Power Generation, Transmission & Distribution 2026 Comparisons

The principal law governing the ownership and structure of the power industry in South Korea is the Electric Utility Act. It defines electricity business as including the electricity generation business, electric transmission business, electric distribution business, electric sales business and district electricity business. The Electric Utility Act also provides for permits and approvals required by each business, structure of the electricity market, permits, approvals and safety requirements for electric facilities.

A distinctive feature of the South Korean electricity market is its cost-based pool structure, with market prices reflecting variable costs. The market price is determined not by price bidding but by summing the increase in actual variable costs for additional electricity supply (the system marginal price, known as SMP) plus a capacity price to cover fixed costs.

The Korea Electric Power Corporation (KEPCO) exercised a monopoly over the South Korean electricity generation market until 2001, when the competitive market structure was implemented. Currently, independent power producers, including six power generation public corporations (GENCOs), are engaged in the electricity generation business. Generally, entities engaged in the electricity generation business and electricity sales business must trade electricity through the Korea Power Exchange (KPX) in accordance with the Rules on the Operation of the Electricity Market. In South Korea, although the generation, transmission, distribution and supply segments of the power industry are unbundled, KEPCO has a monopoly over the transmission, distribution and sales markets, in contrast to other countries that have adopted a district monopoly system for the transmission and distribution markets or a competitive system for electricity sales.

As noted in 1.1 Law Governing the Structure and Ownership of the Power Industry, KEPCO has a monopoly over the transmission, distribution and sales markets, and GENCOs are the principal entities in the generation market.

KEPCO, a publicly listed market-based company, was established under the Korea Electric Power Corporation Act. Its major shareholders are the Korean Development Bank (about 33%), a 100% government-owned bank, and the South Korean government (about 18%), collectively holding 51% of the shares.

The GENCOs are as follows.

• Thermal generation companies:
1. Korea South-East Power Co Ltd;
2. Korea Midland Power Co Ltd;
3. Korea Western Power Co Ltd;
4. Korea Southern Power Co Ltd; and
5. the Korea East-West Power Co Ltd.
• Hydro and nuclear generation company:
1. Korea Hydro & Nuclear Power Co Ltd.

GENCOs are wholly owned by KEPCO.

General Restrictions

Foreign investment in South Korean entities is generally unrestricted and, unless otherwise provided under relevant laws, foreign investors are treated equally to domestic investors. The Foreign Investment Promotion Act offers certain incentives, such as tax reductions or exemptions and lease subsidies, to foreign investors that meet certain requirements.

However, foreign investment in certain industries may be restricted by designation or public notice if foreign investment:

• threatens national security and public order;
• harms public health and sanitation or environmental preservation;
• is against South Korean morals and customs; or
• violates any South Korean laws or regulations.

Restrictions on Foreign Investment in the Power Industry

The following restrictions apply to foreign investment in the power industry.

Under the Electric Utility Act, if an investment in a nuclear power generation business qualifies as a foreign investment under the Foreign Investment Promotion Act (investment amount of KRW100 million or more and 10% or more shareholding), the Ministry of Climate, Energy and Environment (MCEE) must revoke the nuclear power business licence. The Integrated Public Notice of Foreign Investment imposes restrictions on the acquisition of shares issued by entities operating nuclear power generators (generally applying to a 10% or more shareholding) and foreign-investment entities cannot obtain a newly issued electricity business licence (an EBL) for nuclear power generators.

Under the Financial Investment Services and Capital Markets Act, a foreign entity cannot acquire more than 3% of equity securities of a listed entity in certain industries essential to the national economy (the listed entities are known as “Public Purpose Corporations”). Even if a foreign entity acquires more than 3% of the equity securities of such listed entities, its voting rights are capped at 3%. As KEPCO is designated a Public Purpose Corporation, the foregoing restrictions apply to the acquisition of KEPCO’s shares.

General

Apart from any merger control issues that may arise under the Monopoly Regulations and Fair Trade Act (the “Fair Trade Act”), the following activities require the approval of the Minister of MCEE under Article 10(1) of the Electric Utility Act (the “MCEE approval”).

• Acquisition of all or part of an electricity business.
• Division or merger of an electricity business.
• Acquisition, for the purpose of exercising control, of:
1. 20% or more of the voting shares of an electricity business with generation facilities that have a power generation capacity of 20 MW or greater, becoming the largest shareholder, with shares owned by jointly owned companies counted together to determine whether the voting-share ownership surpasses 20%;
2. 20% or more of the total issued voting shares of a company that holds shares as described in the bullet point above, if by acquiring such shares, the purchaser will become the largest shareholder; or
3. shares where that acquisition enables dominant influence over the management of an electricity business, such as the power to appoint or dismiss the representative directors or over 50% of the directors of such electricity business.

The acquirer must obtain MCEE approval before the closing of the relevant transaction. The approval is granted after passing the deliberation of the Electricity Regulatory Commission (ERC), a commission established under the supervision of MCEE under the Electric Utility Act. The processing time for the approval is typically more than two months from submission of the application.

The ERC considers the following factors during its deliberation:

• whether the entity has the financial and technological capacity necessary to operate the electricity business;
• whether the entity will be able to carry out the electricity business as planned;
• for the distribution business and district electricity business, whether the business territory of two or more distribution business entities or the supply territory of two or more district electricity business entities will not fully or partially overlap;
• for the district electricity business, whether the entity will have the supply capacity of at least 60% of the total electricity demand in the particular supply district and the entity’s district electricity business will not cause any disruptions in the electricity supply by other electricity business entities that supply to users residing in neighbouring districts;
• whether the concentration of electric power stations or fuels in a specific district will interfere with electric power systems;
• whether concentration in a specific fuel will interfere with electricity supply;
• whether the master plan for electricity supply and demand is complied with; and
• whether the achievement of the greenhouse gas (GHG) reduction target will not be interfered with.

Although the Electric Utility Act does not explicitly provide for minimum requirements, such as capital requirements, for an acquirer of a generation business, during its deliberation, the ERC comprehensively considers the largest shareholder’s financial and technological capacity as well as whether the acquisition will affect the sustainable and stable operation of the generation business.

Photovoltaic Power and Minimum Requirements

In the case of photovoltaic power generation business, in addition to the above requirements, “the generation business shall have commenced in the preparatory period for the electric business”. This means that, in principle, a photovoltaic power generation business cannot obtain the MCEE approval until the generation business has commenced. As a result, transferring an electric business for photovoltaic power generation is difficult, except for transactions exempt from the above approval requirement (eg, a share transfer involves an electric business operator whose power generation facility has a capacity of less than 20 MW).

The Ministry of Climate, Energy and Environment

The MCEE (specifically the Climate and Energy Policy Office and Energy Transition Policy Office) is the central authority that oversees and administers the government’s electricity supply policy. The establishment of MCEE reflects the consolidation of climate and energy policy functions, with energy-related functions generally transferred from the former Ministry of Trade, Industry and Energy, except for natural resources and overseas nuclear power projects. To stabilise electricity supply, MCEE establishes the master plan for electricity supply and demand every two years. The 11th Basic Plan for Supply and Demand of Power (2024–2038) was confirmed on 21 February 2025. Following its confirmation, the responsibility for managing the plan and preparing the upcoming 12th Basic Plan transitioned to the MCEE.

The 11th Basic Plan for Supply and Demand of Power includes:

• general direction for the supply and demand of electricity;
• long-term prospects for the supply and demand of electricity;
• plans for generation facilities and major transmission and substation facilities;
• management of electricity demand;
• evaluation of the previous master plan; and
• other matters deemed necessary for the supply and demand of electricity.

MCEE must establish and publicly notify standards to maintain the credibility of the electric power system. If the credibility is not maintained according to such standards, harming the interest of consumers, the Minister of MCEE, through the deliberation of the ERC, may order the KPX or electricity business entities to take necessary measures.

The Electricity Regulatory Commission

The ERC (which officially transferred to the MCEE in late 2025) has the authority to deliberate on the following matters:

• an EBL;
• approval of sale and acquisition of electricity business;
• approval of charges for use of transmission and distribution facilities;
• approval of electric sales entity’s terms and conditions;
• maximum electricity trading price;
• approval of the Rules on the Operation of the Electricity Market;
• annual plan and results of the management of the credibility of the electric power system and establishment, amendment and repeal of related regulations; and
• reorganisation of the electricity industry, such as introduction of competitive systems.

The Korea Power Exchange

The KPX was established as a separate entity under the Electric Utility Act to manage the electricity market and electric power system. It is engaged in establishing and operating the electricity market, electricity trading, calculating the volume of electric power traded and operating the electric power system.

Energy Trifecta Act and 2026 Implementation

On 25 March 2025, the so-called Energy Trifecta Act was promulgated. As of 2026, the legislation has moved from a legislative milestone to an implementation issue for power projects, particularly in relation to national grid expansion, offshore wind development and spent nuclear fuel management.

The Energy Trifecta Act consists of:

• the Special Act on the Expansion of the National Electricity Network (the “Electricity Network Expansion Act”);
• the Special Act on Promotion of Offshore Wind Power Distribution and Industry Development (the “Special Offshore Wind Power Act”); and
• the Special Act on High-Level Radioactive Waste Management (the “High-Level Waste Management Act”).

Under the Electricity Network Expansion Act, the South Korean government plans to lead the development of a national core power grid, prioritise electricity use at production sites, and shorten the local consultation period to 60 days. Under the Special Offshore Wind Power Act, offshore wind projects will be expedited through a one-stop permitting system, with measures to enhance local acceptance through reasonable compensation and benefit-sharing. The Special Offshore Wind Power Act also includes grandfathering provisions for existing developers, with further guidance to be issued by the relevant ministries. Under the High-Level Waste Management Act, a new framework will be introduced for the off-site storage and disposal of spent nuclear fuel, although measures to ensure community acceptance have yet to be disclosed.

Renewable Energy Act Amendment

On 12 February 2026, an amendment to the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy passed the plenary session of the National Assembly. The amendment separates “new energy” sources such as hydrogen and fuel cells from the renewable energy framework and transfers provisions relating to such sources to the Hydrogen Economy Promotion and Hydrogen Safety Management Act. It also prohibits, in principle, indiscriminate setback distances imposed by local governments for solar power projects when granting development permits, subject to exceptions including the preservation of historical and cultural areas and other exceptions to be prescribed by Presidential Decree.

Enactment of the Agrivoltaic Power Generation Promotion Act

On 7 May 2026, the Bill for the Act on the Promotion and Support of Agrivoltaic Power Generation Projects passed the Plenary Session of the National Assembly. This special Act establishes an independent approval system separate from a standard power generation business licence under the Electric Utility Act. Under the Act, when an agrivoltaic project combining farming and solar is approved, a ‘temporary permission for use of farmland for other purposes’ under the Farmland Act is deemed to have been granted for farmland outside agricultural promotion zones or designated as renewable energy zones. Participation is highly restricted, limiting operators primarily to actual farmers or qualified persons to prevent cultivated farmland from being indiscriminately used.

MCEE 2026 Plan

On 1 February 2026, MCEE announced its 2026 plan, identifying four major initiatives:

• accelerating renewable energy development and reducing costs;
• innovating and expanding the power grid;
• building a power system that supports a just and inclusive energy transition; and
• enhancing acceptance and sustainability of nuclear power policy.

The 2026 plan targets the deployment of 100 GW of renewable energy by 2030 and the expansion of the power grid needed to accommodate it.

First Renewable Energy Basic Plan

On 19 May 2026, MCEE announced the First Renewable Energy Basic Plan. The plan targets 100 GW of renewable energy capacity by 2030 and at least 30% renewable energy in the power generation mix by 2035. It also signals the abolition of the existing RPS system and a transition to a fixed-price contract system through competitive bidding in the capacity contract market for each power source, with grandfathering provisions for existing RPS projects.

Renewable Energy Deployment, Siting and Revenue Model Reform

On 19 May 2026, MCEE announced the First Renewable Energy Basic Plan, the first plan of its kind under the Renewable Energy Act. The plan aims to rapidly expand renewable energy deployment, reduce the cost of renewable energy, strengthen the competitiveness of the renewable energy sector, share income generated from renewable energy, increase public awareness and enhance the role of local governments.

• For offshore wind, the government is introducing planned development zones under the Special Offshore Wind Power Act, preparing a long-term bidding execution plan to 2035, expanding the offshore wind supply chain, constructing support ports, securing wind turbine installation vessel capacity and promoting shared grid connection facilities or energy hubs to address the high cost of grid connection.
• For solar power, policy focus is shifting towards idle land and higher-acceptance sites, including industrial complexes, factory rooftops, agrivoltaics, roads, railways, agricultural waterways, schools and parking lots. A separate agrivoltaic bill passed the plenary session of the National Assembly on 7 May 2026, creating an independent institutional framework for agrivoltaic projects and proposing that certain farmland conversion permissions be deemed granted upon project approval.
• RPS reform remains a core market development. The First Renewable Energy Basic Plan indicates that the existing RPS system is to be abolished and that new renewable facilities will be unified under long-term fixed-price contracts awarded through competitive bidding, with grandfathering provisions for existing RPS projects.
• For power purchase agreements (PPA), the government continues to support broader corporate procurement of renewable energy. The policy direction includes easing PPA regulations, creating a PPA brokerage market and allowing the resale of RECs from excess PPA generation, although practical implementation will need to be assessed together with network availability and KEPCO-related settlement mechanics.

11th Basic Plan Confirmed and 12th Basic Plan Preparation

On 21 February 2025, the 11th Basic Plan for Supply and Demand of Power (2024–2038) was confirmed. It provides for the management of ageing thermal power facilities, the promotion of nuclear power, the expansion of renewable energy and clean hydrogen/ammonia power generation, and the early roll-out of battery energy storage system (BESS) as a means of mitigating renewable energy volatility and output control.

The key policy directions are as follows.

• Decommissioning ageing coal-fired power plants and converting them to LNG, co-generation, or hydrogen-based plants.
• Promoting nuclear energy, including the construction of two new nuclear reactors and one domestic SMR.
• Expanding renewable energy deployment:
1. for offshore wind, focus on strengthening the supply chain; and
2. for solar, focus on strategic site allocation.
• Improving the PPA regime:
1. establishing a new facility entry market based on government-led bidding; and
2. easing regulatory restrictions, offering low-interest financing, and creating a PPA brokerage platform.
• Promoting zero-carbon power generation using clean hydrogen, supported by a hydrogen certification system and a bidding market.
• Accelerating the roll-out of BESS starting with the Honam region, to address renewable output volatility and enhance grid stability.
• See energy mix – power generation quantity and proportion of power generation (unit: TWh) table.

The 12th Basic Plan is expected to be significant because MCEE’s 2026 plan indicates that it will reflect a carbon-free generation mix and a coal phase-out roadmap for 2026–2040. It will therefore be a key policy document for investors assessing the long-term role of renewables, nuclear power, clean hydrogen/ammonia and BESS.

As mentioned in 1.1 Law Governing the Structure and Ownership of the Power Industry, the South Korean electricity market operates as a cost-based pool, where wholesale prices are not determined based on supply and demand, but on generation entities’ expected costs and demand. More specifically, generators bid based on electric capacity without price bidding and KEPCO, having a monopoly on demand, accepts the bid of the generator with the lowest variable costs and adjusts based on costs, not price.

The adjusted unit price is reviewed and determined by the Costs Assessment Commission. The electricity price is constituted of the SMP, which reflects variable costs, and capacity payment, which reflects fixed costs.

Electricity from new and renewable energy sources, like solar and wind, is also traded at the SMP for a particular point in time. To account for the variability of the SMP, a long-term, fixed-price contract system was introduced. In other words, when GENCOs purchase electricity generated from solar and wind power, they sign a long-term contract for a contract term with approximately 20 years for a sum of the SMP and the renewable energy certificate price, and the power generation business operators are guaranteed to expect stable profits in the long term, even if the SMP varies from time to time.

The Electric Utility Act also regulates the structure and functions of wholesale electricity.

As noted previously, an operator of an electricity generation business and an operator of an electricity sales business must carry out electricity transactions in the electricity market in accordance with the electricity market operational rules. A GENCO or a private operator engaged in electricity generation business is in charge of electricity generation in accordance with the power supply instructions of the KPX, which, taking a neutral position, oversees the electricity market and the operation of the power system (including determination of the electric power sales price). KEPCO supplies electricity to consumers by purchasing electric power at the price determined by the electricity market.

While the electricity generation market is competitive with private operators generating electric power, KEPCO maintains a monopoly in the transmission, distribution and sales of electricity, so the wholesale market is not fully competitive. Additionally, there is no nodal pricing system.

See 1.1 Law Governing the Structure and Ownership of the Power Industry and 1.8 Unique Aspects of the Power Industry for details on the structure of the wholesale electricity market and electric power.

It is understood that the acts of importing and exporting electric power are not specially prohibited by the relevant laws and regulations. However, there is no confirmed case of electricity imports or exports in South Korea. This is because grid connections with other countries are required, when South Korea is surrounded by the sea on the eastern, western and southern borders and is separated from North Korea on the northern border, such that South Korea is effectively isolated as an “electric power system island”.

As a result, electricity import and export through a grid system has not been achieved. In 2017, the former government announced that it was pursuing the goal of joint use of clean energy sources by North-East Asian countries through the so-called “Super Grid” connecting the South Korean-North Korean-Russian and the Korean-Chinese-Japanese electric power systems, but this is still understood as a plan at a declarative level only.

As of the end of 2024, the amount of power generated by new and renewable energy consisted of the following (according to the 2024 renewable energy statistics for distribution, Korea Energy Agency):

• solar power – 55%;
• wind power – 5.5%;
• hydropower – 6.3%;
• marine power – 0.6%;
• bioenergy – 17.8%;
• waste treatment – 0.6%;
• fuel cell – 11.1%; and
• IGCC (Integrated Gasification Combined Cycle) – 3.0%.

In the electricity business industry, including the power supply market, South Korea does not specifically restrict the market dominance of specific operators in terms of market share. As mentioned, competition in the power generation market has been introduced, but KEPCO and GENCOs still account for approximately 60% of the total power generation. Due to exclusive government licensing, KEPCO monopolises the power transmission, distribution and sales markets. The government has a broad range of authority over regulation of the electricity business based on the unique nature of electric power and characteristics of the electricity business industry, in return for allowing a vertically integrated monopolistic electricity business operator to engage in all of electricity power generation, transmission, distribution and sales.

However, even if KEPCO’s monopoly is accepted in the electricity sales market, the electricity sales business operator under the Electric Utility Act must supply electric power, such that it is not permitted to deny the supply of electricity without a justifiable reason, pursuant to the licence obtained according to the terms and conditions of electricity supply from the government (MCEE). Likewise, electricity business operators are prohibited from engaging in unfair trade practices under the Fair Trade Act.

In this regard, the Korea Fair Trade Commission (KFTC) has the authority to regulate abuse of market-dominant positions and unfair trade practices.

The Fair Trade Act is a general law that prohibits anti-competitive behaviour in specific markets and provides for market surveillance and enforcement procedures. As explained in 2.4 Market Concentration Limits, the KFTC oversees anti-competitive behaviour, and formulates relevant regulations and policies.

MCEE also has the authority to investigate, order measures, take disciplinary action, and levy and collect fines, in the event an electricity business operator commits a prohibited act under the Electric Utility Act, such as submitting false electricity generation data about the electricity generated by the power plant to the KPX for setting an unreasonably high electricity trading price or unjustly discriminating against the end user in the use of electric facilities for power transmission and distribution.

An electricity business operator undertaking anti-competitive actions in the market may be subject to administrative dispositions such as corrective actions and administrative fines, as well as criminal penalties such as imprisonment and fines.

The principal laws that govern the construction and operation of generation facilities are the Electric Utility Act and Electrical Construction Business Act.

As discussed, the Electric Utility Act provides for general regulations on the electricity business including:

• an EBL;
• stabilisation of electricity supply, safety management of electric facilities and composition of the electricity market; and
• the KPX, ERC and the Korea Electrical Safety Corporation.

The major approvals required under the Electric Utility Act are the EBL, approval or report of the construction plan for electric facilities for electric utility and pre-use inspection. In general, the Minister of MCEE (in certain circumstances, the mayor or governor) has the authority to issue such permits, approvals and reports.

The Electrical Construction Business Act provides for the standards regarding construction, management and supervision of generation facilities and regulates the electrical construction business registration, orders for and subcontracting of electrical construction and technical management. The major approval required under the Electrical Construction Business Act is the registration of electrical construction business, which must be filed with the relevant local authority.

Also, administrative regulations provide guidelines and elaborate on the obligations of generation business entities and the following are material regulations that affect the electricity industry:

• Specific Standards for Electricity Business Licences;
• Standards for Calculation of Electric Utility Charge;
• Public Notice on Permissible Errors of Electric Meters and Operation of Electric Power System; and
• Standards on Electric Facilities Technology.

All entities engaged in the electricity business have the obligation to maintain facilities that they have installed or operate to comply with such standards, and are subject to regular inspections.

Regulatory Categories

The regulatory process for obtaining all approvals can be categorised into the below five categories, and the relevant laws are as follows:

• new and renewable energy policy – New and Renewable Energy Act;
• entry into and operation of generation business – Electric Utility Act;
• construction, management and supervision of generation facilities – Electrical Construction Business Act;
• generation facilities site – National Land Planning and Utilisation Act; and
• environment – Environmental Impact Assessment Act and various laws regulating emission of pollutants.

For offshore wind projects, the Special Offshore Wind Power Act introduces a separate framework involving planned development zones, operator selection and implementation plan approval. For agrivoltaic projects, the Act on the Promotion and Support of Agrivoltaic Power Generation Projects (passed on 7 May 2026) is expected to create an independent approval system distinct from a conventional power generation business licence, with eligibility limitations intended to ensure that projects are operated in parallel with genuine farming activities.

Obtaining Approvals

The general order for obtaining approvals is as follows:

• EBL under the Electric Utility Act;
• development activity permit or urban planning facility decision under the National Land Planning and Utilisation Act;
• if required, (small-scale) environmental impact assessment;
• approval of the construction plan under the Electric Utility Act;
• construction of the electric facilities in accordance with the Electrical Construction Business Act;
• pre-use inspection of the electric facilities;
• test run;
• report of business commencement; and
• commercial operation.

Under the New and Renewable Energy Act, facilities utilising new and renewable energy must, within one month from pre-use inspection, additionally apply for REC facilities confirmation.

As noted in 1.4 Sale of Power Industry Assets, the following factors are considered for the issuance of the EBL:

• whether the entity has the financial and technological capacity necessary to operate the electricity business;
• whether the entity will be able to carry out the electricity business as planned;
• for the distribution business and district electricity business, whether the business territory of two or more distribution business entities or the supply territory of two or more district electricity business entities will not fully or partially overlap;
• for the district electricity business, whether the entity will have the supply capacity of at least 60% of the total electricity demand in the particular supply district and the entity’s district electricity business will not cause any disruptions in the electricity supply by other electricity business entities that supply to users residing in neighbouring districts;
• whether the concentration of electric power stations or fuels in a specific district will interfere with electric power systems;
• whether concentration in a specific fuel will interfere with electricity supply;
• whether the master plan for electricity supply and demand is complied with; and
• whether the achievement of the GHG reduction target will not be interfered with.

In addition to the above, when approving permits for photovoltaic, wind and fuel cell power generation businesses – which require either a small-scale or full-scale environmental impact assessment – the opinions of residents will be taken into account by providing prior notice to those residents.

Technical Capacity for Electrical Construction Business

An entity applying to register as an electrical construction business must have certain technical capacities, including having at least three electrical construction engineers, a minimum capital of KRW150 million (for foreign entities applying through their South Korean branch, the branch must also have a minimum establishment capital of KRW150 million), and an office for the operation of the electrical construction business. Generally, the project implementer does not register as an electrical construction business for the installation of electric facilities and EPC duties are subcontracted to entities that have obtained the electrical construction business permit.

Standards for Development Activity Permit

The following standards must be complied with to obtain the development activity permit:

• the development plan must be in accordance with the development scale limits prescribed by the Enforcement Decree;
• the development plan must not run counter to any urban or local management/growth plans;
• the development plan must not impede any urban or local management/growth plans;
• the development plan must be harmonious with surrounding land usage, local environment and scenery; and
• the infrastructure and securing of sites under the development plans must be appropriate.

Environmental Impact Assessment

If required under the Environmental Impact Assessment Act, full-scale or small-scale environmental impact assessments must be conducted. Opinion hearings of residents are required at certain stages, such as the development activity permit.

Processing time

Although it may vary based on the scale and location of the project, the general processing time is as follows.

• One to three months for an EBL.
• If required, one year for a full-scale environmental impact assessment or three months for a small-scale environmental impact assessment.
• One year or more, excluding environmental impact assessment, for the development activity permit, which is divided up between:
1. the assessment based on the evaluation criteria – three months;
2. the consultation and discussion with relevant administrative bodies – three months;
3. the evaluation by the Urban Planning Commission – two to three months; and
4. the evaluation by the Central Urban Planning Commission – two to three months.
• The Minister of MCEE’s approval of the construction plan may require one to two months.

In order to ease the administrative burden on small-scale photovoltaic power generation businesses with a generation capacity of less than 3,000 kW, the permit process for photovoltaic power generation businesses has been simplified by allowing the development activities permit, which is required under the National Planning and Utilisation Act, to be deemed granted.

Approvals for Operation

Licences and permits are not particularly required by law for the operation and maintenance of generation facilities. However, if an O&M operator performs electrical work as part of operation and maintenance, that O&M operator must hold an electrical construction business licence.

The Electrical Construction Business Act provides that electrical work cannot be entirely subcontracted to a third party, but the main part thereof must be performed directly by an electrical contractor.

Generally, EBLs provide for obligations under the Electric Utility Act regarding the installation and operation of electric facilities; and approval of division, merger or business acquisition and an EBL may be cancelled for violation of such obligations.

The following additional conditions are frequently imposed, although the conditions will vary for each business. The operator:

• must comply with the obligations under the Electric Utility Act and other relevant laws and regulations;
• must commence operations within the approved preparation period and, in the event of a cause of delay, must apply for an extension before the installation period;
• must obtain approvals required for development activity, construction, conversion of mountainous districts, occupation and use of roads under the Mountainous Districts Management Act, Building Act, National Land Planning and Utilisation Act, Cultural Heritage Protection Act, Road Act and environmental laws;
• must conduct prior negotiations with relevant authorities if the generation capacity is to be modified during the process of obtaining the above approvals and must comply with the review of the relevant agencies;
• must report the construction plan to the relevant local authorities to commence construction under the Electric Utility Act after obtaining the above approvals;
• must use best efforts to implement safety measures during construction to promote safety and minimise environmental damage and, in the event of inevitable environmental damage, must restore without delay after construction completion; and
• must sufficiently gather and reflect the opinion of interested parties, including neighbouring landowners and residents, through information sessions, and conduct the business after implementing measures to prevent civil complaints.

Other than modification approvals or reports, the Electric Utility Act does not explicitly provide for required procedures to amend or relax a term or condition of an EBL. Accordingly, negotiations with the relevant authority will be required. If a term or condition of an approval violates relevant laws and regulations, such term or condition will be deemed a separate measure of the relevant authority and may be challenged through administrative litigation.

Under the Korean Constitution, just compensation must be paid for the expropriation, use or restriction of private property for public necessity in compliance with relevant laws. The Act on Acquisition of and Compensation for Land, etc, for Public Works Projects (the “Land Compensation Act”) allows land to be acquired or used for installing electric business facilities under the Electric Utility Act. The Electric Utility Act also allows for the use of a third-party’s land under the Land Compensation Act. Accordingly, land may be acquired or expropriated for the installation of electric business facilities, and lump-sum compensation must be paid in cash under the Land Compensation Act, with the amount determined by an appraiser.

In general, government-led businesses and privately led large impact businesses are acknowledged as public works projects. The majority of privately led businesses are conducted through the purchase, lease or establishment of surface rights over land. Issuance of an EBL may be restricted if land is not secured for the business. An entity that has obtained the approval for a public works project execution plan must prepare a land and goods protocol, disclose the compensation plan, determine the compensation amount and negotiate with landowners and other interested parties. If negotiations fail, compensation for expropriation or use is determined through alternative mechanisms, such as adjudication by the relevant land tribunal or objections to adjudication. Additional compensation may be required under the Act on the Compensation and Support for Areas Adjacent to Transmission and Substation Facilities.

Under the Electric Power Source Development Promotion Act, which provides for relaxed regulations, if an electric power source business entity obtains approval for an execution plan for electric power resource development, it is deemed to have acquired all permits, licences, decisions, designations, approvals, cancellations, agreements and measures required under each separate law. Upon approval of the execution plan, the electric power source business entity may also expropriate or use the required land. Accordingly, expropriation and use rights may also be obtained under the Electric Power Source Development Promotion Act.

Under the Nuclear Safety Act, construction of nuclear power reactors and relevant facilities requires a permit from the Nuclear Safety and Security Commission and the permit application must include a decommissioning plan, which must thereafter be regularly renewed. The Nuclear Safety and Security Commission’s approval is also required for the decommissioning of nuclear power reactors and relevant facilities (as noted in 1.3 Foreign Investment Review Process, foreign investment in a nuclear power business is a cause for revocation of the nuclear power business licence).

Generation businesses other than the nuclear generation business are not subject to specific decommissioning requirements except general obligations under environmental laws and construction laws. However, if the generation facility site is within a mountainous district or farmland, a deposit for restoration is required. If the generation facility site is leased, the premises must be restored to the original state under the lease agreement with the lessor.

The principal laws governing the construction and operation of transmission facilities are the Electric Utility Act and the Electrical Construction Business Act and, for national core grid projects, the Electricity Network Expansion Act.

Under the Electric Utility Act, transmission businesses must obtain a permit from the Minister of MCEE. The registration of an electrical construction business must be obtained in accordance with the Electrical Construction Business Act (see 3.1 Constructing and Operating Generation Facilities for registration standards).

As discussed, KEPCO has a monopoly over the South Korean transmission market.

The factors considered for the issuance of the EBL to electricity businesses, as noted in 3.2 Obtaining Approvals to Construct and Operate Generation Facilities, also apply to transmission businesses.

Although KEPCO has a monopoly over the transmission business, a power generator is generally obligated to construct transmission lines for grid connection at its own cost and responsibility. The electricity plan, one of the documents submitted when applying for the EBL, should include:

• an opinion issued by KEPCO concerning the effect of grid connection; and
• an electricity transmission map.

Accordingly, it would be necessary to consult in advance with KEPCO about, among other things, where the transmission lines would be located, as KEPCO may require that transmission lines be placed in different locations than originally planned.

Under the Electrical Construction Business Act, electrical construction includes the installation of electric facilities. The Electric Utility Act’s definition of electric facilities includes facilities for generation, transmission, distribution, supply and use. Accordingly, the standards for the electrical construction business as mentioned in 3.2 Obtaining Approvals to Construct and Operate Generation Facilities also apply to the construction of transmission facilities. Other procedures, such as the development activity permit and environmental impact assessment, also apply to the construction of transmission facilities. See 3.2 Obtaining Approvals to Construct and Operate Generation Facilities regarding the typical processing time.

See 3.3 Approvals to Construct and Operate Generation Facilities. As the Electric Utility Act’s definition of electric facilities includes facilities for generation, transmission, distribution, supply and use, the terms and conditions imposed in an EBL also apply, where relevant, to the transmission business and the construction of transmission facilities.

As with the installation of generation facilities, the installation of transmission lines requires ownership, surface rights or lease rights for the installation site. As mentioned in 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities, under the Electric Utility Act and Land Compensation Act, land may be acquired or expropriated for the installation of electric business facilities, including transmission facilities. Accordingly, the procedures for compensation mentioned in 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities apply.

KEPCO has a monopoly over the entire South Korean transmission market, unlike other countries’ entities that have exclusive rights within a defined territory.

The Electric Utility Act does not restrict the issuance of a transmission business permit to KEPCO, and KEPCO’s monopoly over the transmission market is not explicitly provided for in the relevant laws or regulations or governmental authority’s administrative measures. Historically, KEPCO had a monopoly over the entire electricity market. In the early 2000s, a phased plan for market competition was introduced, but after competition in generation was implemented, further phases of the plan were suspended, resulting in the current structure of the South Korean electricity market.

To prevent monopoly pricing and ensure stable supply of electricity, the Electric Utility Act requires the transmission business to:

• obtain the prior approval of the Minister of MCEE regarding the charges for use of transmission facilities; and
• ensure that electricity businesses may use the transmission facilities without discrimination.

As noted in 4.5 Monopoly Rights to Provide Transmission Services, the Electric Utility Act provides for certain requirements to prevent monopoly pricing and ensure the stable supply of electricity. It also regulates the charges for use of transmission and distribution facilities. The transmission business must obtain the approval of the Minister of MCEE regarding the charges for use and other terms and conditions, and, before the approval of the Minister, deliberation of the ERC is required.

In accordance with the above requirements, KEPCO provides for the regulations on the use of transmission and distribution facilities, which have been approved by the Minister of MCEE. Under the Enforcement Decree of the Electric Utility Act, the following must be included in such use regulations:

• use charges;
• method of calculating volume traded and use charges;
• liabilities between the transmission business and distribution business and liabilities between the transmission and distribution businesses and users of the transmission and distribution facilities;
• method and procedure for application for use of the transmission and distribution facilities;
• standards and payment method of costs to be borne by transmission and distribution facilities users;
• access point and standards for access between the transmission and distribution businesses and transmission and distribution facilities users; and
• any other matters regarding the protection of the transmission and distribution facilities users’ interests.

The approval criteria for the usage charges for the use of transmission and distribution facilities and other usage conditions, as well as the criteria for the approval for change, are as follows:

• the usage fee should be an amount equal to a reasonable cost plus a reasonable profit;
• the use of electric facilities is free from discrimination; and
• the relationship of rights and obligations with respect to the use of electric facilities shall be clearly specified.

According to MCEE’s “Standard for Calculation of Transmitted Electricity Usage Charges”, the transmission charge should cover the total cost of transmission, which is the sum of the appropriate cost for transmission business plus investment compensation incurred under good faith and efficient management.

• The appropriate cost is calculated by deducting the non-operating income and expenses as well as asset depreciation from the cost of sales related to the transmission business, general administrative expenses and appropriate corporate income tax.
• The appropriate amount of investment compensation is the appropriate compensation for the actual invested assets directly utilised in connection with the transmission business. This amount is calculated by multiplying the “appropriate investment compensation ratio” determined at a level that can harmonise the corporate performance and the public interest (considering factors such as capital cost of transmission business, risk, interest rate, inflation rate, reinvestment and expansion plan of the fiscal year, repayment plan of principal, and price prospects), with the “base fee” derived from the sum of the average net operating facility assets at the start and end of the fiscal year, the working capital for a certain period, and the assets under construction by self-financing for the fiscal year under review.
• The transmission charge system is composed of basic charge and usage fee, and it should be structured so that the burden on the users of the electricity transmission facility is fairly maintained and the resources are distributed reasonably based on the cost of transmission business.

The Electric Utility Act does not explicitly stipulate how an electricity transmission business operator shall contest the approval of the Minister of MCEE in relation to the regulation for the use of transmission facilities. However, if the licence is illegal or unfair, KEPCO may contest it in accordance with the general principles and procedures of administrative litigation. While there is no explicit procedure for contesting the current regulation, an operator can apply for the change to the licence conditions by attaching the statement of grounds for change.

As described in 4.6 Transmission Charges and Terms of Service, “the use of electric facilities without discrimination shall be guaranteed” is one of the licensing criteria in the facility usage regulation.

The usage regulation provided by KEPCO also provides that “KEPCO, in providing usage of electricity transmission and distribution facilities, shall ensure that the customers can use such facilities without being unfairly discriminated against” (customers include both consumers in demand and power generators).

If a customer makes an application to use KEPCO’s transmission and distribution facilities, KEPCO shall conduct a technology review of the access plan and make an offer of connection to the customer. The customer shall accept the offer and KEPCO shall allow the customer to use the transmission and distribution facilities by negotiation and execution of a Term of Use Agreement with the customer within one month after KEPCO receives the acceptance of offer notice.

The First Renewable Energy Basic Plan indicates a complete overhaul of the existing first-come, first-served method of granting grid connection rights to a system that evaluates economic feasibility and public interest before granting rights, in part to prevent grid hoarding and the trading of grid connection rights.

The main laws governing the construction and operation of the distribution facilities are also the Electric Utility Act and the Electrical Construction Business Act.

Under the Electric Utility Act, a licence is required for electricity business operation and the authority to grant such licence lies with the Minister of MCEE, in principle. For the construction of electricity distribution facilities, the electricity construction business should be registered according to the Electrical Construction Business Act (see 3.1 Constructing and Operating Generation Facilities for registration standards).

Meanwhile, South Korea’s electricity distribution market is also dominated by KEPCO, as previously mentioned.

The Electric Utility Act stipulates the provisions for transmission facilities and distribution facilities in parallel and applies the same rules, therefore refer to 4.2 Obtaining Approvals to Construct and Operate Transmission Lines and Associated Facilities for details.

See 3.3 Approvals to Construct and Operate Generation Facilities. The electricity business is inclusive, referring to all electricity-related businesses such as the electricity generation business and the electricity distribution business. The conditions of the EBL apply similarly to the distribution business.

For the installation of electricity distribution facilities, ownership or use rights over the project site, such as rights in the land, superficies, or lease, are required. However, projects recognised as serving public benefit under the Land Compensation Act and the Electric Utility Act – for which the acquisition, acceptance or use of the land are recognised – are treated as businesses installing electric facilities for the electricity business. As the electricity business and installation of electric facilities include the electricity distribution business and electricity distribution facilities, the same procedure for securing business sites for electricity generation facilities also applies to distribution facilities. See 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities.

Unlike countries such as Japan, the UK, France and the USA, where the transmission/distribution market has a regionally monopolistic structure, the South Korean distribution market is also dominated by KEPCO (that is, it is not a regional monopoly but operates under an exclusive structure where KEPCO is the exclusive operator of the entire transmission market in South Korea). See 4.5 Monopoly Rights to Provide Transmission Services.

The Electric Utility Act stipulates the provisions for the transmission facilities and the distribution facilities in parallel and applies the same rules. See 4.6 Transmission Charges and Terms of Service for details.

Whilst MCEE provided a notice for the “standard for calculation of distributed electricity usage fee”, separate from the notice for the “standard for calculation of transmitted electricity usage fee”, the contents are nearly identical. Thus, the explanation for “transmission” of electricity in 4.6 Transmission Charges and Terms of Service can be read as “distribution” of electricity.