South Korea's focus on renewable energy, such as solar and wind power, will drive growth in the country's renewable sector as a whole, according to a global rating agency.
President Moon Jae-in has vowed to reduce the country's reliance on nuclear and coal-powered generation, while boosting the renewable energy segment.
"The Korean government's aim to increase generation from renewables to 20 percent of total generation by 2030 from 5 percent-6 percent in 2016 will likely mean capacity expansion of 40-60 gigawatts for new solar and wind power from around 5 gigawatts at end-2016," says the report released early this week by Moody's Investors Service.
The Korean government's plan to expedite the development of renewables is consistent with its commitment to reduce carbon emissions under the Paris Agreement, as well as with its aim to gradually reduce its reliance on coal and nuclear power.
Moody's estimates that the government's targeted capacity expansion in solar and wind power by 2030 will require a total investment of between 100 trillion won (US$89.8 billion) and 130 trillion won over the next 12-13 years.
"The GENCOs will lead the government's initiatives, owing to their key policy role and increasing exposure to carbon transition risk," Moody's said. GENCOs refers to the five power generators in South Korea that include the Korea South-East Power Co.
"Specifically, the government will likely require nonrenewable power generators to produce a greater proportion of power from renewables," it added.
Private sector participation in renewable developments will be increasingly important, given the significant funding needs, the rating agency said. The government aims to boost the private sector participation in renewable developments by easing various regulations.
The potential adverse impact from renewable developments will also be manageable over the next two to three years as the capacity expansion in wind and solar power will be gradual, it said.
Hwi Won firstname.lastname@example.org
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