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Market Demand
As commercially disadvantageous technologies in Korea, the market development of renewable energy is
greatly subject to government initiatives and support. In 2003, the Korean government launched a plan to
raise the level of its renewable energy supply to five percent of total primary energy supply by 2011.
Specific plans include leading and supporting research and development (R&D) projects and providing
financial incentives to renewable energy developers, such as low interest loans, tax reduction and feed-in
tariffs. It also mandated new government buildings to be equipped with renewable energy generation
facilities. With these efforts, the Korean government plans to spend $1.6 billion by 2007.
The majority of renewable energy technologies such as hydrogen/fuel cell and biomass are still in the
R&D stage. For further development of those technologies, the Korean government often forms working
groups jointly with private research institutes, universities, technology and equipment suppliers, and endusers of renewable energy. Supplying products and technologies at this R&D stage is deemed critical for
the supplier, as they will have an advantage to win contracts for commercial production stage.
The industry also runs R&D projects on its own for the development of renewable energy technologies.
The types of companies vary from small to medium sized energy specialists to large conglomerates such
as Samsung and LG, and state-run power companies. In most cases, they lack core technologies, and
are keen on adopting advanced technologies from non-Korean suppliers.
Given the Korean governments strong initiatives to develop renewable energy technologies, active
private participation, and the rising price and consumption of oil, there exists a positive market outlook for
the near term.
Market Data
The market data below was provided by various Korean government agencies.
(Graph 1)
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Dependency Ratio
97.2%
90%
97.1%
96.8%
87.9%
80%
73.5%
70%
1980
1990
2000
2002
2006
Year
(Graph 2)
Goals for New and Renewable Energy Deployment (5% of Total Primary Energy Supply by 2011)
Share %
5
3.6%
4
3
2
1.24%
1.4%
2001
2002
2.06%
2.08%
2.13%
2003
2004
2005
3.99%
4.32%
5%
2010
2011
1
2008
2009
Year
* Figures from 2008 are projected values.
The Korean government defines 11 renewable energy technologies: solar thermal, photovoltaic, biomass,
wind energy, small hydro-power, fuel cells, coal liquefaction and gasification, ocean energy, waste energy,
geothermal energy, and hydrogen energy. Among these, waste energy and hydro energy are the two
biggest sub-sectors, accounting for about 75% and 19%, respectively, of total renewable energy
generated in 2005.
(Table 1)
Renewable Energy Sub-sectors (2005)
Waste Energy
Energy generated
(TOE)
3,706
75.9 %
Small Hydro-Power
919
18.8 %
Biomass
181
3.7 %
Solar-thermal
35
0.7 %
Wind Energy
32
0.7 %
Photovoltaic
0.1 %
Geo-thermal
0.1 %
Total
4,879
100.0
Resources
Share
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The investment by the Korean government and industry on renewable energy area has steadily grown
since late 1980s.
(Table 2)
Investments for Renewable Energy R&D
Year
Government
Investments
Private
Sector
Investments
Total
88~99
00
01
02
03
04
96.32
13.94
13.22
27.99
35.68
63.64
85.92
350.69
72.59
5.75
12.68
15.05
19.50
34.28
46.00
206.86
168.91
19.69
25.9
43.04
55.18
97.92
131.92
557.55
Best Prospects
Most of the renewable energy markets are forecast to grow in the near future, creating demand for
advanced equipment and technologies.
Among these, the Korean government has prioritized
hydrogen/fuel cells, photovoltaic, and wind power as key renewable energy sub-sectors to focus its efforts
to develop. Several large-sized power plants using those renewable energy technologies are either
operating or soon to be built in Korea. Local Korean companies supply non-core parts and equipment for
the projects, but heavily rely on foreign technologies as they lack the core technologies. Local industry
experts evaluate the level of Korean technology prowess below 50% of most advanced technology
countries. Foreign renewable energy technologies are well received by Korean companies.
Key suppliers
For core renewable energy technologies, the U.S., Europe and Japan are active foreign suppliers
entering the market as either key suppliers or joint venture partners.
U.S.-based FuelCell Energy Inc. signed a contract with POSCO, Koreas steel giant, to provide fuel cell
technologies for a 2.4 MW power plant in Jeonju in Korea. The construction plans to be completed by
March 2008, making it the worlds largest fuel cell power plant. U.S.-based UTC Fuel Cell has also
participated in a fuel cell vehicles project led by Hyundai Motor Company for commercial production by
2012.
GE Energy will supply photovoltaic modules for a 3 MW solar power plant in Yonggwang, 200 miles south
of Seoul. When constructed in 2008, it will be Asias largest solar power plant. The project is led by
Korea Hydro Nuclear Power (KHNP), which is the Koreas largest energy supplier covering 40% of the
total energy demand.
Germany-based Sun Techniques, jointly with Dongyang Engineering &
Construction Corp. of Korea, will construct a 20 MW solar power plant in Shinan, 200 miles south of
Seoul, which will be the worlds largest solar power plant when built by November 2008.
Denmark-based Vestas provided most of the core parts for a wind power generation system in Gangwondo, west of Seoul, which was led by a local wind energy specialist, Unison Co.
In the other sub-sectors like biomass, small hydropower, and ocean energy, several R&D and
construction projects are going on, including state-run power companies building several large-scale tidal
power plants on the seaside of Korea.
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Prospective Buyers
The renewable energy technologies that are brought into Korea are used mostly for the construction of
power plants using the technologies. Thus, the entities in charge of the projects, which can be either a
single company or a consortium of several companies, have the buying authority. For governmentfunded projects, the Korean government may exercise influence on the buying decisions of important
parts and technologies. Academics are often times asked to provide advice on choosing products, thus
convincing them with scientific data can be critical for suppliers to successfully win sales contracts.
Market Entry
Core renewable energy technologies are provided through either technical licensing, direct sales, or direct
investment, such as being a joint venture partner with local Koran companies, etc. Renewable energy
equipment requires high levels of precision, reliability, and maintenance. Therefore, technical features,
pre-sales consultations, training and after-sales service, as well as price, are the prime factors associated
with purchasing decisions for renewable energy equipment. In addition, U.S. service engineers should
make periodic visits to Korea to discuss operational problems as well as improvements or modifications
required in the equipment. If the decision is made to enter the market using an agent, it is important to
choose a reliable and competent firm that possesses the requisite technical capabilities and has excellent
government and industry contacts.
Partnerships with Korean firms can take many forms including: distributor or agent agreement, technology
transfer or license agreement, and a joint venture company. If a U.S. company has substantial
experience and knowledge of the Korean market, it can establish its own representative or branch office,
or a wholly owned subsidiary. It is also possible to have a local presence by acquiring an existing Korean
renewable energy company.
Although it is also important to prepare a clear-cut agreement, many Korean corporate decision-makers
still greatly value personal trust and relationships more than contractual terms and conditions. Such a
trusting relationship can be built by maintaining frequent and effective communications, both formal and
informal, and through patience. In this context, it is also imperative to thoroughly evaluate the prospective
partner(s) through reliable and objective sources in order to avoid or minimize any unexpected future
conflicts and risks.
Trade Events
U.S. suppliers may wish to participate in local trade shows to promote their technology and equipment in
Korea. Post recommends that U.S. suppliers of renewable energy equipment who want to enter the
Korean market are recommended to leverage this show as a promotional vehicle in Korea.
Solar, Wind & Earth Energy Trade Fair (SWEET 2008)
Dates: April 8-10, 2008
Venue: Kimdaejung Convention Center, Gwangju
Tel: 82-62-611-2212
Fax: 82-62-611-2209
Website link: http://www.sweet.or.kr/
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Fax: 82-2-581-8605
Webpage: http://www.koema.or.kr
American suppliers may be able to get a list of member firms divided into each product category from
KEMC. U.S. suppliers may contact the following for further information:
Mr. Won, Il-Sik, President
Korea Electrical Manufacturers Cooperative (KEMC)
#103-10, Shinkil-2 dong, Yongdengpo-ku,
Seoul 150-052 Korea
Tel: 82-2-2102-4100
Fax: 82-2-848-8337
Webpage: http://www.kemc.co.kr
Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every
effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the
accuracy or completeness of information in this or any other United States government document. Readers are advised to
independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal
advice.
International copyright, U.S. Department of Commerce, 2006. All rights reserved outside of the United States.
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