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5.97. Prices for diesel, gasoline, and fuel oil are relatively low compared with those of other IEA members. Taxes are an important component of their prices, and include the transportation-energy-environment tax, the driving tax, the education tax, and VAT.

5.105. (...) Renewable energy accounted for 6% of total electricity generation, and oil 1%. The Government, in its 8th Basic Plan for Long Term Electricity Supply and Demand (BPLE) for the period 2017-31, announced the target of gradually phasing out coal and nuclear power generation, and increasing the share of renewable energy in electricity generation to reach 20% of power generation by 2030. (...).

5.111. The electricity market is governed by the Electricity Utility Act, the Nuclear Safety Act, and the Act on the Development, Use, and Diffusion of New and Renewable Energy. The Electricity Utility Act was amended in 2018 to establish new licensing procedures for small-scale electricity brokerage businesses and electric vehicle charging businesses. Small-scale electricity brokerage businesses are now authorized to collect and trade electricity that is produced from renewable sources and stored in energy storage devices, or electric vehicles, and can be traded on the Korea Electric Power Exchange (KPX). Both types of businesses must register with MOTIE.

5.116. In addition to [the Korea Electric Power Corporation] KEPCO's six generating subsidiaries, there are private independent power producers. In December 2019, 20 independent fossil fuel producers and 3,442 new and renewable energy power generators (3,297 of which are solar power producers) were operating independently of KEPCO. They accounted for 21.7% of total installed capacity.

5.118. Korea Electric Power Corporation (KEPCO) purchases all power generated through the Korea Power Exchange (KPX), and then supplies power to consumers. The KPX is a state-owned electricity pool, which is compulsory for all generators (above 20 MW) with a few exceptions. Electricity generators do not bid their prices into the mandatory pool. Instead, they must submit full details of their operating costs to the KPX, based on which the KPX calculates the system marginal price (SMP) used as the price for the next-day electricity market. Power generators then receive a remuneration that is equal to the SMP plus a reference capacity price, which is determined annually based on the plant's fixed costs. Since April 2019, the SMP has also reflected environmental considerations: tax on eco-friendlier LNG generated electricity was reduced, while tax on bituminous coal-generated electricity was increased.

5.120. As at the time of the previous Review, fees were charged on the consumption of electricity (3.7% of the consumption bill) in order to finance the Electric Basis Fund. The Fund was set up in 2001 after the Power Industry Structure Reorganization to achieve public objectives and build infrastructure for sustainable growth of the power industry. Subsidies were given to, inter alia, the diffusion of electricity generated by renewable energy, the maintenance of the stability between electricity demand and supply, and research and development (R&D) activities.

5.121. Promoting energy from renewable [42] sources is the core of Korea's energy target. Korea is committed to increasing the share of renewables in power generation to 20% by 2030 and to 30% 35% by 2040. Currently, the share of new and renewable energy in TPES (2.4% in 2019) is much lower than the IEA median (11%), and the share of renewable energy in power generation (4.9%) is also lower than the IEA median (27%).

[42] Korea refers to renewable energy as "new and renewable energy", where "new" energy includes hydro, fuel-cell, and energy converted from fossil fuels, such as an integrated gasification combined cycle. Before October 2019, Korea also included non-renewable waste energy (i.e. waste, wood pellet, by-product gas, etc.) in the definition of "renewable energy". (...)

5.122. In 2019, Korea had 19,651 MW of new and renewable energy-generation capacity, up from 19,027 MW in 2018. Solar photovoltaic (PV) accounted for 84.6% of total new and renewable power capacity, followed by biomass (6.5%) and wind (4.3%).

5.123. Pursuant to the Act on Development, Use and Diffusion of New and Renewable Energy (Renewable Energy Act), MOTIE formulates basic national plans for the promotion of new and renewable energy every five years. MOTIE also oversees the regulations for renewable electricity generation, including the allocation of permits. The KEA and the Korea New and Renewable Energy Center under it promote new and renewable energy by issuing renewable energy certificates (RECs) that serve as certified proof of renewable energy power generation.

5.124. Power generators are obliged to generate a certain portion of electricity using renewable energy in order to meet renewable portfolio standards (RPSs). They may either generate electricity using new and renewable energy themselves to receive proportionate RECs from the KEA, or purchase RECs from the electricity market operated by the KPX. In practice, KEPCO is the only entity approved by the Government to directly purchase renewable electricity. [44]

[44] The authorities indicate that, starting from October 2021, electricity consumers will be able to directly purchase renewable electricity.