Korean consumers show willingness to pay extra for renewables, but unable due to legislation restrictions

Marking Energy Day in South Korea, 41 plaintiffs filed a constitutional appeal at the South Korean Constitutional Court, calling for the revision of legislation that unfairly restricts renewable energy procurement to general electricity or industrial electricity users, effectively blocking average residential electricity consumers from participating in the purchase of renewable energy.

Geonyoung Kim, Attorney at Solutions for Our Climate (SFOC), said, “Around 15% of South Korea’s electricity consumption is taken up by residential electricity use. By restricting renewable energy to general and industrial users, renewable energy procurement is effectively left off the table for residential users. This blocks the citizens’ right to make conscious purchasing decisions in response to the climate crisis by choosing renewable energy-derived electricity.”

According to a survey of 2,000 respondents (covering men & women, between the ages 20-59) conducted by SFOC and Hankook Research earlier this year, most respondents (56.8%) see their lives connected to the expansion of renewable energy. Additionally, around half (47.4%) believe that their efforts to expand renewable energy can make a difference. Notably, around half (47.7%) also indicate their willingness to pay extra for renewable-energy derived electricity.

Figure 1: South Korean residents' willingness to pay a premium for renewable energy-based electricity

Source: SFOC and Hankook Research, 2024

Cha-Kyung Lee, Secretary General at Consumer Climate Action, emphasised the important role of changemakers, “We believe that consumers can be the agents of change in the energy ecosystem. It is vital for the government to realise that responding to consumer demand for the right to choose green electricity is an effective way to achieve carbon neutrality.”

The South Korean power market is monopolised by the state-owned utility, Korea Electric Power Corporation (KEPCO), which oversees the bulk of power generation and is the sole distributor providing electricity to consumers.

Under South Korea’s current legislation, average households are effectively blocked from renewable energy procurement options due to the absence of suitable mechanisms, such as power purchase agreements (PPAs). While companies can utilise various mechanisms under the Korean RE100 scheme, such as third-party PPAs, direct PPAs, and certificate purchases, residential consumers can only make use of self-generation, like setting up solar panels in their homes. Average South Korean citizens who live in apartment buildings cannot meet 100% of their electricity needs by using solar panels, which makes alternative renewable energy procurement options critical to meet their needs.

At a global level, restrictions in legislation put South Korea’s residential consumers behind those of other nations, such as Germany, the UK and Japan – where avenues of residential renewable energy procurement are more readily available.

Kim from SFOC reiterated the importance of broadening renewable energy procurement, “In the race to combat the climate crisis, it is imperative that as many stakeholders as possible are given space to purchase renewable energy. By revising legislation that blocks residential electricity consumers from renewable energy purchases, South Korea can empower citizens’ actions domestically and serve as a model case of household renewable energy procurement for the region.”

Figure 2: Overseas Cases Showcasing Residential Electricity Consumers' Optional Renewable Energy Purchase Schemes

Source: SFOC analysis

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