SOUTH KOREA Law and Practice Contributed by: Michael Chang, Sang-Hyun Lee, Su-Yong Jung and Jae-Wook Ryu, Shin & Kim
The ERC considers the following factors during its deliberation: • whether the entity has the financial and technologi- cal capacity necessary to operate the electricity business; • whether the entity will be able to carry out the elec- tricity business as planned; • for the distribution business and district electricity business, whether the business territory of two or more distribution business entities or the supply territory of two or more district electricity business entities will not fully or partially overlap; • for the district electricity business, whether the entity will have the supply capacity of at least 60% of the total electricity demand in the particular sup- ply district and the entity’s district electricity busi- ness will not cause any disruptions in the electricity supply by other electricity business entities that supply to users residing in neighbouring districts; • whether the concentration of electric power sta- tions or fuels in a specific district will interfere with electric power systems; • whether concentration in a specific fuel will inter- fere with electricity supply; • whether the master plan for electricity supply and demand is complied with; and • whether the achievement of the greenhouse gas (GHG) reduction target will not be interfered with. Although the Electric Utility Act does not explicitly provide for minimum requirements, such as capital requirements, for an acquirer of a generation busi- ness, during its deliberation, the ERC comprehen- sively considers the largest shareholder’s financial and technological capacity as well as whether the acquisi- tion will affect the sustainable and stable operation of the generation business. Photovoltaic Power and Minimum Requirements In the case of photovoltaic power generation business, in addition to the above requirements, “the generation business shall have commenced in the preparatory period for the electric business”. This means that, in principle, a photovoltaic power generation business cannot obtain the MCEE approval until the generation business has commenced. As a result, transferring an electric business for photovoltaic power genera-
tion is difficult, except for transactions exempt from the above approval requirement (eg, a share transfer involves an electric business operator whose power generation facility has a capacity of less than 20 MW). 1.5 Central Planning Authorities The Ministry of Climate, Energy and Environment The MCEE (specifically the Climate and Energy Pol- icy Office and Energy Transition Policy Office) is the central authority that oversees and administers the government’s electricity supply policy. The establish- ment of MCEE reflects the consolidation of climate and energy policy functions, with energy-related func- tions generally transferred from the former Ministry of Trade, Industry and Energy, except for natural resourc- es and overseas nuclear power projects. To stabilise electricity supply, MCEE establishes the master plan for electricity supply and demand every two years. The 11th Basic Plan for Supply and Demand of Power (2024–2038) was confirmed on 21 February 2025. Fol- lowing its confirmation, the responsibility for manag- ing the plan and preparing the upcoming 12th Basic Plan transitioned to the MCEE. The 11th Basic Plan for Supply and Demand of Power includes: • general direction for the supply and demand of electricity; • long-term prospects for the supply and demand of electricity; • plans for generation facilities and major transmis- sion and substation facilities; • management of electricity demand; • evaluation of the previous master plan; and • other matters deemed necessary for the supply and demand of electricity. MCEE must establish and publicly notify standards to maintain the credibility of the electric power sys- tem. If the credibility is not maintained according to such standards, harming the interest of consumers, the Minister of MCEE, through the deliberation of the ERC, may order the KPX or electricity business enti- ties to take necessary measures.
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