With electricity demand surging amid the advancement of artificial intelligence (AI) and digital technology, and the growing need to manage the volatility of renewable energy, a proposal has emerged calling for power market reform to help new energy businesses take root.
The Korea Chamber of Commerce and Industry (KCCI) said Tuesday that it held a "Seminar on Revitalizing New Energy Businesses and the Power Market" together with the Korea Resource Economics Association at the international conference hall of the Chamber building.
The seminar discussed the limitations of the current power market system and ways to reform the pricing structure and governance to support the growth of new energy businesses.
Cho Hong-jong, president of the Korea Resource Economics Association, stressed the need to fundamentally improve the power market. "As the power industry shifts from a centralized model to a distributed, digital-based one, various new businesses are emerging," he said. "To make the energy transition a reality, we must urgently build a competitive system based on market principles."
Joo Sung-kwan, a professor at Korea University, emphasized that a "price signal" should function to disperse demand by raising prices when power supply is short, and conversely to promote usage by lowering prices when supply is sufficient. "Our current power market is a cost-based pool (CBP) market structure that determines wholesale prices based on fuel costs one day before electricity supply," Joo said. "As a result, it cannot flexibly reflect real-time supply and demand conditions in prices, creating significant market rigidity."
He added, "For new energy business participants to secure profitability and increase investment, the current 'day-ahead market' must be reformed into a 'real-time market.' We must transition to a price-based pool (PBP) market where power generators and electricity retailers present bid prices in both directions."
The need to create a market environment that can attract private investment and to establish independent governance ensuring autonomy in organization, personnel, and budget was also raised. Lee Seo-jin, a professor at Hongik University, explained, "Beyond opening the market, the key is creating a compensation structure tailored to new businesses and a predictable policy environment."
Heo Yun-ji, a professor at Dankook University, also advised, "Economic feasibility is secured only when fair price discovery in the wholesale market is linked with the normalization of retail rates. For successful power market reform, it is important to guarantee the independence of the power oversight governance the government is pursuing."
Industry players requested swift institutional support. Lee Hyo-seob, vice president of Encored, which is preparing a virtual power plant (VPP) business utilizing AI-based forecasting technology, said, "The uncertain schedule for power market reform makes it difficult to push the business forward in earnest," urging the establishment of a pricing system to guarantee profitability. Yeom Sung-oh, CEO of Green Energy Seoul, also said, "In the AI era, the flexibility and sustainability of power supply are key," referring to a proactive system encompassing the grid network, energy storage systems (ESS), and data centers.
Kim Min-seok, head of the KCCI's Green Energy Center, said, "To simultaneously solve the surge in power demand in the AI era and the volatility of renewable energy, revitalizing private new energy businesses is an important task. We must increase the predictability of the power market so that companies do not hesitate to invest in high-cost new technologies, and proactively build an institutional foundation that includes regulatory innovation and market environment creation."
