Korea's Climate Ministry Weighs ESS Charging Fee Deferral for Congested Grids
The Ministry of Climate, Energy and Environment is reviewing criteria to defer grid fees for Energy Storage Systems (ESS) when charging in distribution grid congestion areas, contingent on their proven contribution to grid stability. This clarifies that a nationwide ESS grid fee exemption is not being considered, and existing deferrals apply only to ESS discharge.
Our take
Will distribution-grid storage in Korea stop paying grid fees when it charges?
Not yet, because the ministry is only reviewing criteria to defer charging fees for storage that proves it relieves congestion, and it has denied any nationwide fee exemption.
Fees on discharge are already deferred, but no criteria, date or result for charging has been published, and as of August no rule had changed. One project participant's analysis, as reported, puts the fee at about 49 million won a year per line and the project IRR at 2.1–4.4% with it, against 4.2–6.5% without.
What the source says
- The Ministry of Climate, Energy and Environment is reviewing criteria for deferring grid fees for ESS when charging in distribution grid congestion areas, based on proven grid contribution.
- Ministry of Climate, Energy and Environment The Ministry clarified that reports of a nationwide ESS grid fee exemption are 'not true'.
- Regulatory Rationalization Committee On April 15, the first plenary meeting of the Regulatory Rationalization Committee, chaired by the President, reported a temporary exclusion/mitigation of fees only for 'renewable energy mega-special zones'.
- Korea Electric Power Corporation Korea Electric Power Corporation (KEPCO) applied transmission and distribution usage fees to Jeju Island distribution-connected standalone ESS operators in November of the previous year (2025).
- Korea Electric Power Corporation KEPCO stated that Jeju ESS, when charging, uses KEPCO's transmission and distribution facilities as a demand customer, making fee imposition valid with no separate deferral or exemption.
- Korea Electric Power Corporation KEPCO announced it would apply demand-side basic and usage fees to AI-enabled distribution grid ESS for charging.
- A project analysis by a participating company found that annual transmission and distribution usage fees would be approximately 49 million KRW per line for a 4MW/20MWh system, with a total project cost of 6-7 billion KRW.
- This fee would decrease the project's Internal Rate of Return (IRR) from an estimated 4.2-6.5% to 2.1-4.4%, a drop of 2.1 percentage points.
- Depending on unit investment cost sensitivity (300-350 million KRW/MWh), the IRR could fall to a maximum of -2.9%.
- An ESS industry official argued that charging fees for intermediate power (ESS charging) constitutes 'double taxation'.
- The official also claimed 'discrimination' because only pumped hydro and ESS participating in the low-carbon central contract market are exempt from fees.
- In advanced power markets like the US (CAISO, ERCOT, PJM), UK (NESO), and Australia (NEM), ESS is recognized as a flexibility resource and exempted from grid fees when participating in wholesale markets or contributing to grid stability.
- Ministry of Climate, Energy and Environment The Ministry of Climate, Energy and Environment discussed problem resolution at a business agreement ceremony for the distribution grid ESS construction support project in July (2026).
- Industry stakeholders submitted opinion letters to power authorities regarding the grid fee issue.
For investors — Investors in distribution-grid storage programmes should model charging fees as a cost in the base case and treat any deferral as upside until the criteria are published.
VPP operators bidding for these lines should keep records showing how their storage relieves congestion on each line, since that is the test the ministry has named.
Watch: Announcement of specific criteria for ESS charging fee deferral in congested areas by the Ministry of Climate, Energy and Environment.
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