[Editorial Note] No Renewable Energy Policy Without Electricity Rate Reform

"We are debating whether to issue a third call for applications or to look for an alternative solution."

The official in charge of Gwangju's energy storage system (ESS) private supply project, which has been underway since March, no longer sounded as confident as at the project's outset. Although it was an ambitious initiative and the first of its kind by a local government in the country, not a single applicant came forward in the first round. Even the flood of phone inquiries that marked the early stages has completely dried up in the recent second round.

ESS is a critical infrastructure for power demand management and grid stabilization, as it stores renewable energy produced during the day and supplies it during peak hours. In the Honam region, including Gwangju, substation capacity has already reached its limit, making it virtually impossible to build new power plants until the end of 2031. This is why Gwangju had no choice but to take the lead in launching a private ESS supply project.

The ESS business model is to store electricity when prices are low and sell it when prices are high. However, according to industry experts, the current time- and season-based electricity rate differences set by Korea Electric Power Corporation (KEPCO) are far too small to generate a profit. For example, for the "Industrial Power Type I Low Voltage" category (less than 300kW), which is commonly used by small and medium-sized enterprises, the summer electricity rate is 116.2 won per kWh, while in spring and autumn it is 94.4 won per kWh. This difference of just over 20 won makes it difficult to recoup the multi-hundred-million-won investment required to install an ESS. Gwangju also estimates it would take more than 10 years to recover an investment of 500 million won.

Experts point out that this narrow gap in the current rate structure is blocking the wider adoption of ESS by the private sector. In Texas, USA, where the power market is highly liberalized, the wholesale electricity price paid by private power suppliers is reflected in real time on consumers' bills, providing a clear price signal. As of last year, Texas had the highest ESS installation rate in the US, and Korean companies such as SK Gas have begun operating commercial ESS facilities there for the first time.

Currently, the shortage of power grid infrastructure, including transmission networks in Korea, is a major obstacle to expanding renewable energy facilities. KEPCO, which has a monopoly on power supply, is unable to raise electricity rates in line with external conditions, resulting in accumulated debt reaching 200 trillion won. KEPCO alone cannot achieve the targets set in the Basic Plan for Long-term Electricity Supply and Demand. To meet renewable energy targets, it is necessary not only to expand solar and wind power facilities, but also to reform the electricity market structure so that ESS adoption can increase.

The expansion of renewable energy is no longer just an environmental issue. In the era of carbon neutrality, it is a core strategy that determines corporate competitiveness and regional survival. What is needed now is not environmental slogans, but a redesign of the power system. The electricity market must be opened to a variety of suppliers, and the rate structure must make ESS installation viable. Only then will the share of renewable energy generation increase, and electricity consumers will be able to make more efficient choices.