The Ministry of Climate, Energy and Environment is moving forward with its 'Electro-state' initiative by introducing a regional differential electricity pricing system for industries and establishing a dedicated pricing structure for artificial intelligence data centers (AI DC). The goal is to provide stable electricity and water supply to advanced industries while enhancing national competitiveness in the AI era through decarbonization, circular economy, and climate disaster response.
During a business report meeting hosted by the President at the Blue House on August 4, the ministry outlined five key tasks, including the construction of the 'Electro-state,' supply of water to advanced industries, green transition (K-GX), a circular economy to reduce plastic use, and the establishment of an environmental safety net.
To address the rising electricity demand from AI DCs and semiconductor industries, the ministry plans to expand carbon-free power generation, focusing on renewable energy and nuclear power, while also reforming the electricity pricing system and power grid.
Minister Kim Sung-hwan stated, "The regional electricity pricing system will only apply to industrial users, and we are not considering it for residential users." The ministry intends to design the regional differential pricing system for industries by comprehensively reflecting the costs of using transmission lines, regional power self-sufficiency, grid conditions, and national balanced development.
A public hearing is scheduled for the third week of this month to unveil the outline of the regional differential electricity pricing system. The industrial electricity rates will be differentiated across four major regions, with detailed criteria linked to the regional classification system of the Ministry of the Interior and Safety.
Minister Kim expressed a desire to lower electricity rates to the level of China but acknowledged that it could lead to significant losses for Korea Electric Power Corporation (KEPCO). He noted, "We are trying to determine the extent of the reduction within a range that KEPCO can manage." He added that industries directly competing with China, such as steel and petrochemicals, face significant electricity cost burdens and that they are considering differential pricing to enhance the competitiveness of industries located outside the metropolitan area.
The ministry also plans to introduce a dedicated pricing system for AI DCs within this year. This system will reflect the unique electricity usage characteristics of data centers, encouraging large power-demanding facilities to locate in areas with relatively abundant electricity.
Additionally, the ministry aims to expand the use of renewable energy. This includes mandatory solar panels on factory rooftops, large-scale solar projects in reclaimed and border areas, and government-led offshore wind power initiatives, with a target of achieving 100 GW of renewable energy ahead of schedule. For residential solar systems under 10 kW, the ministry is promoting a 'sunlight income' system that allows for cash settlement of surplus power instead of the existing offset method, with monthly or quarterly settlement periods under consideration.
The decision on the introduction of new nuclear power plants and small modular reactors (SMRs) will be reflected in the 12th Basic Plan for Power Supply and Demand after consulting with experts and the public.
The power transmission network will also be developed ahead of industrial locations. The ministry plans to proactively expand the grid to ensure that AI DCs and advanced industrial complexes can be connected to the power system immediately, while also enhancing community acceptance through the expansion of existing transmission lines and undergrounding projects. To respond to the diversification of power sources and the transition to a decentralized power system, the establishment of a 'Power Supervisory Agency' (tentative name) to oversee the electricity market and grid operations is also being pursued.
The water supply system, another critical infrastructure for advanced industries, will undergo a comprehensive overhaul. The review cycle for the national basic water supply plan will be shortened from five years to two years, and the ministry will reclaim and redistribute excess river water permits to respond flexibly to changes in demand. The ministry plans to utilize agricultural, power generation, and river water in a connected manner, while also expanding the maintenance of metropolitan water supply systems and the reuse of wastewater. In drought-prone areas, the ministry will enhance groundwater storage dams and mobile seawater desalination facilities.
The ministry is also set to accelerate the decarbonization of industries, transportation, and heating. Strategies for the green transition of five major high-carbon industries—steel, petrochemicals, refining, cement, and semiconductors—will be developed, aiming for a 50% share of electric vehicles among new cars by 2030 and promoting the electrification of public and commercial vehicles. The ministry plans to expand the demonstration of heat pumps in multi-family housing and support green transition financing.
The circular economy to reduce plastic use is also a core task. The mandatory use rate of recycled materials in PET beverage bottles will be increased to 30% by 2030, and a system for the circular use of critical minerals such as rare earth elements and waste batteries will be established.
Furthermore, the ministry will strengthen responses to climate disasters and harmful factors in daily life. An AI-based flood response system and a chemical safety net will be established, along with measures to manage high ozone levels and reduce fine dust in residential areas.
Minister Kim stated, "We are facing both the AI revolution and the climate crisis simultaneously. We will support the success of mega-projects with clean and stable electricity and water supply, overcome the climate crisis through green transition and circular economy, and create an environment where citizens can feel secure."
* This article has been translated by AI.
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