Korea to limit 2nd round of DER Special Zone bids to microgrid type
The Korean government, through the Ministry of Climate and Energy and the Korea Energy Agency, has officially announced that the second round of Distributed Energy Resource (DER) Special Zone applications will be limited to the 'community microgrid type', excluding the three existing types.
Our take
How will Korea's shift to community microgrid-only DER zones impact developers?
Korea's decision to restrict the second round of DER Special Zones to community microgrids with a 70% self-sufficiency target, despite acknowledged difficulties and operator concerns over profitability and implementation timelines, signals a strategic pivot towards localized, renewable-based energy independence, potentially shifting operational and financial risks to local governments and project developers.
The government's pivot to exclusively 'community microgrid type' for the second round of DER Special Zones reflects a desire to accelerate tangible, small-scale renewable energy integration and local consumption, moving away from larger, slower-to-materialize projects. However, by maintaining a stringent 70% self-sufficiency target and a tight application schedule while acknowledging the technical and economic challenges, the Ministry of Climate and Energy is effectively transferring significant development, operational, and financial risks to local governments and private operators. This tension between ambitious policy goals and practical implementation hurdles, especially concerning ESS profitability and renewable intermittency, highlights a critical trade-off in the DER market's evolution.
What the source says
- The Ministry of Climate, Energy and Environment will limit the second round of Distributed Energy Resource (DER) Special Zone applications to the 'community microgrid type'.
- The existing three types of DER Special Zones (supply attraction, demand attraction, new industry activation) are excluded from the current call for bids.
- Ministry of Climate, Energy and Environment, Korea Energy Agency The Ministry of Climate, Energy and Environment and the Korea Energy Agency held a briefing on September 16, 2026, for local governments and DER operators.
- The government plans to start the application process in September 2026, close applications in October 2026, conduct preliminary reviews and deliberations in November 2026, and finalize special zone designations in December 2026 via the Energy Committee.
- Local governments and operators anticipate confusion due to the government reversing its previous stance, which had denied the possibility of limiting the call for bids to the community type.
- A local government official Operating existing special zones already imposes a significant financial burden on local governments, and the community microgrid type could similarly shift operational and management costs to them.
- B local government official Current ESS operators face difficulties generating revenue due to inadequate tariff structures, suggesting that expanding community microgrids requires establishing profitable systems, not just installing ESS.
- C local government official The Ministry of Climate, Energy and Environment acknowledges the difficulty of achieving a high self-consumption rate with only solar PV and ESS, suggesting that a 'DER self-reliant village' project might be more appropriate than limiting existing special zones.
- A local government official The short application period (about one month) and delayed release of guidelines make it difficult for local governments to develop specific business models and plans.
- A business operator The 70% responsibility supply ratio, requiring 70% of community power demand to be met by locally produced DER, could significantly restrict actual transaction models, especially with variable solar PV generation.
- Ministry of Climate, Energy and Environment official The 70% responsibility supply ratio is a core requirement for community microgrids and 'cannot be lowered,' despite acknowledging the difficulty of meeting it with renewable energy.
- Ministry of Climate, Energy and Environment The Ministry of Climate, Energy and Environment is considering national funding support for solar PV and ESS installations within the community microgrid special zones, with support levels determined by application scale and capacity.
- Ministry of Climate, Energy and Environment The Ministry of Climate, Energy and Environment will negotiate regulatory special provisions with relevant ministries based on individual project needs, rather than applying them commonly across multiple zones.
- Ministry of Climate, Energy and Environment The Ministry of Climate, Energy and Environment is reviewing measures to relax grid connection restrictions for community microgrids, leveraging their characteristic of reducing external transmission by maximizing local consumption.
For investors — Investors and operators in Korean DER will face heightened project development and financial risk due to the strict focus on community microgrids with high self-sufficiency targets, requiring robust business models for ESS profitability and efficient renewable integration within tight timelines. Success will hinge on securing the promised national funding for solar PV and ESS and navigating the specific regulatory special provisions.
Watch: Monitoring the release of detailed application guidelines and business plan templates for the community microgrid special zones, and any adjustments to the application timeline or the 70% responsibility supply ratio.
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