Source：solar quarter

A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) highlights significant risks for South Korea’s semiconductor and artificial intelligence (AI) industries due to delayed renewable energy deployment. The report, authored by Michelle Kim, Energy Finance Specialist at IEEFA, underscores that addressing the country’s renewable energy gap is essential for maintaining global competitiveness and aligning with environmental, social, and governance (ESG) standards.

The IEEFA report points out that renewable sources like wind, solar, and hydropower could meet the increasing electricity needs of South Korea’s burgeoning semiconductor clusters and AI data centers. By tripling its renewable energy capacity by 2030, South Korea could generate 113,434 gigawatt hours (GWh) of net additional power, surpassing the projected power demand increase of 53,168 GWh.

Kim emphasizes that global semiconductor buyers are increasingly concerned with supply chain carbon intensity and are seeking manufacturers that actively reduce their carbon footprint. Given that semiconductors constitute over 20% of South Korea’s total exports, embracing renewable energy is crucial for preserving economic competitiveness and securing future business within the supply chain.

The report also compares South Korea’s current renewable energy efforts with those of the U.S. and the European Union, which are heavily investing in domestic renewable projects through policies like the Inflation Reduction Act and the Net-Zero Industry Act. In contrast, South Korea’s renewable energy accounted for only 9.64% of its power generation mix in 2023, falling short of global, OECD, and regional averages.

South Korea’s 11th Basic Plan for Long-Term Electricity Supply and Demand (BPLE) aims to increase renewable electricity to 21.6% by 2030 and 32.9% by 2038. However, the report argues that this plan is insufficient and suggests that the country could lag by at least 15 years in reaching the 30% renewable electricity threshold.

The report criticizes South Korea’s reliance on liquefied natural gas (LNG) and speculative Small Modular Reactors (SMRs) to meet growing electricity demand, urging a shift away from fossil fuels to achieve Nationally Determined Contributions (NDCs) targets. It also warns that recent requests by South Korean companies for new LNG-fired power plants could jeopardize their RE100 goals and market competitiveness, especially as global customers prioritize renewable energy.

Additionally, the report highlights that South Korean semiconductor companies could face mounting global pressure and potential market share loss due to stricter environmental regulations and carbon tax implications. This underscores the need for a unified and comprehensive policy approach to accelerate renewable energy deployment and enhance industrial competitiveness.

Kim concludes that accelerating the transition to renewable energy is vital for South Korea to maintain its geopolitical influence, national security, industrial leadership, access to financing, and public well-being. Addressing the renewable energy deficit is essential for the country to sustain its global competitiveness.