Korea's Renewable Portfolio Standard (RPS), which has driven the rollout of renewable energy plants since 2012, will be abolished. The transmission grid construction sector, previously monopolized by Korea Electric Power Corporation (KEPCO), will also be opened to the private sector. A framework will be established to support industrial transition in line with the planned phase-out of coal-fired power plants by 2040.
According to the Ministry of Climate, Energy and Environment on Tuesday, the National Assembly's Climate, Energy, Environment and Labor Committee held a plenary session at the National Assembly on Friday and passed 46 bills containing such provisions. A wide range of legislative measures needed to push forward the government's renewable-centered energy transition cleared the relevant standing committee. Lee Ho-hyeon, second vice minister of the climate ministry, told reporters, "Bills have passed that provide the basis for a just transition while raising local acceptance, in order to move toward a carbon-neutral energy mix."
The most notable bill is the amendment to the Act on the Promotion of Development, Use and Distribution of Renewable Energy, which abolishes the RPS and instead distributes renewable energy plants through long-term fixed-price bidding. The RPS requires large-scale power generators to supply a certain percentage of their electricity from renewable sources. Power companies must either build and operate renewable energy plants directly to meet the mandated ratio or purchase Renewable Energy Certificates (RECs) from outside private renewable energy generators.
Under the RPS, the government could control the pace of renewable energy deployment simply by adjusting the mandatory ratio, while private renewable energy operators could earn additional revenue by selling RECs. Korea's renewable energy capacity, which stood at just 3 gigawatts (GW) when the RPS began in 2012, grew more than 12-fold to 37 GW by the end of 2025.
The problem is that the RPS, which has expanded the renewable energy market, has reached its limits. The financial burden on large generators has become excessive. While the cost burden was modest in the early years when the mandatory ratio was small, the mandatory ratio reached 15% as of last year, pushing major generators' annual REC purchasing costs above 4 trillion won. Another issue is that as renewable energy plants have been distributed mainly through small-scale, private projects, the strain on the power grid has grown and public interest functions have weakened.
In response, the government has decided to fully abolish the RPS. Instead, starting in 2027, it will distribute renewable energy plants by auctioning specific volumes each year at long-term fixed prices. The aim is to encourage large generators to identify and develop mid- to large-sized renewable energy plants directly. To prevent confusion among existing small operators, however, those operating before the law takes effect will be allowed to issue and trade RECs within a remaining maximum of 20 years. The REC spot market will also be phased out gradually over a three-year grace period before being abolished, with a transition to a contract-based market.
The government also revised three power grid laws — the Electric Utility Act, the Electric Source Development Promotion Act and the Power Grid Special Act — to open transmission line construction, which had been KEPCO's exclusive domain, to the private sector. The core change expands the scope of project operators for national backbone power grid construction from "transmission operators" to "entities other than transmission operators." This means private companies other than KEPCO can also enter the transmission grid construction business. However, project eligibility is limited to operators designated through deliberation by the National Backbone Power Grid Expansion Committee.
The government opened transmission grid construction to the private sector because it judged that KEPCO alone could not handle the demand for transmission grid expansion underway simultaneously across the country. Construction delays have been occurring in many places, particularly for high-voltage transmission lines, due to strong opposition from local residents.
The construction of the 154-kilovolt (kV) Gijang-Jangan transmission line was recently pushed back another year. The High-Voltage Direct Current (HVDC) transmission project linking the East Coast and the Seoul metropolitan area has also been stalled for years as Hanam City in Gyeonggi Province blocked the construction and expansion of the Dongseoul converter station. The Bukdangjin-Sintangjeong transmission line, which was completed last year, took 22 years to finish.
The government will allow the private sector to carry out all stages of transmission grid construction, from site selection and environmental assessment to land acquisition, design and construction. To prevent controversy over privatization of the transmission grid, however, projects will be carried out under a Build-Transfer (BT) scheme. To preempt cases like privately financed expressways, where construction operators collect user fees for years, KEPCO, as the transmission operator, will take over the transmission grid immediately upon completion.
The "Special Act on Support for Coal-Fired Power Plant Workers and Phase-Out Areas," which had been pending in the National Assembly for more than two years, also cleared the climate and labor committee. The special act sets out procedures for phasing out coal-fired power plants: when a power generator submits a phase-out plan, the Korea Power Exchange will analyze grid impacts, and the plan will go through the Electric Power Policy Deliberation Committee before receiving government approval.
To cushion the social and economic shocks during the transition, separate support frameworks will be established for workers, residents and local governments, power generators, and partner companies. The government will produce a basic plan every five years setting out overall support directions, on the basis of which local governments will draw up region-specific implementation plans. While the original draft limited eligible local governments to those hosting coal-fired plants, the version passed by the climate and labor committee expands the scope to neighboring regions.
With the revisions to the Electric Utility Act and the Distributed Energy Act, "sunlight income villages" will be the first to be connected to the power grid as soon as their plants are built. "In grid-saturated areas, even building a solar power plant does not guarantee a connection to the power grid, but resident-cooperative-based generators will be granted exceptions to promote their projects," a climate ministry official said. "Sunlight income villages have individual facility capacities of around 1 megawatt (MW), so there should be no major issues."
