South Korea's future power grid to tackle curtailment and price challenges

South Korea's Ministry of Trade, Industry and Energy publishes the Basic Plan for Electricity Supply and Demand every two years. This plan outlines the country's energy strategy, including future energy needs, capacity distribution, and renewable energy initiatives. It also serves as a key reference for other government energy policies, such as long-term LNG imports, battery energy storage systems, and grid investments.

On Feb. 21, South Korea finalized its 11th BPE after a public hearing at the National Assembly. This plan, which covers the period from 2024 to 2038, was supposed to be announced by the end of 2024 but was delayed due to disagreements between the main political parties over nuclear energy and recent political instability following the declaration of martial law on Dec. 3, 2024.

In December 2024, S&P Global Commodity Insights provided an updated analysis for South Korea's energy landscape through 2050, using an hourly dispatch model. This analysis indicates that by 2038, nuclear energy will constitute 29.8% of the energy mix, while renewable sources will account for 24.9%. In contrast, the BPE outlines these figures at 35.2% and 32.9%, respectively.

LNG generation is expected to stay steady at 24.9%, compared to the government's figure of 11.1%. Higher thermal generation signals the need for a calibrated approach to long-term energy import strategies and highlights the importance of adequate policy support to promote faster deployment of renewable energy for South Korea to reach Net Zero in 2050. The update also introduces new features such as renewable energy capture prices for wind and solar, curtailment forecasts, and net load projections.

Net load, often dubbed as "duck curve", describes the difference between total electricity demand and renewable energy generation, mainly from solar and wind. As solar energy capacity grows, the midday demand for electricity drops significantly, creating a "belly" shape in the curve that poses challenges to grid stability and the efficient operation of renewable and thermal energy sources.

This analysis considers both front-of-the-meter and behind-the-meter energy generation and demand, with BTM generation, particularly from solar, expected to rise. This will reduce reliance on the wholesale market during the day, further deepening the net load curve.

According to the Commodity Insights power model, by 2040, up to 32% of solar and wind energy generation will be curtailed as variable renewable energy sources exceed 20% penetration.

During peak sunlight hours, solar and wind could provide 57% of the hourly electricity supply. This growth in renewables will impact not only renewable energy developers but also gas plant operators and BESS providers, as they play a crucial role in maintaining grid flexibility.

By 2050, renewable energy generation is expected to account for 65% of the hourly load during the month with the highest renewable output. This will significantly reduce the net load and apply downward pressure on the system marginal price. This highlights the need for strong energy storage solutions and demand-side management strategies to maintain grid reliability and the economic viability of renewable energy. Investing in grid modernization and technologies like synchronous condensers and BESS will be essential.

As South Korea strives to better integrate renewable energy into the grid, effectively balancing supply and demand under current constraints will become increasingly important.

Further Read:

South Korea Long-Term Power Price Outlook: Electricity price, REC and carbon price(opens in a new tab)

South Korea Power and Renewables Market Profile(opens in a new tab)