SOUTH KOREA Law and Practice Contributed by: Michael Chang, Sang-Hyun Lee, Su-Yong Jung and Jae-Wook Ryu, Shin & Kim
See 1.1 Law Governing the Structure and Owner- ship of the Power Industry and 1.8 Unique Aspects of the Power Industry for details on the structure of the wholesale electricity market and electric power. 2.2 Electricity Imports and Exports It is understood that the acts of importing and export- ing electric power are not specially prohibited by the relevant laws and regulations. However, there is no confirmed case of electricity imports or exports in South Korea. This is because grid connections with other countries are required, when South Korea is surrounded by the sea on the eastern, western and southern borders and is separated from North Korea on the northern border, such that South Korea is effec- tively isolated as an “electric power system island”. As a result, electricity import and export through a grid system has not been achieved. In 2017, the former government announced that it was pursuing the goal of joint use of clean energy sources by North-East Asian countries through the so-called “Super Grid” connecting the South Korean-North Korean-Russian and the Korean-Chinese-Japanese electric power systems, but this is still understood as a plan at a declarative level only. 2.3 Supply Mix of Electricity As of the end of 2024, the amount of power generated by new and renewable energy consisted of the follow- ing (according to the 2024 renewable energy statistics for distribution, Korea Energy Agency): • solar power – 55%; • wind power – 5.5%; • hydropower – 6.3%; • marine power – 0.6%; • bioenergy – 17.8%; • waste treatment – 0.6%; • fuel cell – 11.1%; and • IGCC (Integrated Gasification Combined Cycle) – 3.0%. 2.4 Market Concentration Limits In the electricity business industry, including the pow- er supply market, South Korea does not specifically restrict the market dominance of specific operators in terms of market share. As mentioned, competition in
the power generation market has been introduced, but KEPCO and GENCOs still account for approximately 60% of the total power generation. Due to exclusive government licensing, KEPCO monopolises the power transmission, distribution and sales markets. The gov- ernment has a broad range of authority over regulation of the electricity business based on the unique nature of electric power and characteristics of the electricity business industry, in return for allowing a vertically integrated monopolistic electricity business operator to engage in all of electricity power generation, trans- mission, distribution and sales. However, even if KEPCO’s monopoly is accepted in the electricity sales market, the electricity sales business operator under the Electric Utility Act must supply electric power, such that it is not permitted to deny the supply of electricity without a justifiable reason, pursuant to the licence obtained according to the terms and conditions of electricity supply from the government (MCEE). Likewise, electricity business operators are prohibited from engaging in unfair trade practices under the Fair Trade Act. In this regard, the Korea Fair Trade Commission (KFTC) has the authority to regulate abuse of market- dominant positions and unfair trade practices. 2.5 Surveillance to Detect Anti-Competitive Behaviour The Fair Trade Act is a general law that prohibits anti- competitive behaviour in specific markets and pro- vides for market surveillance and enforcement pro- cedures. As explained in 2.4 Market Concentration Limits , the KFTC oversees anti-competitive behaviour, and formulates relevant regulations and policies. MCEE also has the authority to investigate, order measures, take disciplinary action, and levy and col- lect fines, in the event an electricity business operator commits a prohibited act under the Electric Utility Act, such as submitting false electricity generation data about the electricity generated by the power plant to the KPX for setting an unreasonably high electricity trading price or unjustly discriminating against the end user in the use of electric facilities for power transmis- sion and distribution.
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