Gov’t eyes incentives to create RE100 industrial complexes

(News1)

The South Korean government has decided to introduce bold incentives to create RE100 (100 percent renewable energy) industrial complexes - one of its key national policy initiatives.

The decision was made during the first meeting of an inter-ministerial task force (TF) held at the Korea Chamber of Commerce and Industry in central Seoul on Wednesday after its official launch on the same day.

During the meeting, relevant ministries agreed to focus on establishing essential incentive measures to attract advanced companies, including creating a “zero-regulation” business environment, attractive education and living infrastructure, and significant reductions in electricity rates.

“We must view RE100 as an opportunity rather than a regulation alongside promoting regional balanced development and energy transition via renewable energy,” First Vice Minister of Trade, Industry and Energy Moon Shin-hak said. “We will explore all available policy tools to enable the swift establishment of RE100 industrial complexes.”

An RE100 industrial complex refers to attracting energy-consuming businesses to regions where renewable energy is produced. The aim is to locate companies directly in renewable energy-producing areas instead of the current energy supply system - where electricity generated in the provinces is transmitted to demand centers such as the Seoul metropolitan area, thus reducing transmission infrastructure costs, accelerating energy transition, and promoting balanced regional growth.

The government is reportedly considering building RE100 complexes in Jeolla Province, where solar and wind energy can be supplied, and attracting facilities such as artificial intelligence (AI) data centers. Relevant ministries plan to hold meetings every other week to finalize plans for the complexes and draft special legislation within the year.

The TF includes the Ministry of Trade, Industry and Energy (as lead agency), the Office for Government Policy Coordination, the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, the Ministry of Environment, the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Oceans and Fisheries, the Ministry of Education, and the Ministry of Culture, Sports and Tourism.

Industry experts view this government move as a proactive attempt to reshape the country’s industrial landscape ahead of the global adoption of mandatory RE100 standards.

“Although companies can currently choose whether to adopt RE100, it is likely that meeting RE100 standards will become mandatory moving forward,” Joo Young-sup, a distinguished professor at Seoul National University’s Graduate School of Engineering, said. “It is a meaningful approach to create RE100 industrial complexes as a test bed first, then expand them to all industrial complexes.”

However, significant challenges remain.

Although the government is considering “significant electricity rate discounts,” renewable energy in Korea is currently supplied at much higher costs than regular electricity. The average power purchase cost for Korea Electric Power Corp. (KEPCO) in 2024 was 134.8 won ($0.097) per kilowatt-hour (kWh), while solar power cost over 200 won/kWh, and offshore wind power over 400 won/kWh.

Yoo Seung-hoon, a professor at Seoul National University of Science and Technology, warned, “Discounting renewable energy electricity rates - whether through power fund subsidies or KEPCO bearing the cost - will ultimately become a direct or indirect burden on the public.”

Overcoming the intermittency of renewable energy is another key challenge.

Advanced manufacturing facilities, such as AI data centers, semiconductor fabs, and battery plants, require 24-hour operations, but renewable energy generation fluctuates depending on the time of day and natural conditions.

There is also the potential for trade disputes if electricity rates are lowered for companies moving into RE100 complexes. The U.S. steel industry previously accused Korean firms of receiving de facto government subsidies via low electricity prices.