The government will unveil the first outline of its Basic Plan for Electricity Supply and Demand, the nation's overarching energy blueprint, later this month. The plan is a 15-year mid-to-long-term strategy established every two years and serves as the highest-level statutory framework for energy policy. This edition is particularly significant as it marks the first mid-to-long-term plan prepared under the Lee Jae-myung administration, expected to encompass total national energy demand, power source composition, and policy directions for major generation sources.
According to the Ministry of Climate, Energy and Environment, the government plans to hold its first public discussion session for the 12th Basic Plan for Electricity later this month. The plan will cover electricity demand, facilities, and power source composition from this year through 2040.
The government intends to enhance transparency in the 12th plan. Under the Electricity Business Act, the plan is finalized after a draft is prepared, followed by public hearings and reports to the relevant standing committee of the National Assembly. However, critics have consistently pointed out that these hearings have been mere formalities that fail to properly gather stakeholder opinions.
Minister of Climate, Energy and Environment Kim Sung-hwan previously stated, "It is true that the process of establishing the Basic Plan for Electricity has generally been kept private in the past. This time, we plan to share necessary information as much as possible through open discussions before finalizing the plan."
As part of this effort, the government will present Korea's total electricity demand forecast for 2040 by the end of this month, as prepared by the plan's general committee and demand planning subcommittee. An official involved in the plan noted, "Specific details, such as whether to present the total demand figure or methodology and sector-by-sector numbers, have not yet been finalized." The government is also reportedly considering presenting the 2040 electricity demand forecast as a range rather than a single figure.
Electricity demand in 2040 is expected to far exceed 760TWh. The 11th Basic Plan projected electricity consumption would grow at an annual average of 2% from 2024 to 2038, reaching 735.1TWh by 2038. Simply extending this trajectory would put 2040 consumption at approximately 765TWh.
Moreover, with the Lee administration signaling its intention to accelerate electrification and artificial intelligence policies, total electricity consumption is expected to rise far more steeply than the 11th plan's projections. In November last year, the government finalized its 2035 Nationally Determined Contribution, targeting a 53-61% reduction in greenhouse gas emissions from 2018 levels by 2035. The plan outlined electrification initiatives across industrial sectors, including achieving a 40% share of electric and hydrogen vehicles in new car sales by 2030, commercializing hydrogen-based steelmaking and electric naphtha cracking facilities, and expanding heat pump deployment. While the 11th plan projected electrification demand would grow from just 1.2TWh in 2025 to 63TWh by 2038, the 12th plan is likely to show this demand increasing even more rapidly.
Finding solutions to meet this sharply increased power demand will become considerably more challenging. Although Korea has reduced its dependence on the Middle East for liquefied natural gas, approximately 15% of imported LNG still transits through the Strait of Hormuz. Considering energy security and the 2035 NDC targets, simply expanding LNG-based power generation will not be easy.
Expanding renewable energy capacity also faces structural constraints. Park Yu-mi, a researcher at the Korea Institute for Industrial Economics and Trade, noted, "If interest rates rise in the future, renewable energy investment, which is sensitive to capital financing costs, could contract relatively more. A 2 percentage point increase in interest rates raises gas power generation costs by only 11%, but renewable energy generation costs jump by 20%."
Experts are unanimous in calling for flexible strategies rather than relying solely on renewables. Chung Yong-hoon, a professor of nuclear and quantum engineering at KAIST, advised, "What matters is not just expanding renewable energy but properly configuring a flexibility package." Heo Jin, a professor of climate and energy systems engineering at Ewha Womans University, also emphasized, "There is a need to develop multiple electricity demand scenarios to respond to future uncertainties and provide necessary information for stable power supply and demand."
