over the period 2005-2015 53 ) has been sustained by large imports with 128.1 million tons imported in 201654. In 2016, the country had the 7th largest coal consumption in the world55. Imports have been driven primarily by growing demand in the electric power sector. In 2016, power generation and industrial sectors accounted for 98% of national coal consumption56.
50 https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017- full-report.pdf 51 http://kosis.kr 52 http://kosis.kr 53 https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017- full-report.pdf 54 http://kosis.kr/ 55 https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017- full-report.pdf 56 http://kosis.kr/
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Transportation 0.6
Industry 32.3
Figure 5 South Korea’s coal consumption by sector (million toe, 2016)57. Natural gas consumption South Korea consumed 45.5 billion m3 of natural gas in 201658. Since domestic natural gas production is negligible, the country consumption mostly relies on imported natural gas. In 2016, South Korea was the 2nd largest importer of Liquefied Natural Gas (LNG) in the world behind Japan (33.4 million tons), making the import of LNG equivalent to 15% of the country’s annually imported fossil fuels in value in 201659.
As South Korea is not connected by international pipelines, the gas is imported via LNG vessels.
Transportation Public 1.3 0.1 6% 0%
Residential· Industry Commercial 8.0 13.3 35% 59%
Figure 6 South Korea’s gas consumption by sector (million toe, 2016)60.
57 http://kosis.kr 58 https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review-2017/bp-statistical-review-of-world-energy-2017- full-report.pdf 59 http://kosis.kr/ 60 http://kosis.kr
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About 59% of all national gas is used by residential, commercial and public consumers – where it is especially used for heating generation (59%), 35% by industry including power, and only 6% is used by transportation. While prior to the introduction of natural gas in the country, liquefied petroleum gas was used as the source of city gas, natural gas used for city gas now accounts for over 50% of the total natural gas consumption.
2.3.2 Electricity Production in South Korea The energy market in South Korea is highly regulated, and accordingly Korea Electric Power Corporation (KEPCO)61 is responsible for more than 90% of the electricity generation and close to 100% electricity distribution. KEPCO is mainly active in electricity distribution as electricity generation is primarily done by its affiliates; a lesser portion of electricity is produced by independent power operators. According to its energy strategy blue print, the Korean government encourages individual power producers to participate more actively in the Korean energy market.
Electricity constitutes roughly 20% of the total primary energy consumption of South Korea and about 55% of produced electricity is consumed by industry, 45% by the residential, commercial and public sectors, and only 0.5% by the transportation sector. In 2017, South Korea generated 521 terawatt hours of power from an installed power generation capacity of 114 gigawatts62.
Renewables Oil 26.9 6.0 5% 1%
Nuclear Coal 141.0 229.0 27% 44%
LNG 118.0 23%
Figure 7 South Korea’s electric power generation in 2017 (TWh)63.
61 http://home.kepco.co.kr/kepco/EN/main.do 62 https://www.kpx.or.kr/ - 2017 년 연간 전력시장 운영실적 63 https://www.kpx.or.kr/ - 2017 년 연간 전력시장 운영실적
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The shares of oil, gas and coal represented about 68% of South Korea’s electric power generation in 2017, while 27% came from nuclear power and 5% from renewable sources, including hydroelectricity. Base load power generation in South Korea is primarily made up of coal and nuclear power, while peak demand is met by natural gas.
South Korea intends to reduce its greenhouse gas emission levels by 37% from business-as- usual projected levels (projections of emission levels without any carbon price scheme) by 2030, according to the submitted Nationally Determined Contributions (NDCs) at COP 21 in Paris in December 2016. The new government inaugurated in May 2017, announced its policy to establish a nuclear power plant roadmap. The policy is a step-by-step plan to ban the construction of new nuclear power plants and extend the life expectancy of older nuclear power plants and plan to include it in power supply plan.
South Korea plans to close ten older coal-fired power plants by 2025 and by 2030, during which time the proportion of renewable energy will be increased to 20%.
Through this, the energy consumption economy will be transformed into a low-carbon/high- efficiency structure, and based on this South Korea aims to become a leader in New Renewable Energy (NRE). Regarding nuclear generation capacity, as of late 2016, South Korea was ranked 6th highest in the world. South Korea imports all of its required uranium and does not reprocess uranium due to the nation’s nuclear cooperation agreement with the USA, which is valid until 2035.
Key elements for conventional power plants are provided by companies such as ABB Group, Doosan Heavy Industries & Construction, GE Energy (including the energy business area acquired from Alstom), Siemens Energy, and Westinghouse Electric Company.
According to Bloomberg, Korea Electric Power Corporation (KEPCO), comprising six subsidiaries, is South Korea's leading power company involved in renewable energy power development and it is assumed that they will develop 85% to 90% of South Korea's renewable energy capacity over the next decade. Other major companies include foreign players such as Acciona, Enercon,
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Siemens Gamesa, Vestas, Mitsubishi, and Korean players Unison, Hyosung, Hanjin, Doosan and Samsung.64
2.3.3 Renewable Energy in South Korea In 2016, 4.8% (14.2 million toe) of South Korea’s final energy consumption came from renewable energies65. In terms of capacity, renewable energies represented 7.2% of South Korea’s final energy capacity, equal to about 13.3 GW in 201666, and 15.1 GW in 201767.
In 2016, energy made from waste represented 62% (8.7 million toe), while biomass accounted for 19% (2.8 million toe) and solar (including both photovoltaic and thermal) was 8% (1.1 million toe). Hydro represented 4% (0.6 million toe), wind 2% (0.35 million toe), fuel cell 2% (0.24 million toe) while other renewable energy sources such as geothermal, ocean energy, IGCC represented in total 3% (0.34 million toe).
Geothermal Ocean Fuel Cell 162,047 Energy 241,616 1% Wind Power 104,562 2% IGCC 355,340 1% 2% 76,104 1% Hydro Power 609,233 4%
Solar 1,121,327 8%
Biomass 2,765,453 Waste 19% 8,742,727 62%
Figure 8 South Korea’s renewable energy consumption in 2016 (toe)68.
64 http://www.renewableenergyfocus.com/view/31555/market-report-south-korea-and-its-renewable-energy-ambition/ 65 http://kosis.kr/ 66 http://www.kemco.or.kr/ 67 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 68 http://kosis.kr/
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The 3020 Renewable Energy Initiative Following the 8th BPEDS, the Ministry of Trade, Industry and Energy announced its “Renewable Energy 3020” implementation plan which details how the rise of the renewables in electricity generation from the 2016 level of 7% (13.3 GW) to 20% (63.8 GW) will be implemented by 2030.
In order to reach this objective, the country will need to supply new facilities with a new generating capacity of 48.7 GW. 97% of the newly installed plan will be solar (30.8 GW, 63%) and wind (16.5 GW, 35%) power plants. For more environmentally-friendly renewable energy, it will also reduce waste and bio power generation rate to respectively 6% and 5% by 2030 compared to 26% and 16% in 2017.
The Korean government plans to encourage ordinary citizens to participate in the initiative and plans to develop large projects. In addition, the current administration has proposed measures to nurture new energy industry such as:
intensifying industrial competitiveness in renewable energy,
cultivating NRE industry based on dispersed power,
growing service industry of demand management utilising IoE, and
identifying new industry through smart city.
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2017 (GW) 2018-2030 (GW) 2030 (GW)
Current New capacity 2030 goals production plan (63.8GW) Wind (15.1GW)1.2G (48.7GW) Hydr W Wind o 8% 17.7GW 1.8G Wind 28% W 16.5GW 34% 12% Solar Bio 5.7GW 2.3GW 38% Solar Solar 16% 30.8GW Hydro 36.5GW 63% 2.5GW 57% Hydro 4% 0.5GW Waste 1% Bio 3.8GW Bio 26% 1.0GW 3.3GW 2% 5% Waste 3.8GW 6%
Figure 9 “Renewable Energy 3020” implementation plan towards 2030 objectives69. The new capacity plan would be supported as follow:
19.9 GW by the expansion of expand urban-type, private solar power
10 GW by the expansion of solar farms.
28.8 GW by large-scale projects at six public generating companies.
The Ministry of Trade, Industry and Energy will encourage public power generators to work on large-scale projects, mostly on solar and wind related projects, by increasing the mandatory renewable energy supply rate from its current level of 5% to 28% in 2028. As an example, a maximum 11 GW solar farm will be built in a 15,000ha area of reclaimed land in Seosan and a maximum 19 GW wind farm in public lands70.
69 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 70 http://english.hani.co.kr/arti/english_edition/e_national/825098.html
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Individuals 2.4GW 5% Small businesses and cooperatives 7.5GW 15%
Large scale projects Solar farms 28.8GW 10.0GW 59% 21%
Figure 10 “Renewable Energy 3020” implementation projects71. The government estimates that a total of KRW 110 trillion (EUR 84.6 billion) will be required to achieve the 2030 objective72:
KRW 41 trillion (EUR 31.5 billion) financed by the private sector,
KRW 51 trillion (EUR 39.2 billion) financed by the public sector,
KRW 18 trillion (EUR 13.9 billion) provided by the government directly.
In order to achieve a 20% share of renewable energy generation capacity by 2030, the Renewable Energy Portfolio Standard (RPS) obligation rate will raise to 28% in 2030 (10% from 2023)73. The government plans to install Energy Storage Systems (ESS) in public institutions and install intelligent weighing systems nationwide by 2020 to build environmentally friendly smart energy infrastructure and create new business based on Internet of Everything (IoE). Energy efficiency will be shifted from low carbon and high-efficiency structures by strengthening demand management by core sectors (home, commercial, transportation, public buildings, etc.). It is required to certify the zero-energy buildings in the public sector.
71 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 72 http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3042361 73 http://www.kas.de/wf/doc/kas_51845-544-2-30.pdf?180316032406
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The Renewable Energy Certificate (REC) Weighting System The RPS was initiated by the national government in 2012 and requires South Korea’s major electric utilities or power producers that have power generating facilities with installed capacity over 500 MW to produce a minimum proportion of their power using new and renewable energy sources and to gradually increase the renewable energy share in their power generation portfolios. The proportion of renewable energy is stipulated by the government and has been enforced by new ministerial decrees in June 2018. It is stating that the RPS will be 5% in 2018, and set to be 10% by 2023.
Under the RPS system, power producers that are subject to the RPS can also trade in renewable energy certificates to meet their obligatory new and renewable energy supply target. A REC certifies that a power generator has produced and supplied power using new and renewable energy facilities. A REC is issued based on weighted renewable energy supply (MWh); the weights are assigned by the government.
In the case of solar energy, different weight values are applied in consideration of different types of facilities (general facilities, buildings, and floating facilities) and sizes. The smaller the size of the business, the higher the weight is; the larger the size of the business, the smaller the weight is. To compensate for the intermittent nature of wind power generation, energy storage is linked to wind power generating facilities so that a higher weight can be applied in case of power discharge at peak times, while a lighter weight is used during non-peak times. As energy sources such as offshore wind power, tidal power, and geothermal heat require a large initial investment, a flexible weight system has been adopted.
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Energy source and criteria REC Category Facility type Criteria weighting Less than 100 kW 1.2 From 100 kW and less than Facility installed on general site 1.0 3,000 kW More than 3,000 kW 0.7 Facility installed on existing Less than 3,000 kW 1.5 buildings More than 3,000 kW 1.0 Solar PV Facility installed on forest land 0.7 Facilities floating on the water 1.5 Trading electricity through private power generation facilities 1.0 ESS facility (connected to solar 18, 19 years 5.0 power facility) 20 years 4.0 Less than 5 km distance 2.0 From 5 km to 10 km distance 2.5 Offshore wind power From 10 km to 15 km distance 3.0 More than 15 km distance 3.5 Bio-SRF, IGCC, by-product gas, waste energy 0.25 Landfill gas, wood pallet, wood chip 0.5 Hydro, onshore wind, bioenergy, RDF, waste gasification, tidal power (with 1.0 embankment) Water heat, un-used forest bio mass (mixed heat) 1.5 Fuel cell, tidal power, un-used forest bio mass (full Fixed 2.0 biomass only) Non-used forest biomass, fuel cell, tidal power (no Fixed 1.5 to 2.5 embankment), geothermal power, Geothermal, tidal power (no embankment) Variable 1.0~2.5 18, 19 years 5.0 Energy Storage System connected to solar power 20 years 4.0 18, 19 years 4.5 Energy Storage System connected to wind power 20 years 4.0
Table 2 Renewable Energy Certificate Weighting System by Energy Source and Criteria74.
74 https://www.knrec.or.kr/business/rps_guide.aspx
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3 Market Overview and EU Entry Opportunity in South Korea
3.1 Wind Power Wind power is the generation of electricity from the movement of airflow using wind turbines. Wind turbines are broadly divided into two main categories according to the rotational axis’ direction – those with a horizontal axis and those with a vertical axis. The wind generator is composed of mechanical parts, electric components, and the control system. Major parts of the turbine include a blade, a shaft, a generator, a brake, a gearbox, the yawing system, and the tower system. Wind turbines can be placed both onshore and offshore to generate electricity. In recent years, advanced information technologies have led to the sophistication of design and control of the turbine.
3.1.1 Market Overview In 2016, wind energy consumption in South Korea was estimated at 355,340 toe, up by 25% from 283,855 toe in 2015. Wind energy resources are mostly resources for commercial usage (352,953 toe, 99% of all resources) rather than for individual usage (2,387 toe).
2,387 2,429 1,065 1,624 1,113 1,126 992 352,953 281,026 241,289 240,223 174,531 184,394 191,682
2010 2011 2012 2013 2014 2015 2016 Commercial usage Individual usage
Figure 11 Wind energy consumption in South Korea (for commercial and individual usage)75.
In South Korea, as of 2016, the wind power generation capacity was 1,035 MW and represented 7.5% of all renewable energy capacity (13,846 MW).
75 www.knrec.or.kr
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1,035 853
583 645 492 367 419
2010 2011 2012 2013 2014 2015 2016
Figure 12 Wind power capacity in South Korea (MW) 76. In 2016, 30 companies were involved in the wind power generation market. Among them, 16 companies focused on power generation systems77, 5 on the manufacture of towers, 4 on the manufacture of blades, and 1 company was involved in power conversion devices. Other companies were involved in the manufacturing of other parts, which include instruments, turbines, bearings (main shaft, slewing bearing, yaw bearings), gearbox, etc.
Other part manufacturing 10 28% Power generation system manufacturing 16 44% Power conversion device manufacturing 1 3% Blade manufacturing 4 11% Tower manufacturing 5 14%
Figure 13 Wind power sub sectors in which companies in South Korea are involved (2016)78. In 2016, the wind power sector generated a market of KRW 1,164.3 billion (EUR 895.4 million), down by 20% compared to 2015. The tower segment was the most important sub market with a
76 www.knrec.or.kr 77 "power generation system" is the production of a system capable of producing energy, excluding construction or installation industry activities 78 www.knrec.or.kr
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value of KRW 451.4 billion (EUR 347.2 million). The market decreased as only 186.8 MW of capacity were installed in 2016 compared to 207.8 MW in 2015.
The share of Korean wind power companies in the domestic wind power generation market accounted for 100% in 2014 but dropped sharply to 30% in September 2018. The majority of the remainder was taken by Danish products with a 45% share, followed by Germany with 15% and Spain with 10%79.
1,457.1
1,286.6
1,164.3 633.5 388.7
2.6 478.1 49 57 2.6 2.6 444.1 51 494.5 451.4
402 270 181
2014 2015 2016
Power generation system manufacturing Tower manufacturing Blade manufacturing Power conversion device manufacturing Other part manufacturing
Figure 14 Annual Korean wind power market volume (KRW billion)80.
207.8 186.8
91.9 72.8 51.9 61.4 33.4
2010 2011 2012 2013 2014 2015 2016
Figure 15 Annual wind power capacity installed in South Korea (MW) 81.
79 http://m.koreatimes.co.kr/pages/article.asp?newsIdx=258179 80 www.knrec.or.kr 81 www.knrec.or.kr
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Korean Players Korean conglomerates are participating in government-led projects such as the Southwest Offshore Wind Project and are stepping up their effort to narrow the technological gap and cultivate an edge in the global market. Samsung Heavy Industry, Doosan Heavy Industry, Hyundai Heavy Industry, and Hyosung are turbine providers for the project.
The Southwest Offshore Wind Project82.
The project deserves attention because the Korean government is actively supporting it as a boost to local companies for technological sophistication. Led by Korea Offshore Wind Power, a consortium of six state-owned enterprises (Korea Hydro and Nuclear Power Co., Ltd, Korea East-West Power Co., Ltd, Korea South-East Power Co., Ltd, Korea Southern Power Co., Ltd, Korea Western Power Co., Ltd, and Korea Midland Power Co., Ltd) is implementing the pilot project planned to be completed by the end of 2019 (initially December 2018) with 60 MW target capacity. Once successfully completed, the next step is to expand its capacity to 400 MW by 2020.83
Doosan is the EPC contractor and wind turbine supplier for the first phase of South Korea’s Southwest Offshore Wind Project. The first phase has been set out as a demonstration phase and initially involved deploying Doosan’s 3 MW wind turbines. The conglomerate has also acquired the prototype turbine, design, and rights to manufacture and sell a 5.5 MW wind turbine developed by Hyundai Electric & Energy Systems and AMSC84. Doosan will supply the 5.5 MW units to the first phase of the Southwest Offshore Wind Project85. In 2017, Doosan signed a maintenance contract for the 60 MW demonstration phase of South Korea’s Southwest Offshore Wind Power Project and will be responsible for guaranteeing the operation rate of all 20 wind turbines at the project site. It will also be providing routine maintenance and offshore maintenance services for a period of 15 years starting in 201986.
82 http://www.kowp.co.kr/ 83 “Southwest Offshore Project to be launched early next year,” Today Energy, 15 June 2015, available at http://www.todayenergy.kr/news/articleView.html?idxno=104249 (Original text in Korean) 84 The 5.5MW wind turbine has been operating for nearly three years on South Korea’s Jeju Island and in 2016, during typhoon Chaba, the turbine withstood the fourth most powerful typhoon on record to hit South Korea with winds reaching 124 mph. 85 https://www.offshorewind.biz/2017/11/06/doosan-to-deploy-5-5mw-turbines-at-koreas-southwest-project/ 86 https://renewablesnow.com/news/doosan-heavy-wins-maintenance-job-on-korean-offshore-wind-project-623246/
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The Tamra offshore wind farm
The Tamra offshore wind farm opened in November 2017 and is South Korea’s first commercial offshore wind farm. It comprises ten 3 MW Doosan wind turbines installed about 0.5 – 1 km offshore in Geumdeung-ri on Jeju Island. Tamra is able to produce 85,000 MW annually and produced its first power in late September of 201687. With the opening of this farm, South Korea has the world's ninth-largest wind power capacity at 35 MW.
The government of Jeju Island plans to build five additional offshore wind farms by 2022 to meet the 100 percent clean energy goal by 2030 set out in the ‘Carbon-Free Island Jeju by 2030’ plan. This could offer opportunities to European companies.
Doosan Heavy Industries & Construction has also been selected as the main contractor of a consortium tasked to develop an 8 MW offshore wind power generation system. The 48-month- project is pushed by the Korea Institute of Energy Technology Evaluation and Planning 88 . The consortium includes five Korean companies, colleges and research institutes. The total project cost is KRW 55 billion (EUR 42 million). Doosan Heavy Industries & Construction will design, manufacture and demonstrate the 8 MW floating wind power generation system model. Human Composite will manufacture blades and Seil Engineering will be in charge of the design and production of the lower parts, with the support of the Korea Institute of Material Science (responsible for blade design support and testing) and the Seoul National University R&DB Foundation (for devising measures to reduce blade noise).
According to Doosan, the turbine will be able to generate up to 8MW at an average wind speed of 10m/s and will have a utilisation rate of 30% or higher even when the average wind speed is 6.5m/s89. The turbine design will tackle the Korean specific environment which is hit by typhoons but also low-speed winds; typhoons make it necessary that turbines be durable enough to
87 https://www.offshorewind.biz/2016/09/29/breaking-south-korea-becomes-offshore-wind-energy-producer/ 88 http://www.ketep.re.kr/ 89 https://www.offshorewind.biz/2018/06/29/doosan-to-develop-koreas-largest-offshore-wind-turbine/
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withstand even harsh conditions like 70 m/s winds. It can be assumed that with the development of this large scale model, Doosan will be able to enter the overseas wind power market.
3.1.2 EU Entry Opportunities
South Korea, a land for wind power opportunities South Korea has significantly abundant wind across its land. The average wind speed is estimated at 4.0 m/s, varying between 3.5 m/s in September and 4.6 m/s in March. Although the average wind speed may be low, the wind can generate a high amount of energy in winter, especially on the east and south-eastern coasts, during strong surges of cold air, in which the wind speed reaches up to 8.5 m/s90.
Figure 16 Average annual wind speed in South Korea91. The monsoon wind affects South Korea in winter and summer. In summer, the North Pacific atmospheric pressure is directed south of South Korea and the wind is directed southeast or southwest. In winter, the wind direction is northwest in most areas, and northeast wind appears in the southwestern and southern coasts. In addition, southwestern winds can be observed in the north-eastern province.
90 http://www.mdpi.com/2071-1050/10/6/1822 91 http://www.greenmap.go.kr/
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Opportunities in the context of the 3020 Renewable Energy Initiative The 3020 Renewable Energy initiative will offer opportunities to EU companies, especially in the offshore segment.
2017 2018-2030 2030
New capacity plan
1.2GW 16.5GW 17.7GW
Figure 17 “Renewable Energy 3020” implementation plan for wind power towards 2030 objectives92. As part of the government’s goal to increase the proportion of renewable energy from the current 7% to 20% by 2030, wind power capacity will reach 17.7 GW in 2030 compared to 1.2 GW in 2017. In total, South Korea plans to install 16.5 GW (34% of the new capacity plan) of new wind power capacity by 2030. Among them, offshore wind power projects will account for 12 GW.
As a first step, the government plans to establish 500 MW-class turbines in coastal areas and explore ways to converge them with ocean-based industries. It aims to create large-scale floating wind farms through technological innovations in the long term93. These farms will be set up in locations to be recommended by municipalities. In this regard, North and South Jeolla provinces
92 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 93 https://www.evwind.es/2018/06/26/korea-to-add-12gw-of-wind-enegy-by-2030/63783
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and North and South Gyeongsang provinces among others announced plans for five projects that will produce 730 MW.
As part of this step, the renewable energy investment giant Macquarie Capital has been reportedly looking into investing in a 1 GW project planned for offshore Pohang with the Korean developer Gyeongbuk94.
The government will also make endeavours to supply small- and medium-sized (under 500 MW) offshore wind farms in the short term and build large-scale floating offshore wind farms over the mid- to long-term. All projects will be carried out in the form of creating wind farms first and letting companies develop projects later to attract private investment95.
The government plans to combine the renewable energy with shipbuilding and ocean-based industries as they share a lot of manufacturing processes for towers, blades and gearboxes, and, as such, the two sectors can benefit from each other.
The Ministry of Trade, Industry and Energy aims to further promote wind energy96 and plans to raise incentives for offshore wind farm operators; at the same time, they intend to cut back subsidies on biomass producers.
Opportunities for premium advanced technologies South Korea has so far only played a marginal role in the global wind sector, both in terms of domestic installations as well as in industrial capacities. The country is a latecomer to wind energy and offshore wind is probably the best entry point for Korean companies into this sector, given their extensive shipbuilding and marine engineering experience as well as the country’s excellent offshore wind resources.
Korean products have not been as competitive as Western products, especially European, in terms of technology, thus major foreign companies are already key players in the wind turbine
94 https://www.owjonline.com/news/view,asias-100gw-offshore-wind-potential-could-replace-350m-tonnes-of-coal-generation_54077.htm 95 http://www.businesskorea.co.kr/news/articleView.html?idxno=23299 96 http://www.koreaherald.com/view.php?ud=20180518000268
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market in South Korea. Until recently, most of the wind turbines had been imported from overseas – especially from EU companies such as Enercon, Vestas or Siemens-Gamesa.
EU companies that successfully entered the Korean Wind power market Vestas97 (Denmark) is the leading turbine manufacturer in South Korea and has 42.2% market share in the Korean wind energy industry. As of 2017, Vestas has an installed capacity of 275 MW in South Korea, accounting for approximately half of the total wind energy capacity in the country98.
As its first wind power project in South Korea, Siemens99 (Germany) provided 10 direct drive 3 MW wind turbines with a total capacity of 30 MW for the Gasiri project in Jeju Island100 . The company also received an order to supply 17 direct drive 3.6 MW wind turbines for the Gyeongbuk - Uljin 60MW Onshore Wind Farm.
Enercon101 (Germany) is among world leaders for wind energy and has set up an office in South Korea. In 2016, Enercon has supplied three 2.35 MW wind energy converters to two wind farms in South Korea, both located on the country’s east coast. The company Dongkuk S&C Co. Ltd., with which ENERCON has already been doing business for years in relation to the supply of tower components to Asia, was the general contractor for engineering, procurement and construction (EPC). Dongkuk also supplied the steel towers. The end user was the company GS Power. In 2017, a third farm was also equipped with the same type of wind energy converter.
97 https://www.vestas.com/ 98 https://www.windpowermonthly.com/article/1435007/vestas-wins-21mw-south-korean-order 99 https://www.siemens.com/kr/en/home.html 100 https://www.siemens.co.kr/eng/press/press-releases-view.asp?Idx=430 101 www.enercon.de
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3.2 Solar Energy 3.2.1 Solar Thermal Energy Market Overview Solar thermal energy harnesses solar energy into thermal energy for heating or cooling buildings, industrial steam, or thermal energy production. The main technologies of solar thermal energy are heat collection and transfer, heat storage, and heat transport. Solar thermal heat system management and design technologies are important as well.
In 2016, solar thermal energy consumption in South Korea was estimated at 28,495 toe, in stagnation with the 28,469 toe consumed in 2015.
29,257 28,485 28,469 28,495 27,435 27,812 26,259
2010 2011 2012 2013 2014 2015 2016
Figure 18 Solar thermal energy consumption in South Korea102. In South Korea as of 2016, the solar thermal generation capacity was 1.85 million m2. With the continued installation of new facilities since 2010, the generation capacity has seen a steady growth.
1,851,618 1,822,646 1,793,613 1,761,570 1,713,097 1,649,322 1,594,590
2010 2011 2012 2013 2014 2015 2016
Figure 19 Annual solar thermal capacity in South Korea (m2) 103.
102 www.knrec.or.kr 103 www.knrec.or.kr
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In 2016, 17 companies were involved in the solar thermal energy market. Among them, 16 companies focused on collector systems and 4 companies were involved in heat accumulators104.
Heat accumulator manufacturing 4 20%
Solar energy collector manufacturing 16 80%
Figure 20 Solar thermal energy sub sectors in which companies in South Korea are involved (2016)105. In 2016, the solar thermal energy sector generated a market of KRW 26.6 billion (EUR 20.5 million), down by 8.3% compared to 2015. The solar collector segment was the most important sub market with a value of KRW 25.8 billion (EUR 19.8 million).
32.1 1.5 290.9 26.70.9
30.6 28.1 25.8
2014 2015 2016 Solar collectors Heat accumulators
Figure 21 Annual Korean solar thermal energy market volume (KRW billion)106.
104 The total number of companies excludes the duplication of companies that run two or more new and renewable energy industries. It is a simple sum of the number of companies by energy source 105 www.knrec.or.kr 106 www.knrec.or.kr
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Even if the total generation capacity has seen a steady growth since 2010, the annually installed solar thermal capacity has dramatically decreased every year since 2010, which explained the decrease of sales. Between 2011 and 2012, the market saw a rebound by 17% with the installation of an additional 63,775 m2 glazed collector area, to only to see a decline again in 2013.
69,805 63,775 54,732 48,473
32,043 29,033 28,972
2010 2011 2012 2013 2014 2015 2016
Figure 22 Annual solar thermal energy capacity installed in South Korea (m2) 107. Major items in the domestic market include collectors, water heaters, and residential hot water supply systems. Three types of collectors are recognised as New Renewable Energy (NRE) equipment, which are flat plate heat collectors; single-tubular and dual-tubular collectors. Of these, flat plate collectors are mostly produced within South Korea, whereas tubular collectors are predominantly imported from China.108
The market for solar hot water supply systems, though small, has been shaped around medium- or large public facilities. As part of the Green Home projects, residential solar hot water systems have been supported since 2007, but due to a wide difference in temperature between summer and winter, the systems tend to suffer overheating and low utilisation in the summer.
Experts pointed out that the government set the price of solar thermal energy too low, reducing incentives and profit margin to the point at which it was a challenge for business to break-even.
From 2004, the commercialisation of solar thermal water heaters and flat plate heat collectors started. However, they are still behind the level of other advanced countries in terms of functionality and durability. As heat collecting and water heating technologies have become widespread, products utilising these technologies have been sold to residences, golf ranges, and
107 www.knrec.or.kr 108 New & Renewable Energy Center, 2014 New & Renewable Energy White Paper (Original text in Korean)
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fish farms. To overcome the narrow market niche of these products, new technologies to design, produce, and test better systems will be needed.
Under such circumstances, cooling systems using solar energy, solar heat pumps, economical and efficient collectors, small-sized storage are necessary to boost the market and to attract more end-users. In this regard, foreign companies with established technologies in the mentioned fields have an edge in the Korean market.
Korean Players Sunda Korea109 has been selected as a solar thermal specialist company by Korea Energy Management Corporation, the company produces evacuated single-tubular solar collectors and accounts for 80% of domestic market share.
E-Max System110 covers comprehensive areas – design, manufacturing, and construction both in solar photovoltaic and solar thermal energy systems. Its flat plate heat collector and dual- tubular collector acquired NRE certificates.
Dong-ho Engineering has been selected as a distinguished NRE specialist company as well as an NRE facility after-sales service provider. Dong-ho Engineering built 30 solar powered residential houses in Gangwon province in 2011. Its main product is the Solar Keymark certified evacuated tubular collector.
KD Navien111 is a national brand in heating and cooling systems and boilers, it has cultivated the solar thermal market since 2013 with its “all-in-one solar thermal system” which combines the condensing boiler unit and the solar thermal system for heating and hot water.
Sehan Energy112 is a solar thermal energy specialist company since 2006, the company is focusing on technologies addressing residual heat in the summer. With significant fluctuation in
109 http://www.sundakorea.co.kr/ 110 http://www.emax-v21.com/ 111 http://en.kdnavien.com/ 112 http://koreansolar.koreasme.com/en/
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seasonal insolation, the overheating problem is one of the most serious issues in maintenance and construction.
3.2.2 Solar Photovoltaic Energy Market Overview Solar photovoltaic is the method by which sunlight is converted to electricity through the photovoltaic effect. A photovoltaic system consists of a solar module composed of solar cells, condensers, and inverters; its generated electricity is instantly ready to be used. The solar photovoltaic power generation value chain consists of polysilicon, ingots or wafers, solar cells, solar modules or systems, power generation, and related equipment.
Figure 23 Solar Photovoltaic System.
In 2016, solar photovoltaic energy consumption in South Korea was estimated at 1.1 million toe, up by 29% from 0.8 million in 2015. Solar photovoltaic energy resources are mostly resources for commercial usage (731,025 toe, 87% of all resources) rather than for individual usage (145,223 toe).
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145,223
118,354
97,455 947,609 69,696 731,025 57,644 29,120 39,102 449,975 274,755 137,032 158,095 179,899 2010 2011 2012 2013 2014 2015 2016
Commercial usage Individual usage
Figure 24 Solar photovoltaic energy consumption in South Korea (for commercial and individual usage)113.
In South Korea, as of 2016, the solar photovoltaic power generation capacity was 4.5 GW and therewith represented 32.5% of all renewable energy capacity (13,846 MW). Since the introduction of the Renewable Portfolio Standard (RPS) in 2012, the generation capacity has seen a considerable growth.
4.50 3.62 2.48 1.56 1.02 0.65 0.73
2010 2011 2012 2013 2014 2015 2016
Figure 25 Solar photovoltaic power capacity in South Korea (GW) 114. In 2016, 108 companies were involved in the solar photovoltaic power generation market. Among them, 39 companies focused on the solar module segment, 25 on the power conversion device segment, 21 companies on solar parts and materials 115 and 17 companies on photovoltaic equipment116. Other companies were involved in the manufacturing of solar cells, poly-silicon, wafers, light collectors and ingots117.
113 www.knrec.or.kr 114 www.knrec.or.kr 115 Solar "Parts & Materials" include film, glass, metal paste, slim rod, tracker, back sheet, EVA film etc. 116 Photovoltaic "equipment" includes measuring instruments, module testers, memory component testers, and wire saw equipment 117 The total number of companies excludes the duplication of companies that run two or more new and renewable energy industries. It is a simple sum of the number of companies by energy source
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Wafer Light collector Ingot 4 4 3 Poly-silicon 3% 3% 2% 4 3%
Solar cell 7 Solar module 6% 39 32%
Equipment 17 14%
Parts & Materials 21 Power 17% conversion device 25 20%
Figure 26 Solar photovoltaic sub sectors in which companies in South Korea are involved (2016)118. In 2016, the solar photovoltaic sector generated a market of KRW 7,024.7 billion (EUR 5.404 billion), down by 7% compared to 2015. The solar module segment was the most important sub market with a value of KRW 3,873 billion (EUR 2,979 million).
According to the Ministry of Trade, Infrastructure and Energy, Chinese solar modules accounted for 16.5% of the private solar power market in South Korea in 2014, but quickly grew to 27.3% in 2016 and 33.4% as of September 2018119.
118 www.knrec.or.kr 119 http://m.koreatimes.co.kr/pages/article.asp?newsIdx=258179
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7,563.7 Light collector, 3.5 Light collector, 2.6 7,024.7 6,335.9 Light collector, 4.5 Ingot, 444 Ingot, 163 Solar cell, 95.7 Solar cell, 158 Solar cell, 199 Ingot, 143 Wafer, 229 Wafer, 316 Power Wafer, 294 conversion Power conversion Power device, 413 device, 348 conversion Equipment, 322 device, 327 Poly-silicon Equipment, 371 Equipment, 1,334 Poly-silicon 192 Poly-silicon Part & Material, 550 1,277 1,098 Part & Material, 496 Part & Material, 516
Module Module Module 4,112 3,644 3,873
2014 2015 2016 Module Poly-silicon Part & Material Equipment Power conversion device Wafer Solar cell Ingot Light collector
Figure 27 Annual Korean solar photovoltaic power market volume (KRW billion)120. The market has decreased recently, as only 909.2 MW of capacity were installed in 2016 compared to 1,133.9 MW in 2015.
1,133.9 926.3 909.2
530.7 295.2 126.6 78.8
2010 2011 2012 2013 2014 2015 2016
Figure 28 Annual solar photovoltaic power capacity installed in South Korea (MW) 121. Among other NRE industries, the solar photovoltaic power industry accounts for the largest proportion in terms of the number of companies, sales and export; the sub-segment generated 81% of South Korea’s NRE export in 2016, amounting to KRW 2,865 billion (EUR 2,204 million)122.
120 www.knrec.or.kr 121 www.knrec.or.kr 122 www.knrec.or.kr
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The largest solar power plant in South Korea was constructed in 2013 in Haenam, South Jeolla Province. The installed capacity of the system amounts to 57 MW which can supply electricity to more than 20,000 families.
The world's largest floating solar farm In 2017, Hanwha won a bid to build the world's biggest floating solar farm capable of generating 100 MW of electricity123; 80% will be built by Hanwha General Chemical in partnership with KOMIPO (Korea Midland Power Co., Ltd.), and the remaining 20% by the Korea Rural Community Corporation. Hanwha General Chemical plans to break ground in 2019 after the necessary approvals and permits are obtained. The plant is expected to be fully operational by 2020. Once completed, the floating solar farm will cover 1.2 million m2, enough to provide electricity for approximately 140,000 residents.
Korean Players Despite the slowdown of the photovoltaic market between 2011 and 2013, Korean firms continued to invest in the market. Based on the strong competitiveness in semiconductor and LCD technologies, South Korea has since secured technologies in solar power’s upstream value chain, including polysilicon, Ingot/Wafer, solar cell, and module technologies.
South Korea is now among world leaders in the solar market124 and the country is home to several top polysilicon producers as well as makers of solar cells and panels including OCI 125 and Hanwha Q Cells126. OCI is the world’s third-largest polysilicon maker by capacity. Hanwha Group bought Germany's Q Cells after the German company went bankrupt in 2012 and quickly decided to invest in expanding production. As Hanwha Group's solar energy affiliate, Hanwha Q Cells boasts 6.8 gigawatts cell and module production capacity. It is the world's No. 1 manufacturer in terms of cell capacity. Hanwha Q Cells represents the Hanwha Group's foray and expansion into diverse areas of business, as well as leadership in the global solar market. Hanwha Q Cells and Hanwha Q Cells Korea each manufactures cells and modules. While Hanwha Q Cells supplies
123 https://www.hanwha.com/en/news_and_media/press_release/hanwha-to-build-worlds-largest-floating-solar-farm.html 124 https://www.ft.com/content/8b7916f0-c9af-11e7-ab18-7a9fb7d6163e 125 http://www.oci.co.kr/ 126 www.hanwha-qcells.com
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them for the global market and builds solar power plants around the world, Hanwha Q Cells Korea currently focuses on constructing solar farms in South Korea. The Hanwha Energy project manages and operates solar power plants for the global market. Similarly, Hanwha Solar Power, a subsidiary of Hanwha General Chemical, is responsible for project management and operating solar farms, but primarily in South Korea. Lotte Fine Chemicals127 broke ground to build - in collaboration with American MEMC - a polysilicon factory in 2011.
3.2.3 EU Entry Opportunities South Korea, a land for solar photovoltaic power opportunities South Korea has an excellent potential for using solar energy. Solar radiation in South Korea is considered relatively high compared with other countries located at similar latitudes and the average daily solar radiation is estimated to be 4.01 kWh/m2. Therefore, solar energy is considered to be the most important renewable energy in South Korea. However, solar energy availability is intermittent and unpredictable. Solar energy is also vulnerable to changes in weather conditions such as sudden onsets of cloudy or rainy weather.
Stand-alone solar system (off-grid PV solar power)
The territory of South Korea has approximately 3,000 islands, of which around 500 are inhabited. Most of these islands are quite far from the mainland, and the supply of electricity from the mainland to such islands is unfeasible. Currently, most of these islands use diesel generators to produce electricity. Thus, stand-alone PV systems are ideal for remote rural areas and applications wherein other power sources are either impractical or unavailable.
Hybrid solar system (on-grid PV solar power)
A solar system connected to the power grid is the most commonly used system in major cities and solar power plants. The hybrid solar system will save more money with solar panels through better efficiency rates and net metering, as well as lowering equipment and installation costs.
127 https://www.lottefinechem.com/en/main
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Opportunities in the context of the 3020 Renewable Energy Initiative The 3020 Renewable Energy initiative will offer opportunities to EU companies. Under the plan, the government hopes to increase solar energy by 2030 to 57% (36.5GW) of total green energy, from the current 38% (5.7GW).
2017 2018-2030 2030 New capacity plan
5.7GW 30.8GW 36.5GW
Figure 29 “Renewable Energy 3020” implementation plan for solar photovoltaic power towards 2030 objectives128. As part of the government’s goal to increase the proportion of renewable energy from the current 7% to 20% by 2030, solar photovoltaic power capacity will reach 36.5 GW in 2030 compared to 5.7 GW in 2017. In total, South Korea plans to install 30.8 GW (63% of the new capacity plan) of new solar photovoltaic power capacity by 2030:
19.9 GW will be assumed by the expansion of expand urban-type, private solar power – both on-grid and off-grid – in order to nurture an environment where people could easily take part in the solar power project, and to boost photovoltaic power in rural regions with participation through cooperative associations and support for small business (less than 100 kW).
128 http://english.hani.co.kr/arti/english_edition/e_national/825098.html
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The government’s aim in 2030 is that one in every 15 households will be equipped with solar panels. As of 2016, only one in 94 households has solar panels129.
▪ The Ministry of Trade, Industry and Energy is planning to introduce a feed-in tariff system tailored to South Korea. This system will make it mandatory for the six public power generators to purchase energy produced by solar panels with a capacity of less than 100 kW when owned by cooperatives or farmers or with a capacity of less than 30 kW when opened by private business operators130.
▪ Various regulations that had limited the expansion of solar energy for personal use and on farmland will be relaxed. The government is planning to adjust the rules so that the Korea Electric Power Corporation (KEPCO) can provide cash reimbursement for leftover electricity generated by personal solar panels. Currently, the only option is to let the leftover electricity be carried forward into the next period.
▪ Furthermore, changes are in store for a programme that had only allowed the installation of solar panels on buildings completed prior to the end of 2015.
▪ Inside agricultural promotion zones, where solar panel installation is banned, 20-year solar panel projects will be allowed on reclaimed land that has been damaged by ocean salt. To prevent rampant development by outsiders, a “planned site system” is being adopted by which local governments identify a site for a project and get the residents on board in advance.
10 GW will be dedicated to the expansion of solar farms. As an example, a maximum 11 GW solar farm will be built in a 15,000ha area of reclaimed land in Seosan131.
The Saemangeun solar farm project: the world largest solar plant The government recently announced its plan to build a KRW 10 trillion (EUR 781 million) solar and wind power farm in Saemangeum, North Jeolla Province132. The project will have a capacity of a 3 GW, including a 2.8GW solar farm, a 0.1GW onshore wind farm and 0.1GW fuell cell
129 http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3042361 130 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 131 http://english.hani.co.kr/arti/english_edition/e_national/825098.html 132 http://m.koreatimes.co.kr/pages/article.asp?newsIdx=258179
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generation plant 133. By adding a 1 GW offshore wind farm, the project will have a gigawatt capacity equal to power generated by four nuclear plants according to the government. Estimated to cover 38 square kilometers the solar power farm is announced to be the largest in the world. This project will offer opportunity to EU companies.
Solar City Seoul In addition to national standards and incentives, metropolitan cities also have programmes to enhance the installation of decentralised, small-scale, renewable energy systems. A good example of this is the solar power policy in the capital of Seoul, which was formulated during the public outcry against nuclear power installations in South Korea after the Fukushima nuclear accident in 2011. The Seoul Metropolitan Government (SMG) started a city-wide energy transformation campaign known as “One Less Nuclear Power Plant” (OLNPP) in the same year, with the objective of reducing energy usage in the city by 2 million toe; equivalent to the annual output of a nuclear plant. The city government also aspired to increase the city’s self-sufficiency ratio of electricity supply from 3% to 8%, partly through increased usage of renewable energy.
The “Make Seoul a City of Sunlight” project was a core component of the city-wide campaign for energy self-sufficiency, trying to convert Seoul into a “huge solar power plant” through the creation of a large number of small-scale solar generation projects scattered around the city.
The policy target was to expand solar photovoltaic capacity primarily through the installation of rooftop solar PV systems on buildings across the city. To accomplish this, Seoul undertook the following steps:
Entered into memoranda of understanding with domestic energy companies to obtain their commitment of at least KRW 700 billion (EUR 539 million) to a fund for kick-starting solar projects.
Rented out unused public sites to ease space shortage for solar projects.
133 http://www.businesskorea.co.kr/news/articleView.html?idxno=26189
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Initiated a Feed-in Tariff (FIT) scheme as an economic incentive for small solar projects below 50kW. In addition, Seoul also provided loans to any eligible solar photovoltaic system.
Prepared a Seoul Solar Map134, which is an online map displaying the development potential of solar photovoltaic systems on building rooftops.
Established a Solar Power Generation Citizens’ Fund, to which any Seoul citizen can contribute for solar projects.
From 2012 to 2017, the city has replaced 3.66 million toe of energy through enrolment in its Eco- Mileage System and through enhancing buildings’ energy efficiency135.
In 2017, the city has unveiled a master plan called “Solar City Seoul,” which aims to produce 1 GW worth of solar energy – equivalent to the capacity of one nuclear reactor – during the five years through 2022. The master plan will allocate a total of KRW 1.7 trillion (EUR 1.3 billion) over five years to seven initiatives, which are subdivided into 59 individual projects136. The most striking feature of this plan is the initiative to increase the number of households with miniature solar generators installed on verandas and rooftops to 1 million.
At the moment, installing a 260 W veranda generator at an apartment costs between KRW 100,000 (EUR 77) and KRW 150,000 (EUR 115) after city and local subsidies, which enables savings of about KRW 5,600 (EUR 4.3) a month on average on the electricity bill. Rather than increasing subsidies, the city has resolved to have the Seoul Energy Corporation develop and distribute more affordable products. Supply could not keep up with demand for a program that subsidised the installation of solar panels on home rooftops, and though central government subsidies will end next year, the city of Seoul has decided to provide these subsidies on its own.
In 2017, the Seoul metropolitan government also announced plans to install solar panels at Gwanghwamun Plaza, World Cup Park, Gwangjin Bridge and Magok District, and to develop these areas either into solar energy landmarks or solar energy special districts by 2022.
134 http://solarmap.seoul.go.kr/index.do 135 http://english.hani.co.kr/arti/english_edition/e_national/820207.html 136 http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3041048
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Opportunities for premium advanced technologies and global partnerships South Korea is among world leaders in the solar photovoltaic sector and more specifically in the upstream market, which includes poly-silicon, ingot, wafer, solar cell and module. On the other hand, South Korea shows some weaknesses in the downstream market, including business development, finance, construction, and maintenance, which implies entry opportunities in these areas137.
Opportunities for EU companies will also lie in new premium technologies and cooperation with key local players for the overseas market.
The joint development of new technologies thanks to EU funded programmes such as Horizon 2020 or Eureka or Eurostar can also offer opportunities to EU companies.
EU companies that successfully entered the Korean solar energy market In 2011, Avancis138 (Germany) started the construction of a 100 MW copper, indium, gallium, selenide (CIGS) thin film solar PV module manufacturing facility in South Korea. The German headquartered company was a joint venture of Hyundai Heavy Industries and Saint-Gobain. However, as the conditions for the former joint venture Hyundai-Avancis had been assessed as not optimal, production did not start. With the government’s announcement of 3020 Renewable Energy Initiative, Avancis reopened its Korean operations in 2018 with the aim of serving its CIGS modules to the Korean market.
Univergy International139 (Spain) has set up an office in Seoul in 2017, after the government set a target of 63.8 GW renewable power generation by 2030. Univergy has also set a target for 2018 to develop 300 MW of renewable energy projects in the country and is currently developing a 15 MW solar photovoltaic project in Gyeongsang Province140.
137 Invest Korea, “Korea’s Renewable Energy Industry Part 2” 138 https://www.avancis.de/ 139 http://www.univergy.com/ 140 https://www.pv-tech.org/news/univergy-developing-15mw-solar-project-in-south-korea
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3.3 Aerothermal Energy Aerothermal energy is a natural, non-polluting, and inexhaustible form of energy, which uses a thermodynamic device (heat pump) to transfer heat in the air to heat/cool buildings or homes.
3.3.1 Market Overview According to the Korean government’s green energy roadmap in 2011, the heat pump sector was selected as a strategic sector for “domestic market expansion and achievement of international competitiveness through the development of new concept heat pumps”141.
The goal was to increase localisation rate and upgrade the technology level to 100% competitive in the international market by 2030, and consequently to cultivate 20% of the global market share by 2030142.
While the global market for the heat pump experiences a growth, the Korean domestic market is still underdeveloped. Residential gas and oil boilers are the mainstay of the heating space market.
The characteristics of South Korea’s building stock create one of the main challenges with regards to the use of heat pumps. The high average ratio of rental building stock means there is comparatively low initiatives for use of new energy saving facilities. 61% of Koreans live in high- rise apartments and multiplex houses, with only a few initiatives to replace gas boiler to heat pump systems. They usually do not have the choice to choose their heating system as most of these housing types are already supplied with city gas.
141 https://www.hptcj.or.jp/Portals/0/ahpnw/Newsletter/%E2%97%8E2nd%20AHPNW%20Newsletter20130927_ Japan%20China%20Korea%20only_.pdf 142 Jun-Young Choi, “Heat Pump Market and Technologies in Republic of Korea,” Asian Heat Pump & Thermal Storage Technologies Network Newsletter, No.2, October 2013.
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Single house Appartment 38% 45%
Multiplex house 16%
Figure 30 Housing type in South Korea (2015)143. In South Korea, heating systems are dominated by gas and oil boilers, which respectively accounted for 64% and 17% of the energy consumption in 2015. Oil boilers are still popular in single houses and their replacements could offer opportunities for heat pumps. However, gas boilers have the preference of the population as they are available at low costs. In addition, traditional equipment for heating and cooling systems in South Korea includes floor heating by a water circulation system connected to a gas boiler, together with a room air conditioner for cooling. Therefore, South Korea is the 2nd largest gas boiler market country after China 144 and the population is not familiar with heat pumps. This is currently the greatest barrier to the uptake of heat pumps in South Korea.
Briquet Electric boilers boiler 586.60 1250.50 3% 6% District heating 2190.70 10%
Oil boilers 3433.30 17% Gas boilers 13135.60 64%
Figure 31 Total energy consumption by heating system in South Korea (toe, 2015)145.
143 www.kosis.kr 144 http://www.phamnews.co.uk/global-gas-boiler-sales-revealed/ 145 www.kosis.kr
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Korean Players LG and Samsung HVAC are the two largest Korean players in the aerothermal heat pump market. Daeho Heat Pump146 has developed air-source heat pumps especially designed for horticulture facilities. The company has installed its systems at several facilities such as the Daejeon Eulji Children's Hospital, the Daejeon Pediatric Clinic or the National Institute of Horticulture & Herbal Science
3.3.2 EU Entry Opportunities The aerothermal energy market is at its developmental stage. The heat pump market is small at best, while low-energy buildings and passive houses have only gained attention in recent years. Although the market including HPWH is in a poor shape in South Korea, there are visible advantages of heat pumps over traditional boilers. The most obvious benefit is that another system for hot water will not be necessary because the aerothermal pump recycles heat to produce hot water. The same can be said for the high-efficiency ventilator as it is used both for ventilation and heating. There will be a clear incentive to replace boilers, creating a market potential for industrial and residential use of aerothermal energy.
The Korean heat pump market is expected to grow, especially in high-rise buildings and commercial buildings, and is also expected to be gain footing in the residential sector as an alternative for boilers. Penetration rate of a multi-type heat pump system (two-way operation system for heating and cooling) increases, so the heat storage heat pump systems have to be developed and supplied in the market to control increase of peak electricity demand.
EU companies that successfully entered the Korean aerothermal power market ClimaCheck147 (Sweden) develops products with hardware and software for troubleshooting and optimising of refrigeration systems, heat pumps, and air conditioning. It offers Performance Analyser PA Pro, an equipment for inspection and troubleshooting; pressure sensors, a schrader valve with teflon seal; temperature sensors with meter rugged silicone cable with a special
146 http://dhheatpump.com 147 www.climacheck.com
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purpose contact area; software; and online services. The Seoul Energy Dream Center148 is a building used for public awareness on energy and climate. It is built with the latest technology- from architecture to technical solutions – to show how energy consumption can be decreased through building orientation-design and how the energy can be supplied with a combination of photovoltaic and ground source heat pumps. The three heat pumps as well as a chiller which equipe the Seoul Energy Dream Center are monitored by ClimaCheck online to ensure that it is not just efficient products but that they are also operating efficiently.
148 https://seoulsolution.kr/en/content/seoul-energy-dream-center-seoul-energy-dream-center
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3.4 Geothermal Energy Geothermal energy is defined as heat energy stored in the Earth (in soil, underground water, or surface water). Geothermal energy is commonly classified by temperature range – i.e. low to medium (10-90°C) or high temperature (over 120°C). The types of geothermal energy technologies are categorised by the final product form – either direct use (heat) or indirect use (electricity). The most prevalent direct use technology is the geothermal source heat pump system (GSHP), devised to efficiently use heat energy in the low temperature range (10-30°C). The indirect use refers to the geothermal power plant where hot water or vapour (120-350°C), extracted from the ground, is used to generate electricity. Traditionally, geothermal power generation has been strictly limited to areas close to volcanic regions. New technologies are under development to overcome geographical limitations149.
3.4.1 Market Overview South Korea is not located close to tectonic plate boundaries where geothermal resources are generated via volcanic or seismic activities, thus generating geothermal energy has been difficult. Instead, according to the Korea Institute of Geoscience and Mineral Resources (KIGAM), it is likely that geothermal sources over 180°C exist at 5km or deeper underground. Based on this estimation, South Korea’s geothermal energy potentials reach up to 19.6 gigawatt electrical (GWe) as a technological potential150. Considering this low amount of resources, geothermal utilisation in South Korea is mainly from geothermal heat pumps (GHP).
In 2016, geothermal energy consumption in South Korea was estimated at 162,047 toe, up by 20% from 135,046 toe in 2015.
149 2014 New & Renewable Energy White Paper, New & Renewable Energy Center, Korea Energy Agency (Original text in Korean) 150 “Geothermal Energy Market Preview & Means for Promotion,” Energy Today, 20 August 2014, available at http://www.todayenergy.kr/news/articleView.html?idxno=95133 (Original text in Korean)
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162,047 135,046 108,472 86,959 65,277 47,833 33,449
2010 2011 2012 2013 2014 2015 2016
Figure 32 Geothermal energy consumption in South Korea (toe)151.
In South Korea, as of 2016, the geothermal power generation capacity was 979 MW. With the continued installation of new systems since 2010, the generation capacity has seen a steady growth.
979 852 678 553 431 307 234
2010 2011 2012 2013 2014 2015 2016
Figure 33 Geothermal power capacity in South Korea (MW) 152. The domestic market size for geothermal heat pumps has been steadily increasing since it started to receive government funding in 2000 and after the use of renewable energy became obligatory in 2004.
151 www.knrec.or.kr 152 www.knrec.or.kr
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Heat storage tank 1 4%
Heat pump 24 96%
Figure 34 Geothermal sub sectors in which companies in South Korea are involved (2016)153. In 2016, 25 companies were involved in the geothermal power generation market. Among them, 24 companies focused on heat pump systems and only one company on heat storage tank.
The geothermal power sector is relatively small and in 2016 generated a market of KRW 122.4 billion (EUR 94.2 million), down by 14% compared to 2015. The heat pump segment was the most important sub market with a value of KRW 120.6 billion (EUR 92.8 million).
143 108.3 1.9 122.4 1.8 0.8
141.1 107.5 120.6
2014 2015 2016 Heat pump Heat storage tank
Figure 35 Annual Korean geothermal power market volume (KRW billion)154. The market recently decreased since only 127.3 MW of capacity were installed in 2016 compared to 174.3 MW in 2015. In 2016, the Korean geothermal heat pump market accounted over 6% of Asia Pacific region (APAC) share155.
153 www.knrec.or.kr 154 www.knrec.or.kr 155 https://www.gminsights.com/pressrelease/geothermal-heat-pump-market
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174.3
123.8 121.5 124.9 127.3 89.2 73.5
2010 2011 2012 2013 2014 2015 2016
Figure 36 Annual geothermal power capacity installed in South Korea (MW) 156. The first Korean geothermal power plant in Pohang The country produced geothermal energy for the first time in 2017 in its first geothermal power plant located near the city of Pohang, on the southeast coast of the Korean peninsula. The plant, which uses enhanced geothermal system (EGS) technology, has a capacity of 1.2 MW and can provide electricity for up to 1,000 households.
The project began in 2011 and has been initiated by the Ministry of Trade, Industry and Energy. A total of KRW 43.2 billion (EUR 33.2 million) – KRW 18.4 billion (EUR 14.2 million) from government investment and KRW 24.8 billion (EUR 19.1 million) from private investments – has been invested.
Upon this first successful supply of geothermal electricity, officials announced they would raise an additional KR 80 billion in investment through a power plant consortium to expand the current facility to generate 6.2 MW by 2019157.
Korean Players In the field of power generation, Nexgeo158 (founded in 2001) and INNOGEO technologies Inc.159 (founded in 2007) secured major government pilot projects. INNOGEO first introduced EGS technologies to South Korea and has participated in the first phase of the Pohang EGS project. Nexgeo signed a memorandum of understanding with Korea Hydro and Nuclear Power (KHNP)160 in December 2015 and would join the second phase of the Pohang project.
156 www.knrec.or.kr 157 http://koreabizwire.com/geothermal-power-plant-is-a-first-for-korea/75748 158 http://www.nexgeo.co.kr/ 159 http://www.innogeotech.com/ 160 http://www.khnp.co.kr/
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NEXGEO is a leading company related geothermal development in Korea and has a specialised field of business including geo-technical engineering, hydro-geological survey, resource development, IT services for geo-technology. NEXGEO is research managing department of the geothermal site Pohang EGS.
3.4.2 EU Entry Opportunities The market is led by the government due to the relatively high start-up costs. Although geothermal energy is one of the most environmentally friendly forms of energy and provides consistent energy supply, initial boring and facilities require a heavy investment. The installation sites have changed from the previous small offices and schools to larger buildings. Most of the heat exchangers used were vertical closures but recently efforts have been underway to attempt to utilise groundwater.
For business opportunities, it is notable that green buildings attract interest from major Korean construction firms as NRE systems have been introduced and installed in new buildings to save energy. Although the heat pump market is small at this point, geothermal systems could be introduced in other areas and the market is expected to expand in the near future. The One- Million Green Home Project, for instance, is a governmental programme to subsidise the installation of NRE in residential structures. The budget per home is allocated to support up to 17.5kW of geothermal energy for heating and cooling. On a larger scale, the mandatory NRE use for public buildings provides marginal opportunities to employ geothermal heat pumps or systems to utilise the energy source.
Geothermal power generation is strongly related to government policies due to start-up costs and the need for technological development. Countries like Germany, France, and Japan provide subsidies for geothermal power generation to attract investment. With geothermal power included in the Renewable Portfolio Standards (RPS), it might encourage certain companies which are obligated to produce a certain amount of electricity from NRE to invest into geothermal power. Moreover, geothermal power received a significant boost for commercialisation by the introduction of Renewable Energy Credit (REC) and by giving geothermal energy weighted value of 2.0 – which is more important than the weight applied to solar energy – for calculating the price per MWh of power generated.
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Korean companies are also eyeing to enter the global market161. Joint partnership for bid could also offer opportunities to EU companies.
EU companies that successfully entered the Korean geothermal power market The first soft stimulation of a deep geothermal borehole in Pohang started under the DESTRESS project (Demonstration of soft stimulation treatments of geothermal reservoirs), a Horizon 2020 funded project 162 . The consortium of partners gathered eight academic and eight industrial partners from Europe and South Korea, which included:
GFZ163: the national German Research Centre for Earth Sciences, which combines all solid earth science fields including geodesy, geology, geophysics, mineralogy and geochemistry in a multidisciplinary scientific and technical environment
Energie Baden-Württemberg (EnBW)164: one of the largest energy companies in Germany. Major business segments are sales, grids, renewable energies, generation and trading.
Es-Géothermie165: a subsidiary of the ES Group, hold by EDF (France). Its expertise and skills developed with the Soultz EGS pilot project. Es-Géothermie was involved in different steps of the project, from reservoir studies to power plant construction and operation.
Geothermie Neubrandenburg GmbH (GTN)166: seated in Germany, GTN is an internationally active planning office of engineers and geologists. Its activities cover the entire spectrum of geotechnical and engineering solutions to geothermal energy supply problems.
Geoterma167: a Lithuania state company, which was first established in 1991 with the aim to develop and deepen the research for geothermal production. The company operates a geothermal demonstration plant in Klaipeda (Lithuania).
161 http://www.thinkgeoenergy.com/consortium-of-south-korean-firms-eyeing-400m-investment-into-indonesia/ 162 www.destress-h2020.eu 163 www.gfz-potsdam.de 164 www.enbw.com 165 www.es-geothermie.fr 166 www.gtn-online.de 167 www.geoterma.lt
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Energy Combination Wieringermeer (ECW)168 (Netherland) is a grid company at Agriport A7. Agriport A7 is a large scale location for horticulture and agri-business started in 2006. The company serves 850 ha of greenhouses and 100 ha of industrial estate. The two geothermal doublets cover 20 % of the total energy demand of the area.
Trias Westland B.V.169 (Netherland): developed and realised the Trias geothermal project and has been founded by the Flora Holland (one of the World’s largest flower auctions), HVC (sustainable waste disposal and heat utility) and Westland Infra (gas and electra grid utility). The Triassic Project is developed on the basis of the objective of making sustainable geothermal heat available for greenhouse companies in the Westland municipality (southwestern part of the Netherlands).
168 www.ecwnetwerk.nl 169 www.triaswestland.nl
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3.5 Ocean Energy Due to its large amount of energy reserve, the ocean has the potential to become an important source of clean energy that could drive innovation and job creation in coastal areas. Changes in salinity, thermal gradients, tidal currents, or ocean waves can be used to generate electricity using a range of different technologies. They could provide reliable, sustainable and cost-competitive energy. Ocean energy resources are contained in:
Ocean waves & swells
Tidal range (rise & fall)
Tidal currents
Ocean current
Ocean thermal energy
Salinity gradients
3.5.1 Market Overview In 2016, ocean power energy consumption in South Korea was estimated at 104,562 toe, largely produced by the Sihwa Lake Tidal Power Station.
104,731 98,310 102,077 103,848 104,562
11,246 223
2010 2011 2012 2013 2014 2015 2016
Figure 37 Ocean power energy consumption in South Korea (toe)170. In South Korea, as of 2016, the ocean power generation capacity was 255 MW, with the 254 MW capacity Sihwa Lake Tidal Power Station producing essentially all of it.
170 www.knrec.or.kr
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255 255 255 255 255 255
1
2010 2011 2012 2013 2014 2015 2016
Figure 38 Ocean power capacity in South Korea (MW) 171. The Ministry of Oceans and Fisheries, together with the Ministry of Trade, Industry and Energy, has published the “Mid-Term and Long-Term Clean Ocean Energy Development Plan 2015-2025” in order to review the ocean energy development technology area of South Korea. Its main purpose is to set up a relevant R&D support plan based on the observations and seek more efficient roads towards renewable energy distribution. In 2015, the Ministry of Oceans and Fisheries updated its ocean energy R&D roadmap which aims at:
Enhancing the infrastructures and accelerate commercial development;
Planning open sea testing facilities for wave and current devices;
Collaborating with South Pacific islands for Ocean Thermal Energy Conversion
With the 3020 Renewable Energy initiative, the Ministry of Oceans and Fisheries defined a new plan for developing and disseminating the ocean energy systems in the 2030 Ocean Energy Development Plan to meet the government’s new energy policy. This new plan includes aims to build new infrastructures including wave energy systems of 220 MW, hybrid power generation systems of 300 MW, and tidal energy systems of 700 MW.
Wave, Tidal Stream and Ocean Thermal Energy Conversion (OTEC) technologies have been extensively researched. Whilst much development has taken place, technologies have not been mature enough for commercial deployment of ocean power. Although several devices have been deployed at sea, the consenting process is still regarded as a critical barrier for the industry and to the future progress of the sector. The time involved in obtaining consents is of great concern
171 www.knrec.or.kr
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to most developers due to definite resources and economic implications for project planning. For these reasons, ocean energy technologies are largely at the prototype testing phase.
Sihwa Lake Tidal Power Station Completed in 2011, the Sihwa Lake Tidal Power Station is the largest tidal power installation in the world at 254 MW (just ahead of the Rance Tidal Power Station at 240 MW). The power station generates 552 million kWh every year, supplying more than 500,000 households with electricity. The system is a tidal barrage scheme that makes use of an already-existing seawall that was built in 1994 for flood mitigation and agricultural irrigation. Unlike most barrage systems, power is generated during the influx of the tide rather than the outflow. This results in a slightly less efficient system, but it is necessary to balance the land use / water use, and environmental considerations of the barrage and surrounding area.
Uldolmok Tidal Power Station The Uldolmok Station is a tidal stream installation with a 1.5 MW capacity that was installed in 2009. There are plans to increase the array to 50 MW by the end of 2018. The array is built in the Uldolmok Strait, which is an area on the southwest corner of the country that experiences tidal flows exceeding 6.5 meters per second.
Yongsoo OWC Pilot Plant (test site)172 The Yongsoo OWC pilot plant was completed in 2016 and is located in Jeju Island, 1.5 km from the coastline. The plant, equipped with impulse turbines and 250 kW generators, and grid- connected by the 22.9 KV AC underwater cable, is currently under the trial run.
SUPRC 20 kW Ocean Thermal Energy Conversion (OTEC) and 200 kW Hybrid Ocean Thermal Energy Conversion (HOTEC) Plants (test site)173 The 20 kW Ocean Thermal Energy Conversion (OTEC) and 200 kW Hybrid Ocean Thermal Energy Conversion (HOTEC) plants are conducting performance tests at the Sea Water Utilisation Plant Research Centre at Goseong-gun, Gangwon-do. The 20 kW OTEC plant uses
172 http://eascongress.pemsea.org/sites/default/files/file_attach/PPT-S3W3-10-Lee.pdf 173 http://eascongress.pemsea.org/sites/default/files/file_attach/PPT-S3W3-10-Lee.pdf
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5oC deep-sea water as a heat sink and 26oC of surface seawater as a heat source, and it exhibits efficiency of 2.1%. While the 200 kW HOTEC plant also uses 5oC deep sea water as heat sink, it uses available thermal energy resources like geothermal energy near the coast, waste heat from ships, woodchip gasification, and other types of nearby power plants to increase the heat source temperature up to 75oC which exhibits efficiency of 7.7%.
Open Sea Test Sites The Ministry of Oceans and Fisheries has been supporting open sea test sites for wave energy converters and tidal energy converters. The project, led by the Korea Research Institute of Ships and Ocean engineering (KRISO), is expected to be finished by the end of 2019. The western shore of Jeju Island was selected as a test site nearby the Yongsoo OWC wave energy plant. Cables from five different berths are connected to the offshore substation and the grid system with the allowance capacity of 5 MW.
Korean Players The Korea Water Resources Corporation (K-water)174 is the main actor in the ocean energy sector. The governmental agency in in charge of comprehensive water resource development and provides both public and industrial water in South Korea.
The Korea Research Institute of Ships and Ocean engineering (KRISO) 175 has been established in 1973. The institute, leader in the country in technology development in ship and ocean engineering, is in charge of leading open sea test sites and leading several research and development projects in the development of floating wave energy converter activated by pendulum or in the field of deep seawater thermal energy.
3.5.2 EU Entry Opportunities The public funding for renewable ocean energy is led by two ministries – the Ministry of Oceans and Fisheries and the Ministry of Trade, Industry and Energy. The Ministry of Oceans and Fisheries mainly supports demonstration projects under the “Practical Ocean Energy Technology
174 www.kwater.or.kr 175 http://www.kriso.re.kr
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Development Programme” while the Ministry of Trade, Industry and Energy funds mostly fundamental R&D projects under the “New and Renewable Technology Development Programme”. They invested a total of USD 200 million for ocean energy technology development projects from 2000 to 2017. The involvement from the private sector has been continuously increased, particularly in tidal current device development.
Partnering with Korean companies or R&D institutes in order to apply to such funding programmes will offer opportunities to EU companies and facilitate their entry to the Korean market.
EU companies that successfully entered the Korean tidal power market In 2012, Tocardo176, a Dutch hydropower turbine manufacturer, signed a dealership agreement with South Korea in order to tap the country’s marine and river power potential. For Tocardo, South Korea is one of the world’s most promising countries for the application of tidal energy generation. By using tidal power and its potential energy, electricity is created. The main advantages of such a production are low price, large size of production and clean, green energy.
In 2016, the Finnish company Wello Oy177 set up a partnership with the Korean company BSR CO Ltd178 to execute an ocean wave energy demonstration project in South Korea. Wello will provide its technology expertise, while the Korean partner will rely on its own energy plant building know how. The goal of the project will be to develop a more profitable wave energy converter.
The UK based subsea cable and connector specialist Hydro Group179 has been awarded a £750,000 (EUR 842,000) contract in 2017 with the KRISO for its wind and wave energy platform. Hydro Group delivered subsea cable and connectors to the first phase of KRISO’s floating wind and wave hybrid energy platform located in Jeju island.
176 https://www.tocardo.com/ 177 https://wello.eu/ 178 http://www.bsreng.co.kr/ 179 http://www.hydrogroupplc.com/
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3.6 Hydro Power Hydro power is the usage of water to power machinery or make electricity. There are several types of hydroelectric facilities; they are all powered by kinetic energy of flowing water as it moves downstream. Turbines and generators convert the energy into electricity, which is then fed into the electrical grid to be used in homes, businesses, and by industry.
3.6.1 Market Overview In 2016, hydro power energy consumption in South Korea was estimated at 603,244 toe, up by 33% from 453,787 toe in 2015. Hydro power energy resources are mostly resources for commercial usage (602,578 toe, 99% of all resources) rather than for individual usage (666 toe).
253 1,217 218 396 1,304 666 965,120 792,075 814,537 891,015 1,630 602,578 579,882 452,157
2010 2011 2012 2013 2014 2015 2016 Commercial usage Individual usage
Figure 39 Hydro power energy consumption in South Korea (for commercial and individual usage)180.
In South Korea, as of 2016, the hydro power generation capacity was 1,790 MW and represented 13% of all renewable energy capacity (13,846 MW).
1,790 1,769 1,772 1,747 1,755 1,719
1,623
2010 2011 2012 2013 2014 2015 2016
Figure 40 Hydro power capacity in South Korea (MW) 181.
180 www.knrec.or.kr 181 www.knrec.or.kr
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Small hydropower (< 100 KW) In 2016, the small hydropower installed capacity was 159 MW 182 . Considering the small hydropower potential in existing water-related facilities like sewage treatment plants, water treatment systems, irrigation reservoirs, multi-purpose dams and irrigation dams, the total small hydropower potential could reach up to 1,500 MW. Annual power generation could reach 5,256 GWh (assuming a 40% operation ratio). There is limited economic feasibility of small hydropower projects as the terrain does not allow high head turbines to operate. As a result, the local small hydropower industry has not yet been fully developed183.
Ultra-high voltage transmission connecting hydropower to markets The idea of global energy interconnection is currently discussed by major energy companies in China, Japan, Russia and South Korea around the creation of an “Asian Super Grid”, in which an ultra-high voltage grid would link electric grids across regions, countries and continents to transmit electricity generated from regions with an abundance of clean, renewable sources like hydropower184.
Korean Players Korea Hydro & Nuclear Power (KHNP) 185 is a subsidiary of the Korea Electric Power Corporation (KEPCO) and operates large hydroelectric plants in South Korea.
Korea Midland Power Co. (KOMIPO)186 engages in power plant construction, operation, and maintenance activities, as well as provision of related services. The company was founded in 2001 as a subsidiary of Korea Electric Power Corporation (KEPCO). KOMIPO has developed a hydropower plants in Pakistan (640 MW Azad Pattan) and Indonesia (280 MW Muarra Juloi).
182 https://www.unido.org/sites/default/files/2016-11/WSHPDR_Executive_Summary_2016_0.pdf 183 UNIDO, ICSHP, World Small Hydropower Development Report 2013: Republic of Korea 184 https://www.cfr.org/blog/asia-super-grid-would-be-boon-clean-energy-if-it-gets-built 185 http://www.khnp.co.kr 186 www.komipo.co.kr
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3.6.2 EU Entry Opportunities Within the 3020 Renewable Energy initiative, it is planned to develop an additional 0.5 GW of hydro power over the period 2018-2030.
In 2018, Hyundai Engineering Co. signed an MOU to build a hydro-electric power plant in partnership with the Indonesian company Terregra Asia Energy. The planned Teunom hydro power plant project would be jointly carried out by Terregra Asia Energy after conducting a feasibility study. Hyundai Engineering also signed a joint development agreement with Korea Midland Power Co. and Posco Engineering & Construction Co. in order to build the Pongkeru hydro-electric power plant project in Indonesia as well. Under the agreement, they will jointly build and operate a 92 MW hydro power plant in Luwu Timur in Indonesia’s Sulawesi Province187.
Considering this, business opportunities may not be found in the domestic market, but in the joint development of overseas, especially for developing countries, small hydropower projects. EU companies with competitive advantage in technology and cost are likely to find partnerships with Korean companies to win overseas ODA (Official Development Assistance) projects financed by the Korean government such as a Korea Export-Import Bank, Korea International Cooperation Agency.
EU companies that successfully entered the Korean hydro power market Mavel, a.s.188 (Czech Republic) was founded in 1990 and designs and manufactures turbines for small hydro power plant. In 2010, Mavel provided hydraulic design, turbines and related technology for five Korean small hydro plants. Mavel installed 11 turbines that have a combined capacity of about 16.3 MW 189. This project related to the Four Major Rivers Restauration Project, a multi- purpose green growth project launched in 2009 by former president Lee Myung-bak, which aimed to secure abundant water resources to combat water scarcity; implement comprehensive flood control measures; improve water quality and restore rivers’ ecosystems. The project included the construction of 16 hydroelectric power plants on the four major Korean rivers.
187 https://pulsenews.co.kr/view.php?year=2018&no=571562 188 https://mavel.cz/ 189 https://www.hydroworld.com/articles/2010/08/mavel-wins-equipment.html
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3.7 Bioenergy Bioenergy is produced from the biomass derived from animals and plants. Biomass is defined as “the matter that can be derived directly or indirectly from plant which is utilised as energy or materials in a substantial amount”190. There are many types of biomass as it refers to all materials that can be rotted down.
Unlike other NRE resources, bioenergy could be used for fuel, and therefore is considered as the most practical alternative to petroleum, reducing CO2 emissions. Moreover, bioenergy is sustainable since resources for production are reproduced. On the other hand, bioenergy is heavily dependent on the availability of biomass and its price. The portion of resource materials is high in production cost, increasing the sensitivity to the prices of raw material and other energy sources.
In 2016, bioenergy consumption in South Korea was estimated at 2.77 million toe, equivalent to the 2015 level. Biofuel is the most important sub sector in terms of consumption with 1.34 million toe (48%), followed by biomass with 1.26 million toe (46%) and biogas with 0.17 million toe (6%).
222,855 184,538 166,133
1,207,134 1,361,687 1,262,201
236,867 223,503 685,717 215,404 505,809 195,333 1,392,007 1,337,119 411,905 1,219,432 202,468 605,412 635,909 356,822 336,054
2010 2011 2012 2013 2014 2015 2016
Bio fuel Biomass Biogas
Figure 41 Bioenergy consumption in South Korea191.
190 New & Renewable Data Center, KIER, available at http://kredc.kier.re.kr/kier_eng/about/biomass.asp; 2014 New & Renewable Energy White Paper 191 www.knrec.or.kr
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In South Korea, as of 2016, the bioenergy power generation capacity was 1.91 GW and represented 13.8% of all renewable energy capacity (13,846 MW). Since the introduction of the Renewable Portfolio Standard (RPS) in 2012, the generation capacity has seen considerable growth. Among the three sub sectors, biomass power has the largest capacity with more than 1.04 GW (54%), followed by biofuel with 0.75 GW (39%) and biogas with 0.12 GW (7%).
119,171
104,318 101,643 748,237
596,778 680,567 85,573 191,589 1,038,538 75,145 815,542 819,053 120,263 660,540 215,905 2010 2011 2012 2013 2014 2015 2016 Biomass Bio fuel Biogas
Figure 42 Bioenergy power capacity in South Korea (GW) 192. 3.7.1 Market Overview - focus biomass In 2016, biomass energy consumption in South Korea was estimated at 1.26 million toe, down by 7% compared to 1.36 million toe in 2015. Wood pellets is the most important sub sector in terms of consumption with 0.82 million toe (65%).
192 www.knrec.or.kr
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15,828 103,998 15,432 24,927 44,790 82,395 191,142 123,810 5,163 373,308 223,392 190,687
23,517 175,983 23,857 49,622 24,591 140,874 795,215 823,763 817,172 168,466 149,632 56,481 23,665 164,542 23,41923,053- 163,022 268,129 132,230 120,055 23,766 50,995 2010 2011 2012 2013 2014 2015 2016
Wood pellets Wood chip Charcoil Wood waste Briquette
Figure 43 Biomass energy consumption in South Korea193. In South Korea, as of 2016, the biomass power generation capacity was 1.04 GW and represented 8% of all renewable energy capacity (13,846 MW). Since the introduction of the Renewable Portfolio Standard (RPS) in 2012, the generation capacity has seen considerable growth. Among the three sub-sectors, wood pellets gathered 95% of all biomass power capacity with 0.99 GW.
52,490
27,499 30,449 26,059 986,048 770,138 770,699 616,576 11,104 201,851
2010 2011 2012 2013 2014 2015 2016 Wood pellets Wood chip Wood waste
Figure 44 Biomass power capacity in South Korea (GW) 194. In 2016, among companies involved in the biomass energy market, 17 companies focused on wood chips, 14 on wood pellets and 9 companies on the manufacturing of wood pellet boilers.
193 www.knrec.or.kr 194 www.knrec.or.kr
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Wood pellet boiler 9 23%
Wood chips 17 42%
Wood pellets 14 35%
Figure 45 Biomass sub sectors in which companies in South Korea are involved (2016)195. In 2016, the biomass sector generated a market of KRW 91 billion (EUR 70 million), down by 40% compared to 2015. Wood pellets segment was the most important sub market with a value of KRW 44 billion (EUR 34 million).
152
Wood pellet boiler 113 27.4
Wood pellet boiler 91 19.0 Wood chip 64.0 Wood pellet boiler Wood chip 19.5 44.2 Wood chip 27.7 Wood pellets Wood pellets 60.5 Wood pellets 49.8 44.0
2014 2015 2016
Wood pellets Wood chip Wood pellet boiler
Figure 46 Annual Korean biomass energy market volume (KRW billion)196.
195 www.knrec.or.kr 196 www.knrec.or.kr
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In 2017, South Korea imported 2.4 million tons of wood pellets, 20 times more than was imported in 2012197. Biomass energy has been supported by the government thanks to the RPS and accounted for the main renewable energy in South Korea. The country is home to Asia’s largest biomass power plant with a capacity of 105 MW198.
Vietnam has been South Korea’s primary source for imported wood pellets over the past years (in 2015, Vietnam supplied 70% of South Korea’s wood pellets)199.
Korean Players DOHWA Engineering Co., Ltd.200, established in 1957, is Korea’s No. 1 general engineering consulting company specialised in planning, validity survey, engineering, analysis, testing, supervision, test drive, evaluation, advising and instructions in every field of engineering, including water/sewer, water resource development, urban planning, road/traffic, structure, port, railroad, and environment. In the environmental field, the company is specialised in general environmental plants and new renewable energy facilities, including water/sewer, water resources, landfill sites, incineration facilities, recycling sorting facilities, Mechanical Biological Treatment (MBT) facilities, landfill gas processing and power generation facilities, solar power generation, wind power generation, biomass power generation, and hydro-power generation.
3.7.2 Market Overview - focus biofuel In 2016, biofuel energy consumption in South Korea was estimated at 1.34 million toe, up by 10% compared to 1.22 million toe in 2015. Biodiesel is the most important sub sector in terms of consumption with 0.44 million toe (33%).
197 http://biomassmagazine.com/articles/15284/report-analyzes-biomass-supply-demand-in-asia-to-2030 198 https://financialtribune.com/articles/world-economy/26743/asia-s-largest-biomass-power-plant-opens-in-s-korea 199 https://cdn2.hubspot.net/hubfs/299583/2016_Website/Documents/Asian%20Campaign/Demand%20for%20Biomass% 20Pellets%20Chips%20from%20Biopower%20Producers%20in%20Japan%20South%20Korea.pdf?t=1519223939422 200 www.dohwa.co.kr
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41,477 77,843 322,304 78,484 228,848 231,008 281,394 527,270 208,392 17,159 37,574 260,203 306,175 228,337 229,254 113,257 - - - - 441,345 442,859 356,822 336,054 359,916 369,081 387,699
2010 2011 2012 2013 2014 2015 2016
Biodiesel Biofuel Bio-SRF Black liquor Sewage sludge solid fuel
Figure 47 Biofuel energy consumption in South Korea201. In South Korea, as of 2016, the biofuel power generation capacity was 0.75 GW and represented 5% of all renewable energy capacity (13.85 GW). Since the introduction of the Renewable Portfolio Standard (RPS) in 2012, the generation capacity has seen considerable growth. Biofuels and bio-SRF gathered 79% of all biofuel power capacity with 0.59 GW.
36,430 36,365 123,238 36,365 120,306 120,306 229,219 163,325 83,886
36,365 356,220 360,570 359,350 36,365 120,306 81,398 36,365- - 34,917- 2010 2011 2012 2013 2014 2015 2016 Bio fuel Bio-SRF Sewage sludge solid fuel Black liquor
Figure 48 Biofuel power capacity in South Korea (GW) 202. In 2016, among companies involved in the biofuel energy market, 47 companies focused on bio-SRF, 23 on Sewage sludge solid fuel, 10 on biodiesel and 9 companies on biofuel.
201 www.knrec.or.kr 202 www.knrec.or.kr
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biofuel 9 Biodiesel 10
Bio-SRF 47 Sewage sludge solid fuel 23
Figure 49 Biofuel sub sectors in which companies in South Korea are involved (2016)203. In 2016, the biofuel sector generated a market of KRW 1,002 billion (EUR 771 million), down by 7% compared to 2015. Biodiesel was the most important sub market with a value of KRW 772 billion (EUR 594 million).
1,072 982 1,002 33 86.4 2124.5 19 53.3 167.1 177.6 157.9
769.4 775.2 772.2
2014 2015 2016 Biodiesel Biofuel Bio-SRF Sewage sludge solid fuel
Figure 50 Annual Korean biomass energy market volume (KRW billion)204. The domestic biofuel market has been shaped based on biodiesel.205 South Korea is the first country that started the mass production of biodiesel in Asia and has acquired advanced plant technologies using solid catalysts.
Beginning in May 2002, mixed fuel with 20% of biodiesel (BD20) was supplied to 168 gas stations in the Seoul Metropolitan Area and the Jeonbuk province. Subsequently, with a voluntary
203 www.knrec.or.kr 204 www.knrec.or.kr 205 Byung-in Sang, Professor at Hanyang University, “Status of Bioenergy Production Technologies”, Green Technology Information Portal
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agreement between the government and petrochemical companies (end-users), they have biodiesel mixed with diesel fuel up to 2%206. Meanwhile, two types of mixed fuel (BD20 and BD5) came into nationwide use since 2007, and the annual supply of biodiesel reached 40 kilolitres (KL) in 2014. Currently, BD5 (with 5% or less biodiesel) and BD2 are distributed by petrochemical companies, whereas BD20 is distributed for transport businesses equipped with refuelling stations. In July 2015, in accordance with the New and Renewable Energy Act revised in July 2013, the mandatory ratio of biodiesel mix has risen to 2.5%.
Domestic biodiesel producers used soybeans and palm oil at the beginning, but in 2015, 82% of resources came from used cooking oil and waste palm residue. Despite government support, the biodiesel market contains inherent weaknesses:
Import-dependence: the large amount of palm oil must be imported to produce biodiesel.
Price-competitiveness: currently, biodiesel is more expensive than diesel. To increase mixing ratio, the consumer price is to rise as well.
Korean players Most of Korean companies involved in the biofuel sub-sector are SMEs with notable exceptions of SK Chemicals, GS Bio, and Aekyung Petrochemical. Only 6 of them have delivery contracts with petroleum companies – SK Chemicals, GS Bio, Aekyung Petrochemical, JC Chemicals, Dansuk Industrial, and M-Energy.
Aekyung Petrochemical Co., Ltd.207 was founded in 197 and offers bio heavy fuel oil for power generation; bio diesel, an alternative fuel made of vegetable oil; and anode materials for secondary battery used in automobile and IT industry. The company formaly engages in the research and development, manufacture, and sale of phthalic anhydride (PA) and plasticisers in South Korea and internationally.
206 In July 2013, the mixing ratio became mandatory. 207 http://www.akp.co.kr
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3.7.3 Market Overview - focus biogas and landfill gas In 2016, biogas energy consumption in South Korea was estimated at 166,133 million toe, down by 10% compared to 184,538 toe in 2015. Biogas is the most important sub sector in terms of consumption with 95,000 toe (57%).
97,497 79,918 116,073 124,220 75,804 114,990 71,133
139,370 142,937 107,430 108,734 80,343 91,184 95,000
2010 2011 2012 2013 2014 2015 2016 Biogas Landfill gas
Figure 51 Biogas energy consumption in South Korea208. In South Korea, as of 2016, the biogas power generation capacity was 119 MW and represented 1% of all renewable energy capacity (13.85 GW). Since the introduction of the Renewable Portfolio Standard (RPS) in 2012, the generation capacity has seen growth for biogas capacity while landfill gas capacity remained constant.
49,041 35,128 37,803 21,918 15,666 8,986 11,136
66,515 66,515 70,130 58,455 58,455 59,479 63,655
2010 2011 2012 2013 2014 2015 2016 Landfill gas Biogas
Figure 52 Biogas power capacity in South Korea (GW) 209.
208 www.knrec.or.kr 209 www.knrec.or.kr
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In 2016, the sector generated a market of KRW 3.4 billion (EUR 2.6 million), down by 77% compared to 2015.
14.6
10.8
3.4
2014 2015 2016 Biogas
Figure 53 Annual Korean biogas energy market volume (KRW billion)210. Currently, there are 300 landfill sites across the country, and 78% of facilities (229 sites) are managed by local governments. It is notable that the top 20 landfill sites receive more than 80% of municipal solid waste (MSW) in South Korea. Of 300 landfills, 19 sites have LFG collection facilities to utilise biogas emitted from MSW – 16 have plants for power generation and three facilities for boiler fuel.
Of the 300 landfills nationwide, 16 sites operate power generation plants with various capacity potentials. Sudokwon landfill site (SLC: Seoul Metropolitan Area landfill) is 20 million m2 large and the world's largest sanitary landfill. Since 1992, the landfill has processed 18,000 tons of waste daily from the Seoul metropolitan area. Using landfill gas, the 50MW power plant generates USD 30 million worth of electricity for 180,000 households, which is the largest LFG generation capacity in the world. SLC also installed the first LFG management system in South Korea by POSCO IT with the technological support from Perennial Energy Inc. (US). As generation facilities were built with foreign technology, the SLC Management Corporation launched a pilot project to install and operate two 350kW generators and have operated them since 2008.
210 www.knrec.or.kr
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For boiler fuel, the Banchon-ri Landfill Gas-to-Energy Plant located in Bangchon-ri, Daegu is the largest in operation. Contracted to Daesung Eco-Energy, the system annually collects 50 million m3 of gas from the landfill and sells it as boiler fuel to Korea District Heating Corporation for approximately 15,000 households. With its annual reduction of GHG equivalent of 310,000 tons, it was registered as a Clean Development Mechanism (CDM) by the United Nations Framework Convention on Climate Change.
Korean Players Ecodays Co., Ltd.211 was established in 2003. It has developed an organic wastewater treatment method and is specialised in recycling highly concentrated organic wastes (wastewater, livestock excretions, sewage sludge, etc) into biogas and treating wastewater in high-efficiency processes. Ecodays was selected in 2012 to be the first Outstanding Environmental Business by the Ministry of Environment.
Daesung Energy Co., Ltd. 212 provides environmentally-friendly natural gas to more than one million users in the Daegu metropolitan area. Daesun Energy is a component of Daesung Group, one of South Korea’s oldest energy-based conglomerates.
3.7.4 EU Entry Opportunities With the 3020 Renewable Energy initiative, priority will be made on wind and solar technologies, and the biomass power capacity is planned to increase by only 1 GW over 2030. The government plans to raise incentives for offshore wind farm operators and cut back subsidies on biomass producers to promote more eco-friendly energy sources. However, bioenergy will offer opportunities to EU companies.
Biomass As Korean local companies are yet to be competitive in the biomass market, they seek for foreign contractors to carry out RDF manufacturing, bio-gasification, and waste-to-energy projects. For instance, 17 biogas projects cost an average of EUR 24 million since each construction has not
211 http://www.ecodays.com/ 212 http://www.daesungenergy.com
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been functioning to its full potential. As a result, construction companies sourced overseas technology suppliers in order to successfully implement the project.
Some base materials – notably wood pellets – offer different opportunities. The demand for pellets is high beyond the local production capacity. Korean power generation companies value lower cost supply and are willing to take chances on newer producers. Supply chain management and economically feasible production may be the areas for attention.
The use of methane gas (an alternative of LFG) is expected to increase with the new management of waste treatment; direct burying in landfills is forbidden, and composting and disposal in oceans are significantly reduced. With more waste to be processed, methane gas is becoming more attractive. Yet methane gas utilisation does require significant initial investment costs and should be considered more as a waste treatment option than a biomass energy technology.
Heat treatments of biomass energy sources are receiving great attention. Operating with government support, current pilot projects include small heat fission plants using wood. In the supply chain, small and medium sized companies (SMEs) are trying to lead research and cultivate the market, while a few major companies play a leading role in biofuel production – processing and commercialisation.
Biofuel There are concerns about the economic feasibility of biodiesel fuel, although it had been under the spotlight in the previous decade. Biodiesel producers attributed it to inconsistency in government targets – trying to increase the ratio target to 5% during the beginning stages only to bring it back down to 2% for 5 years. In general, the domestic market has declined and confusion is shadowing the short- and mid-term outlook for growth.
However, Korean large conglomerates unveiled plans to invest in biodiesel plants abroad213. EU companies with competitive advantage in technology and cost are likely to find opportunities
213 https://www.agra-net.com/agra/world-ethanol-and-biofuels-report/biofuel-news/biodiesel/indonesia---south-korean-companies-to-invest-in- biodiesel-plants-for-west-kalimantan--1.htm
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in such investments and business opportunities may not be found in the domestic market, but in the joint development of overseas biofuel plants, especially for developing countries.
Also, the Korean government recently announced legislation approving the use of bio-heavy oil made of animal fat214. European companies with expertise in the production of such biofuel will have opportunities in South Korea.
Biogas Generated power or gas is distributed by KEPCO through connected grid or district heating corporations. As landfill sites are mostly managed by local governments, construction projects are ordered from the government or take the form of BTO (build-transfer-operate) models. Opportunities will be offered to EU companies which will partner with domestic companies and institutions to compete for government bids.
As an example, the city of Delhi (India) signed a “Friendship and Cooperation Agreement” with the Seoul Metropolitan Government under which the two cities would exchange expertise on landfill treatment and how to utilise landfill gas to generate electricity215. Such international project could offer opportunities to EU companies ready to set up joint collaboration with Korean companies.
EU companies who successfully entered the Korean bioenergy market Founded in 1995, Scandinavian Biogas216 is one of Sweden’s largest private producers of biogas. The company has leading expertise in the design and operation of biogas plants. In 2007, Scandinavian Biogas was commissioned to help solve the environmental problems with food waste in the Korean city of Ulsan. The two entered a collaboration, encompassing a concession agreement with a term of 15 years. Scandinavian Biogas reached an agreement with the city of Ulsan and the company’s assignment was to design a biogas production process as well as
214 https://cebudailynews.inquirer.net/193417/south-korea-generate-power-bio-heavy-oil 215 https://www.hindustantimes.com/delhi-news/seoul-delhi-etch-pact-to-share-expertise-on-12-fields/story-XaYk0cgH1XaNmncGpx8uBP.html 216 scandinavianbiogas.com/
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assuming responsibility for plant operations. In 2013, this plant was named the country’s most effective biogas facility.
Established in 2004, Agraferm Technologies AG 217 (Germany) is a full service provider of agricultural and industrial anaerobic digestion (AD) plants. In 2015, the company has chosen Seoul to establish its subsidiary, AF Biogas. According to Agraferm, Korea is a country with growing environmental awareness where environmentally friendly manure and waste disposal, as well as active water protection, are key themes. The company has signed a Memorandum of Understanding with the government of Jeollabuk-do province. Due the geographical distance and cultural differences, the company said that it could only enter the Korean market by utilising permanent local representation, hence AF Biogas.
Founded in 2001, Weltec Biopower218 (Germany) plans and produces complete biogas plants made from stainless steel and distributes them world-wide. WELTEC has realised more than 300 plants world-wide. The company has already built two anaerobic digestion plants in Korea, in 2012 and 2015. The main reason why Weltec Biopower to be selected for the 2015 plant was that the company had already experience in Korea and that their proposed project was custom- tailored to the region’s special needs and Korea’s ecological goals.
217 www.agraferm.com/ 218 www.weltec-biopower.com/
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3.8 Waste to Energy - Sewage Treatment Plant 3.8.1 Market Overview In 2016, made-from-waste energy consumption in South Korea was estimated at 8.74 million toe, up by 4% from 8.44 million toe in 2015. Waste gas was the most consumed resource with 5.19 million toe, i.e. 59% of all made-from-waste energy consumption in 2016.
176,405 178,360 661,278 807,229 207,638 821,614 925,376 725,420 944,486 286,419 196,794 261,022 698,870 972,271 837,114 949,551 748,372 218,657 58,935 220,171 229,368 144,706 899,151 780,801 93,275 753,252 717,671 752,890 157,178 233,816 886,943 227,497 681,415 860,472 618,082 169,121 147,247 873,206 851,834 94,406 184,506
2,114,825 2,175,167 2,999,138 3,343,253 4,148,491 5,345,343 5,189,393
2010 2011 2012 2013 2014 2015 2016
Waste gas Municipal waste Industrial waste SRF Cement kiln auxiliary fuel
Refined fuel oil Large city garbage RDF / RPF / TDF Waste wood
Figure 54 Made-from-waste energy consumption in South Korea (for commercial and individual usage)219. In South Korea, as of 2016, the made-from-waste power generation capacity was 3.79 GW – 92% of which from waste gas (3.5 GW) – and represented 27% of all renewable energy capacity (13,846 MW).
219 www.knrec.or.kr
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4,026 4,026 4,026 4,558 4,793 4,820 3,476
2010 2011 2012 2013 2014 2015 2016
Waste gas Municipal waste SRF Industrial waste Refined fuel oil Cement kiln auxiliary fuel
Figure 55 Made-from-waste power capacity in South Korea (MW) 220. In 2016, 101 companies were involved in the Made-from-waste energy market. Among them, 75 companies focused on SRF and 26 on refined fuel oil.
Refined fuel oil 26 26%
SRF 75 74%
Figure 56 Made-from-waste energy sub sectors in which companies in South Korea are involved (2016)221. The made-from-waste energy sector generated a market of KRW 336.7 billion (EUR 259 million), down by 42% compared to 2015, mainly because of the decrease in the total domestic capacity. Refined fuel oil became the most important sub market in 2016 with a value of KRW 238.6 billion (EUR 183.5 million). The market decreased since total capacity in 2016 (3.79 GW) decreased by 25% compared to 2015 (5.08 GW).
220 www.knrec.or.kr 221 www.knrec.or.kr
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794
294.7 576.4
278.1 336.7
499.3 238.6 298.3 98.1 2014 2015 2016 SRF Refined fuel oil
Figure 57 Annual Made-from-waste energy market volume (KRW billion)222. In South Korea, Biogas production is mostly based on food waste and wastewater, animal excreta, and sewage sludge. According to the Ministry of Environment’s Status Report on Organic Waste to Energy Facilities 2014, treatment and power generation facilities using food waste and wastewater are government-run with a few exceptions.
Korean Players Established in 1999, Halla Energy & Environment223 is South Korea’s largest environmental plant specialist focused in the energy industry, including waste treatment, RDF power plants, waste heat recovery, and biogas; thermal power plants’ atmospheric pollution preventive facilities and auxiliary facilities; water treatment for sewage / wastewater / water purification; civil engineering and construction for riverbed filtration and road construction; and consignment services for domestic waste incinerators and sewage/wastewater treatment plants. In particular, the company has experiences in building and operating infrastructure facilities including anaerobic digestive plants.
Bio Energy Development Co., Ltd has installed the only private-run facility in Ulsan (Gyeongnam Province), out of 15 wastewater biogas plants. The facility processed 13,541 tons of wastewater and 4,485 tons of livestock waste in 2013, and 40,252 tons of wastewater in 2014.
222 www.knrec.or.kr 223 http://www.hallasanup.com/eng/
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3.8.2 EU Entry Opportunities With the 3020 Renewable Energy initiative, priority rests on wind and solar technologies, and there is no plan to further increase made-from-waste power capacity. However, the sector will offer opportunities to EU companies.
Despite high demand and increasing interest in biogas production, business operation is still at the beginning stage. First of all, waste collection has not been systemised for biogas production. 93% of food waste, 83% of livestock waste and 60% of wastewater have been used for composting. Second, the ineptitude at anaerobic digestion technologies and facility management has led to inefficient operation.
European companies offering innovative solutions and more efficient solutions in terms of waste treatment management will have opportunities to enter the Korean market.
EU companies that successfully entered the Korean waste to energy market Founded in 1989, Cambi224 (Norway) is a provider of technology for the conversion of sludge to renewable energy and high-quality bio solids. In 2015, Cambi was awarded by the Korean contractor Posco E&C to supply its B12 THP process plant for the Anyang sewage treatment and co-digestion project. Biogas produced from the co-digestion plant will be turned into electricity and the remaining high dry solids dewatered product after digestion will be dried and blended with millet grass to produce a biomass fuel for co-firing in existing power plants. The contract represents a breakthrough into Korea for Cambi, following contracts signed in China and an announcement for the Jurong water reclamation plant in Singapore.
224 www.cambi.com/
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3.9 Off-Grid Solutions Off-grid power is generated from systems designed to function without the support of remote infrastructure. It is broadly defined as “not using or depending on electricity provided through main grids and generated by main power infrastructure,”225 thus allowing independence from municipal utility services such as gas and electricity. Consequently, off-grid solutions are smaller in size compared to centralised grids that hold from a few hundred megawatts to a few thousand gigawatts.
3.9.1 Market Overview The typical sources for off-grid powers are solar, wind, and hydro-electricity. Solar power can provide substantial amounts of electric power without any moving parts and little maintenance. The industrial wind turbines are most prominent, as in the case of Jeju Island, but residential- sized ones are also options for homes in areas with high wind. Finally, in terms of pure cost- efficiency, off-grid hydro power may be the prime choice.
In South Korea, the Green Islands project is directly related to the promotion of off-grid systems with renewables, as its scope included 132 islands that have independent power systems.
Green Islands Project: “Independent Energy Islands” Pilot Projects
The plan is to build a microgrid connected to wind, solar PV, geothermal, and energy storage systems (ESS) in small island areas as an alternative to the diesel-based independent power system.
The government began developing the programme concept in 2009, and the first pilot project was realised in Gapado, which is located near Jeju Island and completely off the main grid, in 2014. The next was Gasado, 470 kilometres south of Seoul with 168 households, to switch to NRE in September 2014. The Gasado project was the first true energy-independent island with an energy storage system (3MW). Although the island still uses three diesel-powered generators as a backup power source, in general, the island has achieved a significant reduction (by more than
225 International Renewable Energy Agency (IRENA), Off-Grid Renewable Systems: Status and Methodological Issues, Working Paper, 2015.
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80%) of fossil fuels use. Moreover, within a year, Gasado enjoyed the economic benefit worth USD 134,600 by reducing diesel fuel purchase.226
The project, however, also pointed out a weak point in building a micro-grid island. To become a fossil-fuel free island, Gasado needs a few more ESS storage, which is not affordable as the cost (USD 2.7 million) could easily exceed the economic benefit of switching to NRE.
Ulleung Island
Based on the successful implementation of pilot projects, the government is moving to a much larger project in Ulleung Island with 7,900 households. In 2014, the governor of the island announced the “Green Island” initiative in partnership with KEPCO for state-of-the-art energy technologies. The main objective is to generate all its electricity from NRE sources from 2020, realising a zero-carbon island.
As of 2014, Ulleung Island was powered by two conventional power plants and a hydropower station. The Green Island project is comprised of the installation of a new electrical grid with a built-in ESS, and NRE based power generators. In particular, ESS technologies would be a key to open commercial opportunities once the project is completed.227
More specifically, the first phase of development has been implemented in 2017 during which solar PV, wind, and small hydropower have been installed and connected to provide 30% of electricity. The second phase (until 2020) is more focused on ESS/EMS systems. Once completed, Ulleung Island will be the largest NRE based energy-independent island in the world.
In 2017, 30% of the island’s energy came from NRE:
The Jeodong diesel power plant has been shut down and replace with solar energy, wind energy, and small hydropower
An eco-friendly energy system with integrated ICT (ESS and EMS) has been set up.
226 Byun Duk-kun, “Energy-independent island gives glance at clean way of life,” Yonhap News¸ June 2, 2015 227 Kim Se-jong, “Ulleung to become energy-independent island,” The Korea Times, 26 October 2014
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By 2025, the project aims at shutting down the Namyang Diesel Power Plant and introducing geothermal energy and LNG instead. The island will be diesel free.
Particularly, the project is carried out by a special purpose company in which the Ulleung local government as well as LG CNS and private investors participate. 60% of funding comes from the private sector, indicating a possibility of commercialisation in the near future. The establishment of microgrid and ESS systems will be the key component of the project, but they will also provide most promising business opportunities.
Korean players LG CNS228 was founded in 1987 and provides information technology (IT) consulting, system implementation/operation, and outsourcing services to customers in South Korea and internationally. The company provides specialised consulting services, such as business strategy planning and process innovation; IT and business process outsourcing services; and infrastructure services. It also offers systems and data center operation services in the fields of system design, deployment, operation, and implementation; and designs, deploys, and operates cloud environment. LG CNS offers industry-specific IT services for energy.
SK Telecom229 was founded in 1984 and is a South Korea’s top mobile carrier provides wireless telecommunication services in South Korea. The company operates in four segments: Cellular Services, Fixed-Line Telecommunication Services, E-Commerce Services, and Other Businesses. The company plans to become a player in smart grid business and is cooperating with KEPCO.
3.9.2 EU Entry Opportunities Overall, the Korean off-grid market looks positive based on the national needs and government initiatives. There are two main areas for entry opportunities.
First, the Independent Energy Island projects indicate potential opportunities for foreign investors, especially in the fields of energy storage technologies and microgrid. The Samsoe Island project in Denmark, which achieved 100% NRE based energy independence, was the most important
228 lgcns.co.kr 229 http://www.sktelecom.com/
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reference for the Green Island project in Ulleung. The two islands signed an MoU for information sharing and cooperation. Depending on the Ulleung Island, more microgrid projects are likely to be open to private investors.
Another area is cooperation with Korean companies to provide off-grid systems overseas. During its 11th board meeting in 2015, the Green Climate Fund (GCF) of the United Nations selected South Korea’s off-grid energy model for its first environmental support project. GCF has set aside USD 183 million to support eight environmental projects in developing nations of Asia, Africa and Latin America230. This five-year project started in 2016 and aims to provide 24-hour energy supply to the fruit-processing plants of the Amazon Basin region using solar power generators and energy storage systems. The base model for this project is Gasado in South Jeolla Province and Jeju Gapado’s energy-independent island model.
Kokam installed a larger 24-MW / 9-MWh system and a 16-MW / 6-MWh system. KEPCO utilises both systems to conduct frequency regulation. The 24-MW / 9-MWh system is the world’s largest capacity Lithium NMC ESS used for frequency. Furthermore, these two deployed systems along with a Kokam 16-MW / 5-MWh Lithium Titanate Oxide ESS system are a part of the world’s largest EDD frequency regulation project231.
The 3020 Renewable Energy initiative will also offer opportunities to off-grid solutions, especially for EU companies offering solar photovoltaic off-grid solutions. As part of the government’s goal to increase the proportion of NRE, 19.9 GW will be assumed by the expansion of expand urban-type, private solar power – both on-grid and off-grid – in order to boost photovoltaic power in rural regions with participation through cooperative associations and support for small business (less than 100 kW).
European companies that successfully entered the off grid solutions market ABB Korea (originally from Sweden)232 is in Korea since 1960 provides power and automation technologies and has its production facilities in Cheonan. In smart grid technologies ABB activities
230 Tuason, Czarelli, “U.N. Grants Green Climate Fund To South Korea’s Off-Grid Energy Model As Its First Official Support Project”, Korea Portal 231 Runyon, Jennifer, “South Korean Grid Will Soon Boast World’s Largest Energy Storage System”, RenewableEnergyWorld.com 232 new.abb.com/smartgrids
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are in electrical transmission: Flexible Alternating Current Transmission Systems (FACTS), High- voltage direct current (HVDC), Wide area monitoring systems (WAMS) and Supervisory control and data acquisition systems (SCADA). ABB technologies for smart distribution networks and buildings include smart meters, building automation systems, electric vehicle charging equipment, low-voltage solar inverters, high-efficiency distribution transformers; substation and feeder automation.
Siemens 233 (Germany) covers the entire spectrum of power generation transmission and distribution from planning to service. Siemens AG announced in 2015 that it would make significant investments in building the next-generation electrical grid in Korea after receiving sizable demand from local customers234.
Alstom (originally from France)235 entered the Korean market in 1965 when it supplied the thermal power plant at YongWol. In 1997, Alstom Grid supplied the first High Voltage Direct Current (HVDC) bipole link (300MW) between Haenam and Jeju Island with submarine interconnection ok 101km long. Alstom has also delivered the second HVDC link between Jin-do and Jeju Island (400MW) in 2013. Alstom Grid and KEPCO created a joint venture named KEPCO Alstom Power Electronics Systems (KAPES). The joint venture focuses on delivering high voltage direct current (HVDC) projects in South Korea. This long term strategic relationship aims at increasing Korean transmission grid capabilities based on Alstom technology. The joint venture is implemented with a shareholding of 49% for Alstom and 51% for KEPCO. Alstom together with KAPES has also signed an agreement with LSIS in 2013 for HVDC technology transfer and equipment transfer to LSIS.
233 https://www.siemens.com/kr/en/home.html 234 www.koreatimes.co.kr/www/news/tech/2016/02/133_188664.html 235 www.gegridsolutions.com/alstomenergy/grid/Global/Group/Resources/Documents/Factsheets/Korea-epslanguage=fr-FR.pdf www.alstom.com/press-centre/2013/5/alstom-grid-and-kepco-create-strategic-power-electronics-joint-venture/ english.hankyung.com/news/apps/news.view?c1=04&nkey=201305240246531
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3.10 Management & Control Systems Energy Management Systems (EMS) are defined as a total energy management solution for visualising and optimising energy flow and the use of commercial buildings, factories, houses, and infrastructure (electrical grids, traffic networks, etc.) by using ICT and control technologies236.
EMS application areas are broadly classified into four fields: Building EMS (BEMS), Factory EMS (FEMS), Home EMS (HEMS) and Remote Energy Management.
3.10.1 Market Overview237 In South Korea, the energy mix transition, which implies the reduction in nuclear generation is driving the deployment of renewable energy technologies (primarily solar and wind), which will contribute to smart technology utilisation for better grid integration.
The Korean government’s plan is to have a nationwide smart electricity meter network by 2020 and to develop home-grown smart grid equipment with a view to export. The country is investing in smart meters, software and hardware, smart Transmission and Distribution Technology (T&D) equipment, communication and wireless network infrastructure and sensors. The installation of smart meters is expected to continue beyond the targeted deadline of 2020, due to lower than expected yearly installations. KEPCO aims to install 26 million smart meters by 2020238.
In 2015, Kepco announced a USD 9.1 million (EUR 7.8 million) contract to create a microgrid in Canada. In 2017, the Korean company teamed up with Canada’s fourth largest electricity distributor Alectra Utilities to supply energy to be produced from the microgrid system in Canada. KEPCO announced it will continue to partner with the Canadian company to expand its microgrid business in North America239.
236 Korea Environmental Industry & Technology Institute (KEITI), Status of and Prospects for the Energy Management System (EMS) Market in Korea available at Virtual Center for Korea Environmental Technology Exchange (http://apec-vc.or.kr/) 237 KEITI, Status of and Prospects for the Energy Management System (EMS) Market in Korea 238 https://ww2.frost.com/frost-perspectives/asia-pacific-smart-grid-market-what-expect-till-2020/ 239 https://pulsenews.co.kr/view.php?year=2017&no=259711
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Key players in the market are KEPCO, ABB, GE Energy, IBM, POSCO ICT and Siemens Energy. Other prominent vendors are GS Caltex, Hyosung, Hyundai Heavy Industries, KT, LG Electronics Alstom, Nuri Telecom, SK Energy and SK Telecom.
Smart home systems allow home owners to control and monitor different devices in their home including heating, lighting, security, and entertainment, either automatically or remotely via the Internet.
The Korean smart home market is forecasted to reach USD 5 billion by 202240 and the household penetration for smart home applications is expected to be around 45% by 2024.
The growth of the smart home market can be mainly attributed to a significantly growing IoT market, but also the need for cost reduction measures is an important factor for an increasing number of home automation systems. In line with those developments, manufacturers expand their product portfolios towards smart devices for remote home monitoring systems.
In 2016, “control and connectivity” was the second largest application segment of the Korean smart home market only after smart appliances. The smart home energy management segment is expected to reach USD 600 Million by 2024.
Korean players Key players in the market are Samsung Electronics, LG Electronics, SK Telecom, KT Corp and Hancom MDS Inc. formerly known as MDS Technology Co., Ltd.
LG Electronics and Korea Electric Power Corporation (KEPCO) provide remote energy management services, such as temperature control. The central EMS sensors, embedded in an energy management system, monitors the power capacity of products in various buildings and factories, and allows the EMS to provide valuable information for efficient power management.
240 https://www.prnewswire.com/news-releases/south-korea-smart-home-market-2017-2024-household-penetration-for-smart-home- applications-is-expected-to-hit-above-45-300573827.html
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The Korea Energy Agency (KEA)241 runs the Energy Service Companies (ESCO) programme, which provides financial support to businesses that retrofit their energy facilities or provide maintenance services and monitoring for customers.
3.10.2 EU Entry Opportunities South Korea is likely to invest in smart meters, software and hardware, smart T&D equipment, communication and wireless network infrastructure and sensors. EU companies with advanced products and technologies will have opportunities to enter the Korean market.
In 2015, Kepco announced a USD 9.1 million contract to create a microgrid in Canada, the first deal for the state-run power company in North America. As part of the memorandum of understanding, Canada's fourth-largest power supplier PowerStream will use Kepco technology to develop micro and smart grids in its service area. The agreement also gives Kepco the option to bid to update PowerStream's supervisory control and data acquisition systems. Kepco’s micro grid system based on an energy management system can control wind and solar power as well as other renewable energy sources. The company said the agreement also outlines a separate USD 3.7 million joint Kepco-PowerStream investment plan for the Penetanguishene region of Ontario242.
EU companies with advanced knowledge in AI, IoT and big data will also have opportunities to enter the Korean market by integrating these sciences with the entire energy cycle, including generation and consumption. Technological convergence is expected to give birth to new industries over a wide spectrum of areas by delivering smarter energy systems.
In power generation, an integrated control system will be established to precisely forecast the amount of power generated from renewables to ultimately address the intermittency of renewable energy. In power transmission, transformation and distribution, the supervisory control & data
241 http://www.energy.or.kr 242 https://www.smart-energy.com/regional-news/asia/smart-grid-equipment-market-to-grow-in-south-korea/
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acquisition system (SCADA) as well as the distribution automation system (DAS) will be introduced to enhance energy efficiency243.
Moreover, a smart distributed generation system, which combines renewable energy with the energy storage system (ESS) and energy management system (EMS), will be deployed nationwide. By 2020, a large number of Korean households will have an advanced metering infrastructure (AMI) to efficiently adjust power consumption.
A platform to utilise big data in the power sector is also under establishment. The platform is expected to encourage electricity savings by allowing consumers to monitor real time their power usage and consumption patterns and therewith also their electricity bills. This will likely lead to the creation of new businesses, such as energy efficiency consulting services. If this platform is successfully established, it will also be applied to the gas and heat energy sectors.
To secure key technologies, South Korea plans to increase the ratio of core technology R&D. In the era of the 4th Industrial Revolution244, the Korean government will provide its full support to companies in the new energy industries by focusing new investments in overseas demonstration projects. Partnering with Korean companies or R&D institutes in order to apply to such funding programmes could offer opportunities to EU companies and facilitate their entry to the Korean market.
EU companies that successfully entered the Korean management & control systems market In Korea since 1990, SOMFY Korea 245 (France) has been promoting the automatic control of commercial and offices buildings for energy saving. By agreeing on strategic partnerships and communicating efficiently about cooperation and joint projects, the company’s solutions are now referenced by private construction companies as specifications for energy savings buildings in Korea.
243 https://www.ief.org/_resources/files/events/ief16-ministerial/official-articles/articalkorea.pdf 244 http://www.businesskorea.co.kr/news/articleView.html?idxno=22130 245 https://www.somfy.co.kr/
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3.11 Energy Efficiency & Carbon Services Carbon services are carbon and energy efficiency schemes available to companies to help them achieve their energy obligations. South Korea is one of the top 10 CO2 emitters and major energy importers, thus CO2 reduction is at the forefront amidst concerns about climate change and awareness of sustainability.
3.11.1 Market Overview In South Korea, the government is at the centre of energy efficiency management, related communications, and consulting. In recent years, the government has changed its approach to energy efficiency from supply-oriented policies to demand-oriented management after a series of conflicts with local communities over major power plant construction projects.
Energy Efficiency Management Programs The most prominent government programs in energy efficiency are energy standards and labelling, high-efficiency equipment certification, and e-Standby. The Ministry of Industry, Trade and Energy and the Korea Energy Agency (KEA or previously KEMCO) are responsible for mandating efficiency standards and implementing energy saving policies in South Korea. KEA implements and operates the programmes under the policy direction of the Ministry of Trade, Industry and Energy. In brief, based upon the Energy Use Rationalisation Act, the Ministry of Trade, Industry and Energy issues notification of regulations related to the three efficiency management programmes described below:
Energy Standards and Labelling Programme
First implemented in 1992, the programme mandates all manufacturers to attach an energy efficiency label with a rank from 1st to 5th class to their energy-intensive and highly disseminated appliances. Appliances failing to meet minimum energy performance standards (MEPS) shall be terminated from production and sales. The programme targets 37 appliances including home appliances, lighting products, vehicles and tires.
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High-Efficiency Equipment Certification Programme
The programme recognises the energy efficiency of the products meeting a certain level of efficiency requirement and promotes the dissemination of high-efficiency equipment in the market. Launched in 1996, the programme issues a certificate for high-efficiency equipment and allows the manufacturers of certified equipment to attach a mark indicating its high efficiency. The coverage of this program includes 45 items including pumps, boilers and LED lights.
e-Standby Programme
The e-Standby programme was launched in 1999 to disseminate energy saving products which consume low standby power. Appliances meeting the e-Standby power requirement laid out by the government are eligible to have an energy saving mark attached, and those failing to meet the requirement are mandated to indicate a warning mark. 22 items, including office equipment, are covered by this programme.
Carbon Market246 Dependant on heavy industries such as steel, petrochemicals, and manufacturing, South Korea has become one of the top 10 CO2 emitters in the world, with its CO2 per capita increasing by 115.4% between 1990 and 2010. With mounting concern on global warming, South Korea made a bold move to set up a national carbon market, which is the second largest in the world with the trading volume of 550 million tCO2.
South Korea's cap-and-trade system (or emissions trading system: ETS) started on January 1, 2015 at the Busan headquarters of the Korea Exchange with the country’s 525 largest emitters.
246 Federio Gallo, Kim Chong Woo, Issue Briefs: Climate and Carbon Market: Options for South Korea, The Asan Institute for Policy Studies (17 April 2015)
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These emitters are companies producing annually more than over 125,000 tCO2 and / or plants producing annually over 25,000 tCO2. The Korean ETS is modelled after the EU ETS and is part of the country’s goal to reduce its greenhouse gas emissions by 30% to 2020 compared to business-as-usual (BAU) levels.
The scheme is run in three phases: Phase I (2015-2017), Phase II (2018-2020) and Phase III (2021-2026). In Phase I, 100% of their emissions allowances were given for free, but this has been reduced to 97% in Phase II and it will further go down to 90% in Phase III with the remainders being auctioned off.
In total, 1.598 billion Korean Allowance Units (KAU)247 have been allocated to the emitters in Phase I with 89 extra million KAUs reserve. Facing opposition from the industrial sector, however, the cap on
CO2 was relaxed back in 2014 and 58 million tons CO2 were added to the original target for Phase I.
The end of 2017 marked the completion of the first phase of the Korean ETS. The second phase runs from 2018-2020 with some key changes implemented. Auctioning has been introduced and benchmark-based free allocation expanded. Following limited trade of allowances in Phase I, a market maker has been introduced in an effort to enhance trade activity and market liquidity. Finally, offsets from international credits developed by domestic companies are allowed at a maximum of 5% with an increased number of approved offset project methodologies.
Consultation for Environmental Management Energy Audit and Energy Saving Consulting (Korea Energy Agency)248
Since 2007, the government has mandated energy-intensive companies to undertake energy audits on a regular basis in order to maintain competitiveness but also to improve their environmental performance. Every five years, companies using over 2,000 toe are obliged to identify and realise energy savings potential and to take measures to raise their energy efficiency.
Green Up Programme (Korea Environmental Industry & Technology Institute)249
247 1 KAU=1 tCO2 248 Korea Energy Agency 249 Korea Environmental Industry & Technology Institute, Policy Handbook for Sustainable Consumption and Production of Korea
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Pursuant to Article 25 of the Framework Act on Low Carbon and Green Growth (Facilitation of Enterprises’ Green Management), the government also provides a business assistance programme for SMEs with the objective of enhancing competitiveness and improving environmental performance. Under the Green Up programme, KEITI selects consulting agencies and leads agencies to help SMEs with certification, education, eco-labelling, consulting, and publication of environment reports.
Korean players Korea District Heating Engineering Co., Ltd.250 was founded in 1991 and provides solutions for combined heat and power generation, and district heating and cooling systems. It offers feasibility study and consulting services; design and supervision district heating and cooling systems; district heat (DH) and cooling systems for small to medium sized residential areas or the blocks of office buildings; DH network and network structural analysis; and flue gas cleaning systems, flue gas desulphurisation systems, dust/heavy metal removal, and dioxin removal. The company also engages in the thermal power generation; development of energy recovery systems, RDF fired boilers, and resources recycling facility systems to produce renewable energy; and designing peak load boilers.
Korea Energy Management Corporation (KEMCO)251 provides energy management services. The company offers energy supply, audit and surveys. Established in 1980, it acts as a national institution in implementing various projects on end-use energy efficiency, developing and supplying renewable energy technologies, etc.
3.11.2 EU Entry Opportunities According to the Ministry of Environment, 118 environmental consulting agencies had been registered by the end of 2012 under the Environmental Technology and Industry Support Act. However, most Korean consultancies are still weak in light of expertise and manpower. Instead,
250 http://www.kdhec.com 251 http://www.kemco.or.kr
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established global consultancies and local law firms are advising companies regarding environmental standards, compliance, or management.
EU companies that successfully entered the Korean energy efficiency & carbon services market European consultancies are gaining visibility in consulting as well as inspection & certification mandated by the government on their own or in partnership with local companies. Notable players include Environmental Resources Management (ERM), SGS, TÜV SÜD, TÜV NORD, TÜV RHEINLAND, Intertek and Bureau Veritas.
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3.12 Energy Conservation 3.12.1 Market Overview According to the Ministry of Trade, Industry and Energy, the use of energy storage systems (ESS), which store energy during hours when much electricity supply exceeds demand in order to better manage energy, increased significantly in the first half of 2018, by 20-fold compared to the same period in 2017252.
The Ministry of Trade, Industry and Energy announced 1.8 GWh of energy went through ESS, which was more than the total supply of electricity over the past six years (1.1 GWh).
Also, the ESS supply linked to renewable energy increased 16 times to 638 MWh. Because the amount of energy produced by renewable energy plants such as solar and wind power plants is not always predictable, ESS are often linked to renewable energy facilities to even out the difference.
According to I.H.S Markit253 2017 was a record year for deployment of grid-connected battery energy storage, and the Asia-Pacific region exhibited the strongest growth, led by South Korea. The country overtook the USA in 2017, to become the largest battery energy storage market globally. South Korea is among top leading regions that are driving forward in energy storage deployment: Korean utilities, many government-owned, have been procuring large-scale frequency regulation projects directly and are moving on to renewables-integration projects, with I.H.S market expecting more than 300 MW annual growth from 2018 onwards.
The growing importance of stable power supply is fueling demand for ESS. It is expected that these advantages will make ESS one of the key elements for implementing next generation power grids such as smart grid. In the industry, it is said that ESS technology will meet power demand with the capacities of existing power generation facilities only when ESS technology is completed.
252 http://koreabizwire.com/use-of-energy-storage-systems-increases-dramatically/121557 253 https://ihsmarkit.com/index.html
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There is also a growing interest in home ESS. They are installed with photovoltaic power generation equipment that can easily produce electric power at home in order to prepare for power failure or reduce electric charges. The home ESS market is forecast to grow at a faster pace than the overall ESS market254.
The Korean government is implementing a policy to require power generation companies to compulsorily install ESSs. The government is pulling out all the stops to distribute ESSs such as giving RECs (renewable energy certificates) at the highest level to ESSs related to solar power generation.
Korean players Hyundai group is currently working on a 65 MW solar photovoltaic plant with 130 MWh of co- located battery energy storage in Seosan, South Korea. Hyundai Engineering and Construction, part of the group had awarded a KRW 100 billion (EUR 76.9 million) to Hyundai Heavy Industries Green Energy and Hyundai Electric & Energy Systems for projects including 150 MWh battery storage plant in Ulsan, on the country’s east coast. Hyundai Heavy Industries Green Energy will supply solar equipment including photovoltaic modules and inverters, while Hyundai Electric & Energy Systems will provide the battery energy storage system.
Doosan is also part of the energy storage market and built a sizeable C&I solar-plus-storage system at its own head offices in Changwon.
Hyosung Heavy Industries Corp. saw its ESS sales in the first half of 2018 jump tenfold on year and totalled KRW 150 billion (EUR 115.4 million) in the January-June period, up from 15.1 billion in the same period in 2017255. The company expects 2018 sales to grow fourfold on year to KRW 270 billion (EUR 208 million).
Kokam Co., Ltd,256 is the world's premier provider of innovative battery solutions and announced this year that it has successfully deployed for Alinta Energy, a leading Australian utility, a 30 MW
254 http://www.businesskorea.co.kr/news/articleView.html?idxno=20287 255 https://pulsenews.co.kr/view.php?year=2018&no=575272 256 http://kokam.com/
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system / 11.4 MWh Energy Storage System, the largest lithium ion battery deployed for industrial application in Australia257. With over 150 battery-related patents and a total of 680 MWh of field performance, Kokam is a proven leader in providing innovative, high-tech battery solutions.
Samsung SDI and LG Chem are two of the world’s biggest lithium battery and storage industry companies and are also eyeing the market for large-scale energy storage systems. Samsung SDI has shifted output from car batteries to energy-storage batteries at its plant in Xi'an, China, while LG Chem has begun expanding energy-storage output at its plant in Nanjing. Samsung SDI supplied around 13,000 energy-storage batteries for a solar power project in Hawaii in the beginning of 2018. LG Chem is expanding cooperative deals with major global companies. It will supply 1GWh worth of energy-storage batteries to AES Energy of the U.S and the company has also signed a deal with IKEA to supply energy storage. Analysts forecast that Samsung SDI will post its first-ever profit in 2018 in the mid-sized to large battery business. LG Chem also estimates its operating profit in the second quarter of 2018 grew significantly compared to 2017258. LG Chem is assessed as the world's best company in terms of ESS battery competitiveness. The company ranked first in 2013 and 2015 in ESS battery competitiveness evaluations announced by global market research company Navigant Research259. LG Chem has been also successfull in the global market. In 2015, LG Chem succeeded in exclusively supplying batteries to an ESS project of Steag, Germany's fifth largest power generator. The supplied battery with a capacity of 140 MWh is the largest in Europe. 10,000 households use 140 MWh for one day. The volume can charge more than 7,600 units of the new Volt at the same time. Samsung SDI is closely trailing LG Chem by expanding its supply of ESS batteries. Samsung SDI supplied the world's largest battery for ESS to an ESS in California in 2017. The total capacity of the ESS is 350MWh enough to replace a natural gas-fired power plant and Samsung SDI covers 240MWh, 70% of the total. This is the amount of power that can be used for four hours by 40,000 households. Samsung SDI batteries were supplied to a 100MW/129MWh ESS that Tesla built in Jamestown, (Australia)
257 https://www.finanznachrichten.de/nachrichten-2018-05/43814661-kokam-delivers-30-megawatt-energy-storage-system-to-alinta-energy- largest-lithium-ion-battery-deployed-for-an-industrial-application-in-australia-008.htm 258 http://english.chosun.com/site/data/html_dir/2018/07/18/2018071801293.html 259 http://www.businesskorea.co.kr/news/articleView.html?idxno=20287
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and the ESS started operation in 2018. Samsung SDI is planning to actively expand its ESS market mainly in Europe.
3.12.2 EU Entry Opportunities ESS is considered as a new growth engine with a huge market potential to effectively establish stable power demand and supply systems. It will offer opportunities to EU companies.
ESS growth prospects also remain strong in South Korea as President Moon Jae-in pledged to wean the country off fossil fuel and nuclear power and instead raise the portion of renewables in the country’s energy mix to 20 percent, equivalent to 63.8 gigawatt hours, by 2030. With the Renewable Energy 3020 initiative, ESS are planned to be installed in public institutions as well as installing intelligent weighing system nationwide by 2020.
ESS holds the key to raising the efficiency of these unstable renewable energy sources. Companies are moving into various fields related to ESS such as systems and leasing.
With the implementation plan for Renewable Energy 3020, ESS and fuel cells will be fostered to expand distributed power, and grid-type ESS installation will be expanded from 0.4 GW in 2017 to 1 GW in 2030 with the aim of complementing the shortcomings of renewable energy.
In addition, the government is implementing a policy to require power generation companies to compulsorily install ESS. The government is putting forth great efforts to distribute ESS, such as giving RECs (renewable energy certificates) at the highest level to ESS related to solar power generation260.
General Electric (GE) is seeking to expand in the Korean solar and Energy Storage System (ESS) market through a partnership with EN Technologies 261 , a Korean energy SME. GE and EN Technologies propose highly efficient high-capacity inverters such as 1 MW 1500 V solar inverters, power conversion system (PCS) for ESS and an energy management system (EMS) softwares262.
260 http://www.businesskorea.co.kr/news/articleView.html?idxno=20287 261 http://entechnologiesinc.co.kr/ 262 https://www.gepowerconversion.com/press-releases/ge-seeks-expansion-korean-solar-and-ess-market-en-technologies
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The Korean market gathered some of the top global players and EU companies will have chance to successfully enter the Korean market by providing high level technologies. In particular, technology transfer can offer opportunities to EU companies which would allow them to set up partnerships with local players.
EU companies that successfully entered the Korean energy conservation market SMA Solar Technology263 (Germany), founded in 1981, produces, and distributes photovoltaic (PV) inverters, transformers, choke coils, and monitoring and energy management systems for PV systems worldwide. It operates through Residential, Commercial, Utility, Service, and Other segments. The company provides single and three phase string inverters under the SMA and Zeversolar brands; three phase inverters under the Sunny Tripower brand; holistic energy management solutions for medium sized solar power systems; solutions for PV diesel hybrid applications; integrated services; energy management solutions; storage systems; communication products and accessories; and optimal solutions for private PV systems in PV markets, as well as operates and manages PV power plants. In 2015, SMA Solar Technology was the only foreign manufacturer to supply a 200 MW large-scale storage project in South Korea, leaded by KEPCO, with 1,000 battery inverters and system technology264.
263 https://www.sma.de 264 https://www.sma.de/en/newsroom/current-news/news-details/news/2128-sma-is-the-only-international-company-to-supply-large-scale- storage-project-in-korea-with-batte.html
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3.13 Energy Conservation Technologies Focused on Reducing CO2 Emissions
South Korea released some 588 million tons of CO2 into the atmosphere in 2016, compared to 580 million tons in 2015.
567 589 584 592 587 580 588
2010 2011 2012 2013 2014 2015 2016
265 Figure 58 CO2 emissions in South Korea (million tons) .
In 2014, the production of electricity and heat contributed 60.5% to the emission of CO2, followed by transport (16.3%), industries and construction (13.7%), residential, commercial and public services (8.1%) while other sectors contributed 1.4%.
Residential Other sectors buildings, 1.4% commercial and public services 8.1%
Industries and construction 13.7%
Electricity and heat Transport production 16.3% 60.5%
266 Figure 59 Origin of CO2 in South Korea per sector (% of total fuel consumption, 2014) .
265 data.worldbank.org 266 https://tradingeconomics.com/south-korea
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In 2016, the Korean government initially came up with a comprehensive framework designed to cut carbon emissions by 37% equivalent to 315 million tons, in order to reach its climate target of 536 million tons based on business-as-usual (BAU) levels by 2030.
In June 2018, the Korean government published a revised version of its greenhouse gas (GHG) reduction plan. According to the revised version, the Ministry of Environment targets a domestic reduction of 574 million tons of greenhouse gas, compared to 632 million tons in the previous plan267.
In the revised roadmap, targets by sectors are as follow:
industry: 98.6 million tons, i.e. 20.5% of the BAU levels (initial target of 56.4 million tons)
buildings: 64.5 million tons, i.e. 32.7% of the BAU levels (initial target of 35.8 million tons)
transportation: 30.8 million tons (initial target of 25.9 million tons).
In order to fight the fine dust problem in South Korea, the government announced to limit operation of old coal-fired power plants to up to 80% of their capacity when fine dust warnings are issued. Local governments will be allowed to raise the bar in 2019 for the operation of coal and oil power plants. The measure is expected to cut 8.6 tons of fine dust, equivalent to about 11% of the daily average generated from coal-fired power plants in 2017.
G-SEED, the Korean Green Building Certification System The Green Standard for Energy and Environmental Design (G-SEED) is the certification system to evaluate the environmental friendliness of buildings. Starting from 2002 up to 2016, 8,000 buildings have been certified according to the G-SEED standard268.
A green building, as defined in Article 2 of the Green Building Act (2006) in South Korea, is a building that minimises its impact on the environment while at the same time providing a comfortable and healthy living environment.
267 http://www.koreatimes.co.kr/www/nation/2018/06/113_251430.html 268 https://futurecitiesandenvironment.com/articles/10.5334/fce.37/
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The G-SEED allows to assess such buildings through a comprehensive assessment of the environmental friendliness of new, existing, and green-remodelling buildings.
G-SEED was amended in 2016 and undertakes assessments across 8 categories including land use and transportation, energy and environmental pollution, materials and resources, water management, maintenance, ecology, indoor environment, and innovative design. The energy and environmental pollution category constitutes the largest portion of the assessment.
Categories Average Number Prerequisites Weighting of Credits Credits Land Use and Transportation 10 6 - Energy and Environmental 30 6 1 Pollution Materials and Resources 15 6 1 Water Management 10 4 1 Maintenance 7 3 1 Ecology 10 3 - Indoor Environment 18 6 1 Innovative Design 10 9 -
Table 3 G-SEED Rating System (New Buildings)269.
Application of Passive Building Design A passive house is functionally defined as “a building, for which thermal comfort (ISO 7730) can be achieved solely by post-heating or post-cooling of the fresh air mass, which is required to achieve sufficient indoor air quality conditions – without the need for additional recirculation of air.”270
In South Korea, the Passive House Institute Korea (PhiKo) was established in 2009 and started to provide research, certification services, education and consulting271. Although the concept of
269 https://futurecitiesandenvironment.com/articles/10.5334/fce.37/ 270 Passidepia – Passive House Resource, available at http://passipedia.passiv.de 271 For more information, see http://www.phiko.kr/ (Korean text only)
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passive house is still relatively new in South Korea, interests in heat insulation, low-energy buildings, and the passive house planning package are steadily growing among home owners.
Korean players In 2017, Samsung Electronics has unveiled an IoT smart building system272. This smart building system has the ability to automate the management of buildings, and it also will control the temperature and lighting use data. This smart building system is able to turn on climate systems before the arrival of users and to automatically turn off the power supply when it detects that the building is empty.
NTELS273 is a Korean IoT company that offers an integrated building management system which allows the monitoring of energy consumption and safety status of buildings. The company has partnered with Suwon City and the solution is already applied to 100 public buildings. Artificial intelligence is applied to the monitoring system in order to predict energy usage; the monitoring system shall continuously become more efficient as more data is collected and applied in the algorithm.
3.13.1 EU Entry Opportunities With the Korean government plans for energy saving, EU companies specialising in energy conservation technologies focused on reducing CO2 emissions will have opportunities to enter the Korean market. Especially the segment smart building systems aiming at reducing CO2 emissions will offer opportunities and EU companies with high technological solutions such as remote condition monitoring for smart buildings, combining energy efficiency solutions and building facility management will have opportunities in South Korea.
EU companies that successfully entered the Korean energy conservation technologies focused on reducing CO2 emissions market Danfoss274, the Danish manufacturer of materials and parts for heating and cooling systems, entered the Korean market by contributing to the smart building engineering of the Lotte World
272 https://www.gizchina.com/2017/10/09/samsung-set-to-launch-an-iot-smart-building-system-in-seoul/ 273 http://www.ntels.com/ 274 http://www.danfoss.kr
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Tower in Seoul. It allowed the skyscraper to reduce electricity use by 5,040 MW a year and carbon dioxide emissions by 2,345 tons. Danfoss is running four business units in South Korea, which includes power management, cooling, drives and heating. Danfoss’ technology helped STX Offshore & Shipbuilding as well as stores of Home plus, Lotte Mart, E-mart and E-Land to optimise their energy efficiency.
Philips275 (Netherlands) is established in Seoul since 1976. Philips Korea distributes lighting products solutions for green buildings under Philips brand in South Korea. Philips Korea Ltd. operates as a subsidiary of Koninklijke Philips N.V.
In Korea, Legrand276 (France) is a specialist in electrical and digital building infrastructures and operates a factory in Pyeongtaek, a main office in Seoul and three sales branches in the provinces. The company’s products and solutions are dedicated to residential, commercial, and industrial markets and are able to cover all low voltage applications.
275 https://www.philips.co.kr/ 276 http://www.legrand.co.kr/
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3.14 Carbon Capture & Storage (CCS) Carbon capture and storage (CCS), also called as carbon capture and sequestration, prevents large amounts of carbon dioxide (CO2) from being released into the atmosphere. The technology involves capturing CO2 produced by large industrial plants, compressing it for transportation and then injecting it deep into a rock formation at a carefully selected and safe site, where it is permanently stored.277
CCS technology involves three steps:
Capture: The separation of CO2 from other gases produced at large industrial process facilities.
Transport: The CO2 is compressed and transported to a storage site.
Storage: CO2 is injected into underground rock formations.
Figure 60 Concept of Carbon Capture and Storage (Source: Global CCS Institute).
3.14.1 Market Overview The Korean Government is currently revising its CCS Master Plan, which includes a large-scale CCS demonstration project operating within certain cost parameters by 2020, and commercial
277 Global CCS Institute
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CCS deployment thereafter. The Government’s policy includes support for a number of testing and pilot plants involving a wide variety of agencies and technology providers in the power generation and steel making industry.
Korea Electric Power Corporation (KEPCO) has already tested dry regenerable solid sorbent technology at the Hadong thermal power plant. Start-up of the first stage of research started in 2010 with a 0.5 MW test-bed slipstreamed from the 500 MW coal power plant. The second stage has seen a scale-up of the CO2 capture facilities to approximately 200 tonnes per day (equivalent to 10 MW). Commissioning of the 10 MW pilot plant was in 2014, with testing until 2017.
Post-combustion capture technologies have also been tested. Small-scale CO2 capture facilities have been installed at the Boryeong and Hadong coal power stations. These facilities have seen their scale to be increased to approximately 200 tonnes per day in 2014278.
The results of these research projects will be used to contribute to a Front-End Engineering
Design Study of a 300 MW-scale dry-sorbent CO2 capture facility.
KEPCO is also testing an advanced amine CO2 capture solvent at the Boryeong thermal power plant. Start-up of the first stage of research was in late 2010 and accomplished 90% CO2 capture from a 0.1 MW test bed. CO2 capture capacity was around 2 tonnes per day. The second stage has seen a scale-up of the CO2 capture facilities to approximately 200 tonnes per day. A commercial scale demonstration – referred to a Korea CCS-1 – is planned to start in 2020.
South Korea is also carrying active storage exploration programme focusing on the offshore Korean basins. The Korea Clean Carbon Storage Project (KCCS) 2025 aims to develop a
1 million ton offshore CCS. In this project, the CO2 is captured from power plants on coast, loaded to CO2 carriers, and transported to an intermediate storage terminal, which is located on shoreline nearby offshore storage reservoirs at the Ulleung Basin. Then the CO2 is exported via an offshore pipeline to an offshore platform for injection to geological storage site for a permanent containment.
278 https://hub.globalccsinstitute.com/sites/default/files/publications/201158/global-status-ccs-2016-summary-report.pdf
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Korean players The Korea Carbon Capture & Sequestration R&D Center (KCRC) 279 is an independent research foundation focusing CCS research and development, affiliated with the Ministry of science, ICT and Future Planning. The KCRC develops innovative technologies by carrying out CCS projects.
KEPCO Engineering & Construction Company, Inc. 280 was founded in 1975 and is a subsidiary of KEPCO. The company engages in designing, engineering, procurement, and construction of power plants in South Korea and internationally. The company offers architect engineering and nuclear steam supply system designing services. It also engages in engineering, procurement, construction, and test run nuclear power plants; enhancing total project management ability, such as process management and document management; and provision of technological support service to enhance the performance, and upgrade the power of nuclear power plants that are being operated. In addition, the company offers technological services to the power plants in operation, including facilities improvement of nuclear power plants, replacement of major devices and facilities, and supporting certifications; and fuel management, and low and intermediate level radioactive waste disposal services. The company has installed 2 ton/day capturing system for the Boryeong Power Plant to gather information for optimisation of process and capacity upgrade.
3.14.2 EU Entry Opportunities The South Korean carbon capture and storage market share will witness significant growth owing to growing concern to reduce greenhouse gas emissions. South Korea’s national carbon capture and storage master plan aims to commercialise CCS projects by 2030281.
In general, it is considered that South Korea has reached an advanced level of technological maturity but is still behind those of leading countries in CO2 capture. However, for CCS to work,
279 www.kcrc.re.kr 280 www.kepco-enc.com 281 https://pdfs.semanticscholar.org/601e/0afab008f3fd23f45f4d8628f71a6454b383.pdf
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all three steps should be tightly aligned. In this regard, South Korea’s CCS capability is still weak due to its weakness in transportation and storage technologies.
Hence, the government-led R&D or demonstration projects are leading this sector. Considering the Korean government’s ambitious goal and R&D efforts, global R&D partnerships and collaborations will offer opportunities to EU companies. To meet CCS target, it is also likely that technological development and cooperation will take place related to storage.
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3.15 Cogeneration Cogeneration, also known as Combined Heat and Power (CHP), is the production of electricity and heat simultaneously while utilising both resources. The principal foundation of cogeneration is that “in order to maximise the many benefits that arise from it, systems should be based on the heat demand of the application”282.
3.15.1 Market Overview In 2016, cogeneration energy consumption in South Korea was estimated at 317,720 toe, up by 37% from 231,458 toe in 2015. Fuel cell is the most important sub-sector in terms of consumption with 241,616 toe (76%), followed by integrated gasification combined cycle (IGCC) with 76,104 toe (24%).
76,104
1,285
230,173 241,616 199,369
122,416 82,510 63,344 42,347
2010 2011 2012 2013 2014 2015 2016
fuel cell IGCC
Figure 61 cogeneration energy consumption in South Korea283. In South Korea, as of 2016, the cogeneration power generation capacity was 564 MW and represented 4% of all renewable energy capacity (13,846 MW). The cogeneration capacity has seen a considerable growth in 2015 with the Taean IGCC power plant started to generate power during its extensive one-year-test run; the commercial operation of the power plant started in August 2016284.
282 COGEN EUROPE, The European Association for the Promotion of Cogeneration, “What is cogeneration?” 283 www.knrec.or.kr 284 http://www.businesskorea.co.kr/news/articleView.html?idxno=15621
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346 381
218 129 165 171 61 2010 2011 2012 2013 2014 2015 2016 Fuel cell IGCC
Figure 62 Cogeneration power capacity in South Korea (MW) 285. In 2016, among the 15 companies involved in the fuel cell energy market, 8 companies focused on power generation systems286, 3 companies on cells and stacks, 3 on parts and materials287 and 3 companies were involved in power conversion devices.
Power conversion devices 3 18% Power generation systems Parts & 8 Materials 47% 3 18%
Cells and Stacks 3 17%
Figure 63 fuel cell sub sectors in which companies in South Korea are involved (2016)288. In 2016, the fuel cell sector generated a market of KRW 300 billion (EUR 231 million), up by 6% compared to 2015. The power generation systems segment was the most important sub market with a value of KRW 288 billion (EUR 222 million).
285 www.knrec.or.kr 286 Fuel cell "power generation system" is a system capable of producing energy, excluding construction industry activities (construction, installation, construction) 287 Fuel cells "Parts / materials" include separators, gas diffusion layers (GDL), gaskets, etc. 288 www.knrec.or.kr
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283.6 300.2 Cells and Stacks Cells and Stacks 1.4 1.3 228.4 Parts & Power Parts & Materials conversion Materials 11.1 device 2.6 2.1 Power generation system Parts & Power generation system 271.1 225.8 Materials 8.7 Power generation system 288.1
2014 2015 2016
Power generation system Parts & Materials Power conversion device Cells and Stacks
Figure 64 Annual Korean fuel cell market volume (KRW billion)289. South Korea is among the world leaders in the use of fuel cells for power generation and developed innovative methods of power production.
The country developed a triple-decker fuel cell park in Bundang290, a city south of Seoul, dubbed the Bundang ‘Power Tower’, which was set up by power company Korea Energy291 (KOEN). The site is the most energy-dense power plant in the world and the first instance of Solid Oxide Fuel Cell (SOFC) systems being deployed in the country. The tower generates 14.42kW/m2. The Gyeonggi Green Energy fuel cell park built by POSCO Energy in Hwasung City uses molten carbonate fuel cells (MCFC).
Korean players Hanhwa, KDHEC and Doosan Corporation Fuel Cell 292 are major Korean player of the cogeneration sector. Doosan Corporation Fuel Cell has a full lineup of products, from power generation to residential use, based on its proprietary fuel cell technologies.
Daejeon Cogeneration Plant Co.293 was founded in 2005 and engages in the generation and supply of steam and electricity in South Korea. It supplies heating and cooling steam to household and commercial areas. Daejeon Cogeneration Plant Co., Ltd. is former subsidiary of Chosun Refractories Co. Ltd.
289 www.knrec.or.kr 290 https://www.power-technology.com/news/south-korea-continues-lead-fuel-cell-development/ 291 https://www.koenergy.kr/kosep/en/main.do 292 http://www.doosan.com/en/business/energy/fuel-cells/ 293 http://www.djcp.co.kr
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3.15.2 EU Entry Opportunities Fuel cells for power generation is an important market to South Korea and the industry targets to keep its technology leadership. Opportunities will be offered to companies with high technological added value. Especially, the segment of hydrogen fuel cell stacks will offer opportunities to EU companies.
Opportunities will also be offered to companies teaming up with Korean companies to achieve the construction of cogeneration power plants. Siemens AG and POSCO Engineering & Construction Co. Ltd. completed the Ansan combined cycle power plant. As the 4th Siemens H-class-based combined-cycle power plant commercially operating in Asia, the CHP plant has an efficiency level of more than 60%. Furthermore, the overall fuel utilisation factor tops 75% with the combination of heat and power production. The NOx emissions of 7ppm are the lowest in South Korea, making this one of the most efficient and eco-friendly fossil-fuel-fired electricity plants294.
EU companies that successfully entered the cogeneration market Sunfire GmbH295 (Germany), founded in 2010, develops and manufactures steam electrolysers and high temperature fuel cells using PowerCore, a solid oxide cell (SOC) stack technology. The company’s technology can be used to covert electrical energy into chemical energy and convert various liquid and gaseous fuels based on hydrocarbons (natural gas, LPG) into electricity and heat. The company’s products includes sunfire hylink, electrolysers for the highly efficient production of renewable, low-cost industrial hydrogen, sunfire synlink, technology to produce renewable feedstocks for refineries such as for synthetic fuels, sunfire remote, generators for a reliable, durable and efficient power supply in remote areas without access to electricity distribution systems, sunfire home, compact cogeneration for residential buildings as an solution for system providers, for integration into consumer devices, and sunfire powerplus, decentralised cogeneration for commercial buildings with year round heat demand. decentralised cogeneration for commercial buildings with year-round heat demand. SunFire has a sales representative in Korea.
294 Siemens.co.kr, Press Release, “Siemens and POSCO E&C complete Ansan power plant in South Korea”, 07 Jan 2015. 295 www.sunfire.de
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SOLIDpower S.p.a.296 (Italy) was founded in 2006 and develops micro combined heat and power systems and generators. The company offers BlueGEN, a system that uses natural gas from the grid to generate electricity; and EnGEN, a micro-cogenerator that converts methane into clean electricity and heat. Its products are used in large residential, small commercial, industrial prime power, smart cities and distributed generation, remote power and off-grid, and waste to energy applications. In 2016, SOLIDpower Group has signed a Memorandum of Understanding (MoU) with Korea Electric Power Corporation (KEPCO), to cooperate on building a greater share in the rollout of fuel cell technology297
296 www.solidpower.com 297 https://www.pressebox.com/pressrelease/solidpower-spa/More-fuel-cells-for-the-energy-revolution-in-South-Korea-cooperation-agreement- between-SOLIDpower-and-KEPCO/boxid/830070
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3.16 Mobility solutions Mobility Solutions include all passenger automobiles and light vehicles with non-conventional propulsion technology, i.e. battery-electric, hybrid-electric, range-extended electric, fuel-cell electric, natural gas, or liquefied petroleum gas, including respective components and charging infrastructure. Furthermore, the sub-sector includes products and technologies of intelligent transport systems and mobility-as-a-service.
3.16.1 Market Overview – Focus Autogas Vehicles South Korea is one of the largest autogas markets in the world. In 2016, 2,185,114 cars running on autogas were registered in South Korea, i.e. 10% of all vehicles298.
2,455,696 2,445,112 2,433,367 2,410,495 2,355,011 2,275,661 2,185,114
2010 2011 2012 2013 2014 2015 2016
Figure 65 Number of vehicles running on autogas in South Korea299. Due to a price advantage, vehicles running on Liquefied Petroleum Gas (LPG) expanded in South Korea since the Asian financial crisis in the late 1990s. The number of registered LPG vehicles increased by 1.13 million in only four years starting from 1999. LPG powered cars reached an all- time-high in 2010 with 2.46 million vehicles. Thereafter this car category has been on decline since then, primarily due to the growing demand for diesel vehicles. From 2011 to 2017, LPG was allowed only for taxis, rental cars, small cars and vans or buses with seating capacity of over seven. Accordingly, LPG powered vehicles remained popular only for taxis and cars and buses primarily in public service.
298 https://gazeo.com/up-to-date/news/2017/Will-Koreans-be-able-to-buy-private-LPG-cars,article,9815.html 299 http://www.koreatimes.co.kr/www/tech/2017/05/419_228630.html
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Since July 2017, a change occurred in the Safety Control and Business of Liquefied Petroleum Gas Act300, which regulates vehicles running on LPG. It is now allowed to anyone to own and drive an autogas vehicle. Vehicles with seating capacity of five or below have been released for sale to the general public301.
According to Daelim University, LPG cars are a suitable alternative in the transition phase from conventional to electric vehicles, as they can help to decrease South Korea’s fine dust levels.
The Korean LPG industries estimates this reform will contribute to the net increase of LPG vehicles by releasing about 30,000 cars for purchase every year. The LPG demand is also estimated to expand by up to 7.5 million tons.
3.16.2 Market Overview – Focus Fuel Cell Vehicles and Infrastructure The Korean government is encouraging the usage of hydrogen fuel cell electric vehicles in the country and aims at supplying 16,000 fuel cell vehicles by 2022 by increasing subsidies to encourage the purchase of fuel cell vehicles302.
Together with the industry, the government agreed to invest KRW 190 billion (EUR 146 million) in 2018 and KRW 420 billion (EUR 323 million) in 2019. In total, KRW 2.6 trillion (EUR 2 billion) are planned to be invested by 2022303 in order to foster the building of plants for fuel cell vehicles and fuel cell stacks, and the deployment of fuel cell storage containers. About KRW 125 billion (EUR 96 million) will be used for research and development of key auto parts in fuel cell vehicles, including localizing production of fuel cell stacks304.
In 2019, a hydrogen bus subsidy programme should be implemented by the government and reduction for transportation companies on tax applied for the acquisition of fuel cell bus, with the objective of supplying 1,000 fuel cell buses by 2022305. Hyundai Motor leads this initiative and
300 https://elaw.klri.re.kr/eng_mobile/viewer.do?hseq=45936&type=lawname&key=LIQUEFIED+PETROLEUM+GAS+ACT 301 https://gazeo.com/up-to-date/news/2017/Autogas-in-Korea-free-at-last,article,9867.html 302 http://www.ammoniaenergy.org/south-korea-to-launch-major-fuel-cell-vehicle-initiative/ 303 http://www.businesskorea.co.kr/news/articleView.html?idxno=23248 304 http://www.koreaherald.com/view.php?ud=20180625000730 305 http://www.koreaherald.com/view.php?ud=20180625000730
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plans to set up a new production line dedicated for hydrogen buses in its commercial vehicle plant in Jeonju.
The government and the industry have also decided to supply hydrogen energy at a lower price than diesel and LPG by 2022. A demonstration project of a “Power to Gas” (P2G) system, which produces hydrogen using the surplus power of renewable energy will be launched in 2019. The government has also planned to install 310 hydrogen stations in the country by 2022 in addition to the already existing 16 stations. Charging stations are planned to be installed at 160 major expressways and national highway rest areas across the country and at 150 spots in major cities by 2022.
Korean players Hyundai Motor was the first carmaker to mass produce fuel cell vehicles in 2013. In 2017, Hyundai Motor launched the Nexo fuel cell passenger vehicle. It can drive a distance of up to 609 kilometres and can be re-charged in only 5 minutes. The company also unveiled in 2018 image of its upcoming fuel cell powered truck which will be launched in 2019.
Hyundai Mobis, was the first company in the world to establish an integrated production system for core components of fuel cell vehicles in 2017, with a production capacity of 3,000 powertrain fuel cell complete modules per year.
On the infrastructure side, SK Energy and Korea Post have decided to plunge into the fuel cell market. They plan to build fuel cell charging stations, respectively in 3,570 gas stations and 3,500 postal offices.
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3.16.3 Market Overview – Focus Electric and Hybrid Vehicles Electric and Hybrid Vehicles Sales of eco-friendly cars306 in South Korea increased from 68,826 in 2016 to 97,486 units in 2017 representing a growth of 41.6%. Out of this almost 100,000 vehicles, 86% were hybrid cars and 14% were electric vehicles307.
In the period from January to April 2018, a total of 5,542 electric vehicle (EV) were sold in South Korea and therewith taking a share of 23% of the eco-friendly vehicle market. The share of hybrid cars fell accordingly and reached 76% in April 2018308. The positive trend for electric vehicles continued to be visible with 11,866 units sold alone in June 2018309.
Sales have been boosted by the government as it has expanded the budget for EV subsidies by 33% to KRW 352.3 billion (EUR 271 million). The government raised its annual sales objective from 14,000 to 20,000 electric vehicles. An elimination of subsidies for hybrid cars in 2019 seems to be more probable than not considering the growing demand for electric vehicles and the relatively low subsidies for hybrid cars: KRW 500,000 (EUR 385) in 2018, KRW 1,000,000 (EUR 769) in 2017. Instead the subsidies for electric vehicles will remain substantial although subsidies per vehicles were reduced from KRW 14 million (EUR 10,769) in 2017 to KRW 12 million (EUR 9,231) in 2018310.
Korean players In 2017, by carmaker, Hyundai and Kia accounted for 73% of all eco-friendly car sales followed by imported brands that made up 24%. Renault Samsung Motors’ sales reached 3% of the total311. Toyota Motor Korea leads the hybrid market, achieving average annual growth of 82%. Its luxury brand Lexus sold 19,102 units of hybrid vehicles in 2017, up by 26% on-year. The two brands made up 84% of the imported hybrid car market in 2017312.
306 eco-friendly vehicles include hybrids, plug-in hybrids and hydrogen-fuelled cars 307 http://www.theinvestor.co.kr/view.php?ud=20180114000263 308 http://koreabizwire.com/electric-vehicles-share-increases-in-s-korean-car-market/119623 309 http://english.yonhapnews.co.kr/news/2018/07/15/0200000000AEN20180715001400320.html 310 http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=3042594 311 http://www.theinvestor.co.kr/view.php?ud=20180114000263 312 http://www.koreaherald.com/view.php?ud=20180320000704
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Hyundai and KIA are planning to introduce solar charging technology currently in development to their green cars set to launch in 2019 with three types of solar roofs as options313. According to a statement by the two car producers, the system charging a battery through a solar panel on the top of a car will enhance fuel efficiency and reduce greenhouse gas emissions. In addition to recharging batteries of electric and hybrid vehicles, the system will serve as an auxiliary power source for conventional cars.
Electric Vehicle Infrastructure South Korea is speeding up its efforts to expand the charging infrastructure for electric vehicles.
The government plans to increase the number of fast-charging stations from 1,508 as of June 2018 to 3,000 by the end of 2018. The number of fast-charging stations should reach 6,000 by 2020. Fast chargers are largely available at places such as hotels, large discount store chains and highway rest stops.
In June 2018, there were 1,606 units of slow chargers. Also, the Korean government plans a substantial extension to all buildings with parking lots as spaces for the installation and operation of slow charging stations. Until recently, this was restricted to residential and office buildings with parking lots for at least 100 vehicles.
Korean players KT, the nation's biggest fixed-line internet operator and its second-largest mobile carrier, leads the domestic EV charging market. The company has so far installed 3,656 chargers for electric cars, accounting for 43% of the total of 8,457 chargers available in parking lots at either apartment complexes or public facilities. Among the other companies licensed by the Korean government to provide charging stations, Posco ICT has installed 1,621 facilities, GNTEL 1,273, while Korea Electric Vehicle Charge Service has set up 1,240 facilities and EVERON 667. The government provided the five charger providers with KRW 300 million (EUR 230,769) to KRW 400 million (EUR 307,692) in subsidies per charger.
313 https://pulsenews.co.kr/view.php?sc=30800021&year=2018&no=680816
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KT has launched a new business model called electric vehicle-demand response (EV-DR) which will enable EVs to be utilised as supplementary power supplies in case of emergency such as blackouts. The company built a vehicle-to-grid test bed, in which plug-in EVs communicate with a power grid to offer demand response services by e.g. returning electricity to the grid314.
3.16.4 Market Overview – Focus mobility as a service Bike sharing Segment Seoul launched its own bike sharing scheme “Seoul Bike Ttareungyi” in 2015; similar services were introduced thereafter by the cities of Busan, Suwon, Ansan and Ulsan. The concept of bike- sharing is still relatively new to South Korea where the use of bicycles is not that popular. In South Korea, only 9% of Koreans ride a bicycle on a daily basis. Accordingly, the bicycle infrastructure is not well developed; bicycle lanes are few and not well connected forcing cyclists to use main streets which is considered relatively dangerous.
Cab-hailing Segment Kakao Taxi, operated by Kakao Mobility – a subsidiary of South Korean tech giant Kakao Corp. – is the most popular cab-hailing app in South Korea with a dominating market share of 98% in 2017.
In 2013, Uber tried to enter the Korean market. However, Uber was faced with strong opposition of taxi drivers and their interest groups and the government enforced a law in South Korea’s Passenger Transport Service Act, which banned unlicensed drivers from providing transportation services315. Uber suspended its services in 2015.
Other solutions like Poolus or Luxi are designed for carpooling only. Drivers are not commercially licensed, but the two solutions exploit a clause in South Korea’s Passenger Transport Service Act that allows driving-for-pay “where people share the use of a passenger vehicle for commuting” as commuting times are not specified in the law316. The Seoul Metropolitan Government and the
314 https://www.koreatimes.co.kr/www/tech/2018/02/133_244106.html 315 http://www.moleg.go.kr/english/korLawEng?pstSeq=52751 316 http://www.moleg.go.kr/english/korLawEng?pstSeq=52751
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Ministry of Land, Infrastructure, and Transport are currently demanding that carpooling apps be declared illegal317.
3.16.5 EU Entry Opportunities Fuel Cell Vehicles The Korean fuel cell vehicle segment is growing and is offering opportunities to EU companies. Especially, companies and SMEs involved in the manufacturing of hydrogen fuel cell stacks or charging stations will have opportunities to enter the Korean market as suppliers of Korean large players.
Hyundai already agreed to work on fuel cell technology together with Audi, which is responsible for hydrogen fuel cell technology in the Volkswagen Group 318. To build up the synergy, Hyundai Motor Group and Audi have built partnership in developing fuel cell vehicles and developing new innovative technologies. They will be able to access each other’s intellectual property and share components, including any new parts developed by Audi.
The government in Seoul wants all buses and trucks to run with zero emissions by 2030. There are also plans for a public-private partnership with the aim to install a network of hydrogen filling stations. Hyundai as well as the state-owned Korea Gas Corporation are part of the deal that includes eight H2 filling stations located on South Korea’s busiest highways with another ten to supply fuel cell vehicles in Seoul and other large cities with hydrogen319. It will offer opportunities to EU companies.
Hybrid and Electric Vehicles The market of hybrid and electric vehicles is growing and will offer opportunities to EU companies able to provide innovative technologies to Korean vehicle manufacturers.
The segment of electric light vehicles is also offering opportunities to EU companies. Renault Samsung already launched its Twizy in South Korea. Categorised as a compact car, this electric
317 https://www.koreaexpose.com/carpooling-apps-collision-korea-taxi/ 318 https://www.electrive.com/2018/06/20/vw-group-turns-to-hyundai-kia-for-fuel-cell-technology/ 319 https://www.electrive.com/2018/04/25/korea-public-private-hydrogen-station-network/
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vehicle can be driven on ordinary roads with a maximum speed limit of 80 km/h; accordingly, it is banned to drive on highways. Seoul also wants to introduce small electric two-wheelers for postal deliveries by 202320. EU companies offering premium electric light vehicles will have opportunities to enter the Korean market.
Mobility as a Service EU companies providing innovative solutions to connect all transportation systems will have opportunities in South Korea. The city of Seoul but also the other main cities in South Korea aim at reducing traffic by pushing interconnected public transports.
EU companies that successfully entered the mobility solutions market Renault Samsung Motors Company Ltd.321 (France) engages in the production and sale of cars and automobile parts in South Korea. The Company is under joint investment contract by Renault Group & Samsung Group and operates as a subsidiary of Renault SA. Renault Samsung opened the Korean market for micro electric vehicles in 2017 with the commercialisation of its micro electric vehicle Twizy. The company has sold 691 units in its first year.
MaaS Global322 (Finland) has been invited by the Korean traffic systems provider LG CNS. The two companies have signed a Letter of Intent to consider the best ways to roll out the MaaS concept in Seoul. LG CNS has researched and developed solutions for enhancing urban mobility in the South Korean capital for over 10 years. Such solutions include the electronic ticketing system for public transport in Seoul.
320 https://www.electrive.com/2018/05/17/korea-to-fully-electrify-buses-and-trucks-by-2030/ 321 https://group.renault.com/groupe/nos-marques/renault-samsung-motors/ 322 https://maas.global/maas-global-expanding-to-asia-with-its-all-in-mobility-app-whim/
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4 Overview of Regulations
Main acts and policies url http://www.moleg.go.kr/english/korLawEng?pst Framework Act on Low Carbon Green Growth Seq=57719&rctPstCnt=3&searchCondition=All ButCsfCd&searchKeyword=low+carbon http://www.moleg.go.kr/english/korLawEng?pst Energy Use Rationalisation Act Seq=57721 Act on the Promotion of the Development, Use, and http://www.moleg.go.kr/english/korLawEng?pst Diffusion of New and Renewable Energy Seq=57707& http://www.motie.go.kr/motie/ne/presse/press2/ bbs/bbsView.do?bbs_seq_n=160040&bbs_cd_ 8th Basic Plan on Electricity Demand and Supply n=81 (Korean text only) Renewable Energy Certificate (REC) Weighting http://www.energy.or.kr/renew_eng/new/standa System rds.aspx http://www.motie.go.kr/motie/in/ay/policynotify/n Guidelines on the Management and Operation of otify/bbs/bbsView.do?bbs_seq_n=60510&bbs_ Obligatory Renewable Energy Supply Program cd_n=5 (Korean text only) Regulation on the Issuance of Renewable Energy https://www.knrec.or.kr/m/pds/statute_read.asp Certificate and the Operation of the Certificate Market x?no=387 (Korean text only) http://www.energy.or.kr/renew_eng/new/standa Renewable Energy Portfolio Standard (RPS) rds.aspx http://www.motie.go.kr/motie/ne/presse/press2/ bbs/bbsView.do?bbs_seq_n=159996&bbs_cd_ 3020 Renewable Energy initiative n=81¤tPage=1&search_key_n=title_v&c ate_n=&dept_v=&search_val_v=3020 (Korean text only) http://english.seoul.go.kr/policy- “2022 Solar City Seoul” plan information/environment-energy/climate- environment/5-one-less-nuclear-power-plant-2/ Mid-Term and Long-Term Clean Ocean Energy http://www.mof.go.kr/article/view.do?articleKey Development Plan 2015-2025 =8677&boardKey=10 (Korean text only) http://www.moleg.go.kr/english/korLawEng?pst Framework Act on Marine Fishery Development Seq=52768 http://www.moleg.go.kr/english/korLawEng?pst Marine Environment Management Act Seq=52755&pageIndex=2&searchCondition=Al lButCsfCd&searchKeyword=management http://eng.me.go.kr/eng/web/index.do?menuId= greenhouse gas (GHG) reduction plan 212 http://gseed.greentogether.go.kr/sys/gms/select Green Standard for Energy and Environmental GreenMain.do Design (G-SEED) (Korean text only)
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http://www.moleg.go.kr/english/korLawEng?pst Korea’s Passenger Transport Service Act Seq=52751 https://elaw.klri.re.kr/eng_mobile/viewer.do?hse Safety Control and Business of Liquefied Petroleum q=45936&type=lawname&key=LIQUEFIED+PE Act TROLEUM+GAS+ACT Table 4 Main regulations and laws in the Green Energy Technologies sector.
4.1 National Policy Support 4.1.1 Framework Act on Low Carbon Green Growth The Framework Act lays the foundation of the national government’s mid- and long-term emissions reduction targets, cap-and-trade, carbon tax, carbon labelling, carbon disclosure, and the expansion of new and renewable energy. It requires a national strategy and related policies to be established and executed, specifically 5-year action plans for a 20-year planning period. Furthermore, the framework defines core principles of green economy. In that regard, the Committee on Green Growth was established in 2013 as the country’s advisor on major low carbon green growth-related policies and plans.
Under the Framework, new green industries with high growth potential are to be promoted, mandatory annual greenhouse gas emission reporting should be completed, and REDD/Land Use policies and transportation policies are to be prepared.
4.1.2 Energy Use Rationalisation Act The Act promotes green growth and aids the international efforts toward climate change. Upon the establishment and enforcement of a comprehensive greenhouse gas mitigation policy, local governments are to follow up with individual local policies.
The Minister of Trade, Industry and Energy should draft a Basic National Energy Plan and the Basic Plan for Rational Use of Energy under this Act. Additionally, Republic of Korea Energy Management Corporation is to plan and carry out energy conservation programmes and activities.
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4.1.3 The Act on the Promotion of the Development, Use, and Diffusion of New and Renewable Energy Emphasising the importance of renewable energy for a sustainable environment, this Act defines 12 new and renewable energy sources: solar energy, bioenergy, wind power, hydro power, fuel cells, liquefied or gasified coal, gasified heavy oil residue, tidal power, waste-to-energy, geothermal energy, hydrogen energy and other energy defined by presidential decrees.
The Minister of Trade, Industry and Energy aims to foster consumer-oriented supply and diffusion, market-friendly system, overseas expansion, market development, and enhancement of R&D and institutional systems.
4.1.4 NRE Standardisation Program Through this programme, the Korea Energy Agency is to develop national standards and adopts international standards to standardise technologies. The international standardisation of Korean technologies is to receive first-mover benefits in the international market and find effective solutions for domestic companies’ international standard issues.
4.2 Greenhouse Gas Reduction 4.2.1 Reporting System for Energy Intensive Business Entities By January 31 of each year, those companies consuming over 2,000 tons of oil equivalent (toe) of energy must submit a report on the company’s energy consumption. These reports are to contain a wide range of data including information related to annual energy consumption, facility details, energy conservation, building type, and energy consumption by product. Such data are utilised to predict national energy consumption trends and develop pertinent policies.
A national statistical database system has been developed by Korea Energy Management Corporation to examine the energy usage and greenhouse gas emissions in various sectors.
4.2.2 Verification of GHG Emission Reduction Korea Energy Agency assess greenhouse gas (GHG) reduction through such projects as Clean Development Mechanism and Verified Carbon Standard. Other GHG reduction projects are
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accepted to encourage company-wide initiatives to voluntarily reduce emission. For companies successfully implementing their registered projects, the government has offered financial incentives. The GHG emissions from businesses are comprehensively recorded and managed by the GHG inventory system.
4.2.3 Carbon Footprint Labelling Under the overall governance of the Ministry of Environment, the carbon footprint label is a product mark to indicate the greenhouse gas emissions generated during the entire lifecycle of relevant products and services. The goal is to promote low carbon and green consumption while fostering eco-friendly innovations in various industrial businesses. There are three phases of this labelling system: certification of carbon emissions (Phase I), certification of low carbon products (Phase II), and certification of carbon neutral products (Phase III).
4.2.4 Green Building Certification The Green Standard for Energy and Environmental Design (G-SEED) rates a given building’s environmental performance in seven categories throughout its entire lifecycle. This green building certification considers various environmental factors during its certification process, including energy and resource conservation and harmony with surroundings. Most importantly, G-SEED aims to promote the development of eco-friendly consumer behaviours and products.
The certification is overall managed by the Ministry of Land, Infrastructure and Transport and Ministry of Environment, and five public and five private (a total of 10) organisations are designated certification agencies.
4.2.5 Green Public Procurement (GPP) The procurement process enables public organisations to meet their needs for goods, services, works, and utilities while also generating mutual benefits for the organisation, society, economy, and the environment. There is no set objective set by the national government. State agencies are annually required to submit an implementation plan for the green public procurement and performance records. Currently, GPP is executed in joint partnership among Ministry of
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Environment, Korea Environmental Industry and Technology Institute, the Korean Public Procurement Service, and other public institutions.
4.3 Approved Exporter Status under the EU-Korea FTA The 'Approved Exporter Status' is not a mandatory requirement but useful in order to help companies to benefit from the preferential tariffs agreed under the EU-Korea FTA. Contrary to the situation in certain other FTAs, certificates of origin are not issued by customs authorities and the EUR 1 form is not accepted as a proof of origin. Instead, exporters have to issue an ‘origin declaration’ themselves. However, in order to be entitled to do so, they have to apply for the status of an ‘approved exporter’ with their national customs authority, unless they export consignments of products of which total value does not exceed EUR 6,000. In this case, there is no need for the exporter to be an ‘approved exporter’, as any exporter can make out the origin declaration. There is no limit on the number of consignments not exceeding EUR 6,000 which can be exported. An origin declaration has to be made out when the products to which it relates are exported, or after exportation, but no later than one year after importation into South Korea and two years after importation into the EU. A declaration of origin issued after exportation should be valid, provided that the exporter has the status of approved exporter at the time he makes the declaration, even if at the time of exportation, he was not an approved exporter.
In order to become an ‘approved exporter’, companies have to make an application to the customs authorities of the Member State where they are established and keep their records. The procedures for granting ‘approved exporter’ status depend on Member State national provisions. Their main point is to make sure that the company knows the rules applicable and that the customs authorities will be able to verify at any time the originating status of the products for which preferential treatment has been requested. When an exporter has been approved by the customs authority, they will grant him an authorisation number which he must quote on the invoice declaration. The customs authorities carry out regular controls on authorised exporters. These controls are designed to ensure continued compliance with the use of the authorisation and may be carried out at intervals determined, if possible, by risk analysis criteria. The Korean customs authorities are not allowed to come to the premises of any EU approved exporters for control,
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except under very specific conditions and subject to the previous agreement by the authorities of the Member State where the control takes place; such visits must always be in the presence of EU customs authorities.
Origin declaration The request for preferential treatment under the EU-Korea FTA is made on the basis of an ‘origin declaration’. The following text (in one of the 23 EU languages or in Korean) is to be included by the exporter on an invoice, a delivery note or any commercial document which describes the products involved in sufficient detail to enable them to be identified: The exporter of the products covered by this document (customs authorisation No ...) declares that, except where otherwise clearly indicated, these products are of ... preferential origin. (Place and date) (Signature of the exporter, in addition the name of the person signing the declaration has to be indicated in clear script)
4.4 Import Regulations The Korea Customs Service (KCS)323 is a governmental agency belonging to the Ministry of Strategy & Finance and is in charge of all related processes in respect to the import and export of goods.
The main logistics operating spots are the Incheon International Airport (ICN) for air cargos and the Busan Port on sea freights followed by Incheon Port.
The Korean government requires all importers to have either a general or specific import license. The import price used for the determination of customs duties is an adjusted transaction value that includes cost, insurance and freight (CIF) incoterm at the time of declaration. A Value Added Tax rate of 10% is applied on imports based on customs value plus duties. In 2008, South Korea introduced a new system called Advanced Customs Valuation Arrangement (ACVA) which was amended in 2012 and 2015. The latest amendment in 2015, focused on a joint application related
323 http://www.customs.go.kr
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to tax (transfer pricing) and customs (import price) under the condition that the transfer pricing method and the customs valuation method must be reconcilable.324
The documents to receive import approval depend on many factors, among other types of product or country of origin. In order to import equipment into South Korea, the authorities require following documents:
General required documents: commercial invoice including, description of goods, brand name, quantity, specifications, type or model number, unit price, freight, insurance and other expenses, amount of duty reduction or exemption of duties obtained at the port of shipment, certificate of origin, packing list and bill of lading.
Goods imported into South Korea for general consumption must be declared and accepted by the Korean Customs Service before being released for domestic consumption. The procedure contains the following steps.
Goods are stored after arrival in a bonded area (incl. bonded transport) until customs clearance is provided
Import Declaration – electronic or manual – is filed by either the broker or importer
Customs review the documents and import declaration
Cargo inspection is performed when considered necessary
Korea Custom Service assesses the value of goods and determines payable amount; payment of duty by the importer
Customs Importation Certificate is issued upon customs clearance
A certain focus needs to be put on “country of origin”. The Korea Customs Service states that the European Union cannot be considered as country of origin. The “country of origin” of goods means the nationality of exported or imported goods and also refers to the area where such goods have been manufactured. However, such a regional cooperative organisation as EU, NAFTA or
324 Detailed information on Advanced Pricing Agreement (APA) and Advanced Customs Valuation Arrangement (ACVA). can be maintained from accounting or law firms
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ASEAN which is not a political and economic independent entity cannot become a country of origin of goods.”
In accordance with Article 33 of the Foreign Trade Act, the Minister of Trade, Industry and Energy has announced 674 4-digit HS code items as items subject to country of origin labelling, centring on consumer goods such as agro-fishery products, food items, clothes, bags, electronics, and games among the imports and mandates labelling country of origin for establishing the order of fair trade and consumer protection.325
The “Authorised Economic Operators (AEO) programme is recognised as a long-term vision of custom authorities to reinvent their deal with trade flows and supply chain”326. AEOs means that one custom authority recognises the AEO status granted by another country and recognises the customs security standards, risk assessment controls and control results of another country. However, mutual recognition of AEOs has not been established between the EU and South Korea.
In respect to the handling of importing goods, it is recommended to work together with a local shipping agent – although this is not required by local law. Furthermore, legal rules and regulations and the interpretation of those can change from time to time. It is advisable to review all related import requirements including certificates and documents prior to the shipment.
325 http://www.customs.go.kr/kcshome/main/content/ContentView.do?contentId=CONTENT_ID_000001342&layoutMenuNo=21063 326 Doing Business and Investing in Korea, Samil Pricewaterhouse Coopers, April 2012
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5 Useful Resources
5.1 Related Organisations and Associations 5.1.1 Governmental, Public Organisations and Associations Ministry of Trade, Industry and Energy (http://english.motie.go.kr)
Ministry of Oceans and Fisheries (http://www.mof.go.kr)
Korea Custom Service (www.customs.go.kr)
Korea Energy Agency (www.kemco.or.kr)
Korea Power Exchange (https://www.kpx.or.kr)
Korea Energy Management Corporation, New & Renewable Energy Center (http://www.knrec.or.kr)
Korea New & Renewable Energy Association (http://www.knrea.or.kr)
Korea Photovoltaic Industry Association (http://www.kopia.asia)
Korea Wind Energy Industry Association (http://www.kweia.or.kr)
Korea Offshore Wind Power (www.kowp.co.kr/)
Korea Hydrogen Industry Association (http://www.h2.or.kr)
Korean Statistical Information Service (http://kosis.kr)
Statistic Korea (kostat.go.kr)
Invest Korea (http://www.investkorea.org)
K Water (www.kwater.or.kr)
5.1.2 Research Institutes Korea Institute of Energy Research (www.kier.re.kr)
Korea Institute of Energy Technology Evaluation and Planning (www.ketep.re.kr)
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Korea Energy Economics Institute (www.keei.re.kr)
Korea research Institute of Ships and Ocean Engineering (www.kriso.re.kr)
Korea Environmental Industry & Technology Institute (KEITI
5.1.3 Newspaper and magazines Korea Times (www.koreatimes.co.kr)
The Investor (www.theinvestor.co.kr)
Business Korea (www.businesskorea.co.kr)
Gazeo (gazeo.com)
Hankyoreh (english.hani.co.kr)
Korea Joongang Daily (koreajoongangdaily.joins.com)
Offshorewind.biz (www.offshorewind.biz)
Korea Herald (www.koreaherald.com)
Pulse News (pulsenews.co.kr)
Hydro Review (www.hydroworld.com)
Biomass Magazine (biomassmagazine.com)
Korea Biz Wire (koreabizwire.com)
5.2 Exhibitions and Conferences Green Energy Expo The Green Energy Expo is a trade show for clean energy and has established itself as an ideal platform to initiate and complete transactions. It is characterised by a high proportion of international exhibitors, most of which are among the top 20 in their industry. They present their
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latest, most innovative products and services to a knowledgeable audience. Rounding out the exhibition is the simultaneous Green Energy Conference.
Date: April 3-5, 2019
Website: http://www.energyexpo.co.kr
Semicon Korea The Semicon Korea is an international trade fair for semiconductor technology, which takes place once a year in Seoul. It is one of the largest exhibitions in Asia for the production of semiconductors and flat panel displays as well as for the photovoltaic industry, the nanoelectronic and micro technology. Here, producers and distributors are merged with developers and researchers to explore new market trends and future developments for semiconductor technology with the goal to accelerate the growth of the industry. Exhibitors show their products and innovations along the entire value chain of semiconductor technologies, ranging from design and development to the finished product. Increasingly, the focus is set on the needs of the applications market which is rapidly evolving and calls for the development of special materials and packaging but also for test and processor technology. The leading semiconductor technology event in South Korea also provides a communication and information platform for the industry with extensive technical forums, business programmes, workshops and seminars.
Date: January 23-25, 2019
Website: http://www.semiconkorea.org
Expo Solar PV Korea The Expo Solar PV Korea held annually in Goyang is one of the largest trade fairs for solar and photovoltaic systems in the world. The various buyers and suppliers from Asia, Europe, North America and the Middle East are meeting each other here. The exhibition gives an insight into the changing dynamics in the global market, presenting the latest products and technologies. This includes high-efficiency solar cells and finishing solutions for cost-cutting.
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Date: June 2019
Website: http://www.exposolar.org
Envex Seoul Envex in Seoul is an international exhibition for environmental technology and green energy. The exhibition is a communication and information platform for the industry and offers exhibitors the opportunity to present themselves to an interested audience. Visitors can inform themselves detailed and comprehensive about the latest developments, trends, information services and products from the different areas.
Date: May 15-17, 2019
Website: http://www.envex.or.kr
Harfko Harfko is an international exhibition for heating, air-conditioning, refrigeration and ventilation and is held annually at Kintex Korea International Exhibition Center. Harfko will offer a good opportunity to obtain detailed information about the latest developments as well as products, systems and services in HVAC & R industry in South Korea. Almost all manufacturers of HVAC & R equipment in South Korea and some from China are ready to exhibit their newest products and services.
Date: March 12-15, 2019
Website: http://www.harfko.com
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