Korea targets 80 KRW/kWh solar price by 2035, plans cost-cutting measures
The Korean government aims to reduce solar power contract prices to below 80 KRW/kWh by 2035, acknowledging current domestic generation costs are higher than major countries. This target is part of a broader plan to expand renewable energy supply to 100 GW by 2030.
Our take
How does Korea plan to reduce solar power generation costs to meet its 2035 target?
The government's strategy to achieve its 2035 solar price target of 80 KRW/kWh involves a shift from solely lowering contract prices to a comprehensive approach addressing high installation costs, inefficient permitting, and grid connection issues, which currently inflate project financing and operational risks for developers.
This shift acknowledges that current high 'soft costs' like permitting delays and grid access bottlenecks, coupled with significant installation cost disparities between project sizes (up to 19% difference), undermine investment despite attractive contract prices. By streamlining these processes and improving grid capacity management, the government aims to reduce the overall cost burden on developers, thereby making solar projects more economically viable and competitive against traditional power sources.
What the source says
- Lawmaker Lee Yong-woo criticized that lowering only contract prices without reducing actual project costs would deter investment.
- Korea Electric Power Corporation (KEPCO) Korea Electric Power Corporation (KEPCO) cleared 7.3 GW of grid capacity by canceling 79 projects that had not proceeded with grid connection applications or contracts for over a year.
- Minister Kim Sung-hwan stated that domestic solar generation costs are still higher than those in Germany, Japan, and the United States.
- The Minister of Climate, Energy and Environment plans to establish a Solar Industry Competitiveness Enhancement Committee, chaired by the Vice Minister, to develop comprehensive measures.
- Lawmaker Lee Yong-woo proposed evaluating public institutions on their performance in providing land and facilities for renewable energy projects, in addition to their renewable energy power purchases.
- Installation costs for 100kW solar facilities are 1,303,000 KRW/kW, while 20MW facilities cost 1,058,000 KRW/kW, representing approximately a 19% difference.
- Lawmaker Lee Yong-woo identified that the first-come, first-served grid connection application system allowed 'phantom operators' with low project feasibility to secure grid capacity, leading to inefficiencies.
For investors — Foreign investors should anticipate potential reductions in project development timelines and financing costs for Korean solar projects as the government implements measures to streamline permitting, improve grid access, and foster joint procurement for smaller-scale developments. However, initial investment decisions should factor in the current high soft costs until these reforms are concretely enacted.
Watch: Announcement of specific policy measures and timelines by the Solar Industry Competitiveness Enhancement Committee.
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