Publication of "The Energy Transition's Next Chapter" Report
"Security and Economic Viability Will Determine the Success of the Energy Transition"
Nuclear Power, ESS, and Other Flexible Resources Must Also Be Advanced
Since the inauguration of the Lee Jaemyung administration, South Korea's energy transition has accelerated toward a significant expansion of renewable energy. A global consulting firm has assessed that energy security and economic viability are the decisive factors for the success of this transition. In particular, it has been pointed out that, in addition to expanding renewables, South Korea must actively utilize flexible power sources such as nuclear power, energy storage systems (ESS), and gas-fired power generation.
On September 15, Boston Consulting Group (BCG) released its report, "The Energy Transition's Next Chapter," stating, "Not only decarbonization targets, but also energy security and economic viability have emerged as core variables in strategy." The report analyzed that "geopolitical risks and infrastructure constraints are intertwining, making the pace and approach of the energy transition increasingly complex."
According to the report, governments and industries around the world have recently made strengthening energy security their top priority. They are increasing the share of domestic energy production while also using protectionist trade and industrial policies to build local value chains for low-carbon technologies.
BCG assessed that the energy transition has moved beyond technological discussions and entered the execution phase of infrastructure construction and operation. The approximately sixfold increase in the cost of building large-scale power grids is attributed to a combination of permitting delays, supply chain bottlenecks, technological complexity, and labor shortages. These constraints not only slow the transition but also lead to higher energy costs for consumers.
The report forecasts that global energy capital expenditures will expand by more than 50%, from about $7 trillion to $10 trillion, between 2024 and 2030. This amounts to 15% of global GDP. Most of this investment is expected to go toward expanding power grids and renewable energy infrastructure.
The report also analyzed, "In this process, 'cost of capital' has emerged as a key variable determining the economic viability of energy systems. However, companies and supply chains are not yet fully prepared for this capital-intensive transition phase."
BCG identified additional structural factors reshaping the energy transition, including: ▲entry into a structural supercycle of electricity demand ▲the need to secure stable power sources ▲continued demand for oil and gas ▲and widening cost gaps among different technologies.
As a solution for Korea’s energy transition, BCG proposed 'public-private cooperation and a flexible power mix' to protect industrial competitiveness.
Baek Jinyoung, Managing Director and Partner at BCG Korea, stated, "Korea’s energy transition must not only achieve decarbonization targets but also ensure supply stability and economic viability to strengthen the competitiveness of manufacturing and advanced industries." He emphasized, "Within the government’s pragmatic approach to the energy transition, achieving the three goals of power supply stability, reasonable costs, and carbon neutrality requires organic cooperation among the government, market, and businesses."
He added, "With additional power tariff adjustments under consideration, it is necessary to expand power purchase agreements (PPAs) so that companies can secure stable carbon-free and low-carbon electricity, and to design a flexible power mix that considers the role of baseload power sources. In particular, to respond to increasing demand centered around the Seoul metropolitan area, such as the Yongin semiconductor cluster, the public and private sectors must jointly address infrastructure challenges such as expanding transmission networks and resolving grid connection delays."
He also suggested, "Alongside the expansion of renewables, a virtuous cycle must be established by ensuring the stable operation of nuclear power, advancing flexible resources such as energy storage systems (ESS) and gas-fired power, and enabling grid participation by large-scale consumers such as data centers. Only then can a Korean-style transition model take root."
The full report is available on the official BCG website.
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