In 2004, the South Korean government passed the Act on the Promotion of the Development, Use and Diffusion of New And Renewable Energy (the Act). With the goal of becoming one of the five largest producers of new and renewable energy, the government has announced that a total of South Korean won (KRW)40 trillion (EUR25.8 billion, USD34.2 billion) will be invested in renewable energy by 2015.
This investment includes KRW22.4 trillion invested by the nation’s 30 largest industrial groups by 2013, KRW7 trillion of government contribution, and KRW10.6 trillion from other private sectors. South Korea has already seen substantial financial investment in renewable energy in recent years, including KRW1.8 trillion (EUR1.3 billion, USD1.8 billion) from the government in the last 2 years (2012–2013).
According to the second national energy plan announced in January 2014, the former renewable energy target, 11 percent of the total energy supply from renewable sources by 2035, has been reaffirmed.
To reach this goal, the government is implementing initiatives in four major areas:
The total budget for renewable energy in 2015 has reached KRW7.8 trillion (EUR619.09 million, USD697.2 million) to develop technologies; support renewable energy distribution, and promote entering overseas markets. The government also supports overseas renewable energy business for small and medium-sized enterprises with a budget of KRW10 billion in 2015.
The R&D tax credit program is applied for renewable energy technologies. Import duties are reduced by 50 percent for all components and/or equipment used in renewable energy power plants that cannot be manufactured domestically. This import duty premium will be abrogated on 31 December 2015.
The Financial Support Program for Renewable Energy in South Korea is comprised of four main categories: R&D support, soft loans for renewable projects, feed-in tariffs and renewable energy distribution support.
The total budget of 2015 consists of KRW6.4 billion for R&D support, KRW319.2 billion for the feed-in tariff, KRW115 billion for soft loans, and KRW102.9 billion for distribution support.
As a part of the 2009 budget, the government appropriated KRW94.3 billion (USD72 million) for the One Million Green Homes Project. The intent is to build one million homes by 2020 that use one of the following renewable energy technologies: solar thermal, solar photovoltaic, geothermal, biomass and wind energy. Each year, the government will set a new budget for the coming year. The budget in 2014 is KRW54.9 billion, and the cumulative budget for the Project reached KRW671.2 billion from 2004 to 2014.
The green homes being built are environment-friendly and use new and renewable energy resources. In addition, green homes create no carbon emissions and use less energy, water and natural resources.
The government announced six new energy businesses in 2014:
The new energy businesses are expected to create a market worth KRW4.6 trillion by 2017. This is based on an investment of KRW1.83 trillion in 2015, including KRW800 billion raised in the private sector.