Challenges of Energy Policy in Korea from the Perspective of Industrial Competitiveness
From this presentation, Dr. Sangjun Lee analyzes the structural challenges facing South Korea's power market and their detrimental impact on industrial competitiveness. Korean manufacturing faces a "sandwich crisis," squeezed between global protectionism and low-cost competition from China, exacerbated by a surge in industrial electricity rates—up over 50% in recent years—and a lack of policy support for high renewable energy costs. This presentation highlights that major industries, including semiconductors, steel, and chemicals, are losing their "capacity to pay" while competitors in China benefit from significantly lower power costs.
To address these issues, Dr. Lee proposes a comprehensive reform of the power market structure, transitioning from the current system to a future model featuring real-time markets, auxiliary service markets, and two-way price bidding to enhance efficiency and transparency. Additionally, the presentation advocates for expanding corporate Power Purchase Agreements (PPAs) and self-generation to bypass state utility limitations. Crucially, it recommends specific policy incentives, such as exempting network usage fees and industry levies for PPA contracts to support the cost competitiveness of export-driven industries.
