How South Korea plans to use the Iran crisis to spur a renewables revolution | South Korea

In In Guyang-ri, a farming village of 70 households about 90 minutes southeast of Seoul, people gather for communal free lunches six days a week. The meals are financed by the village’s one-megawatt solar installation, which generates a net profit of about 10 million won ($6,800) each month.

“Residents have lunch together every day, so we see each other’s faces and talk together,” says Jeon Joo-young, the village chief. “The bond and solidarity between dormitory residents becomes stronger, and life becomes more enjoyable.”

The change has been dramatic. Before the solar project was launched in 2022, the village of about 130 people had no restaurants, no easy mobility and little public infrastructure. Income from solar energy now covers food costs, the village “happiness bus” for the elderly, the table tennis facility and cultural activities.

The village consciously chose to spend the income from solar energy on social assistance rather than individual dividends; Jeon says that the residents made this decision themselves rather than being persuaded.

“When you divide the money into individual income, people feel disconnected. People who haven’t known each other for years now meet through a restaurant in a few days,” he says.

Guyang-ri serves as the national prototype for South Korea’s rapidly expanding “solar village” program, which aims to reach 2,500 villages by 2030. The government aims to quickly create 700 villages from about 150 this year.

The acceleration is part of President Lee Jae Myung’s effort to use the Iran crisis as a catalyst for a faster clean energy transition. South Korea imports more than 90% of its primary energy, with approximately 70% of crude oil coming from the Strait of Hormuz.

Lee has repeatedly described fossil fuel dependence as a dangerous weakness, telling his cabinet that the “fate of the nation” depends on the energy transition.

Many of the renewable targets predate the crisis, including the target of generating 20% ​​of electricity from renewable sources by 2030 and phasing out coal by 2040; But officials say the pace and political urgency have changed sharply and funding has increased.

An additional budget allocates nearly 500 billion won to the energy transition, financing grid infrastructure improvements and increasing overall annual support for renewable energy projects to a record 1.1 trillion won ($670 million).

Additionally, the village program will be provided with a low-interest loan of 400 billion won to accelerate deployment.

Minister of Climate, Energy and Environment Kim Sung-whan said: “The worldwide Middle East war is causing the transition to renewable energy to accelerate further, so Korea also needs to accelerate this pace.”

Refreshing an old problem

But as renewable programs grow, they conflict with the capacity of the electric grid. Large parts of the south and southwest, where solar and wind energy development is concentrated, are already at or near capacity limits. Gigawatts of renewable projects are waiting for grid connection, and some of the renewable capacity is actually wasted.

Hong Jong Ho, an energy economist at Seoul National University, argues that the energy crisis in South Korea began long before the Iran war.

According to Hong, the state-owned Korea Electric Power Corporation (Kepco), which effectively controls national generation, transmission and distribution as a monopoly and has stakes in state-owned companies that operate most coal and nuclear power plants, keeps electricity prices artificially low and discourages investment in renewable infrastructure.

“Decades of government-subsidized electricity have led many Koreans to view electricity as a public good that the government should provide cheaply and abundantly,” he says, eroding public acceptance of the cost of the transition.

Kepco has focused on plans to build high-voltage transmission lines from renewable resource-rich southern regions to Seoul, but construction is taking more than a decade and faces growing local resistance from residents who see it as unfair: rural areas sacrifice land to provide capital while receiving no price benefits under South Korea’s uniform national pricing system.

The push to expand solar energy also exposes South Korea’s dependence on Chinese supply chains. China accounts for the majority of solar panels installed in the country, reflecting its dominance in global production and significantly lower costs.

The government has responded with measures including domestic module requirements for solar villages and plans to introduce carbon footprint certification for imports. But environmental groups argue that the overall response to the energy transition has been inadequate.

Gahee Han of the group Solutions for Our Climate agrees that President Lee has signaled “genuine political intent” to accelerate the transition. The concern, he says, is whether momentum will translate into delivery. About 500 billion won was allocated to the energy transition in the supplementary budget, while simultaneously about 5 trillion won was directed to cover increases in fossil fuel prices, including direct subsidies to oil refineries through the oil price cap system.

“The government that suppresses price signals is the same government that asks the public to save energy,” says Han. “This contradiction reflects a deeper corporate mindset that continues to shield fossil fuel companies from market realities.”

The government postponed the closure of some coal plants and accelerated the restart of nuclear reactors; officials describe them as temporary measures to maintain grid stability during the Middle East crisis. But a recent cabinet meeting confirmed that “capacity payments” or guaranteed revenue streams will continue to flow to the 21 coal-fired power plants after 2040 as emergency energy reserves.

“The window for transformative change is now open,” says Han. “Whether this government has the institutional courage to use it is the question that will determine Korea’s energy future.”