Jung Da-hyun is a reporter at The Korea Times, covering social issues in Korea, including foreign residents, education, environment and politics. Driven by a deep interest in people’s stories, she focuses on investigative and feature reporting through direct interviews and field coverage. She received the Amnesty International Korea Media Award for her “Deepfake Crisis at Schools” series. Reach her at dahyun08@koreatimes.co.kr. Always open to hearing your stories.
Gov't weighs tiered electricity pricing to reverse business clustering around capital
Climate, Energy and Environment Minister Kim Sung-whan speaks during a press conference at Sejong Government Complex, Monday. Courtesy of Ministry of Climate, Energy and Environment
By Jung Da-hyun
Cheaper electricity, energy reform seen as tools to promote balanced development
The Ministry of Climate, Energy and Environment plans to roll out electricity pricing that varies by region in an effort to encourage companies to relocate outside the Seoul metropolitan area, in line with the Lee Jae Myung administration’s broader push for balanced national development.
Climate minister Kim Sung-whan said Monday that the government is reviewing a regional electricity rate system that would make operating costs more attractive in areas closer to power supply clusters, creating financial incentives for businesses to expand into provincial regions.
“The move is aimed at addressing the long-standing concentration of companies in the capital area, where firms tend to cluster to access talent and infrastructure,” Kim said.
Although electricity pricing reform must proceed cautiously due to Korea’s historically integrated national grid, which complicates region-specific cost calculations, Kim emphasized that the initiative is ultimately intended to reshape the country’s industrial landscape rather than merely adjust rates.
The president previously floated the idea during his New Year’s press conference last month, proposing that electricity prices could eventually vary between power-producing regions and more distant consumption areas.
The move aims to steer energy-intensive industries — including artificial intelligence and semiconductor manufacturers — to expand outside the capital region, as companies heavily reliant on electricity would have less incentive to remain in the Seoul metropolitan area if operating costs rise relative to regions with abundant power supply.
“Companies will naturally gravitate toward southern regions rich in renewable energy and lower electricity prices,” Lee said. “The government will support that shift through tax incentives, regulatory easing and infrastructure investment, steering higher-value industries toward regional economies.”
Reflecting this broader policy goal, Kim said promoting balanced national development remains a core consideration in the ministry’s policy direction.
“If companies find it harder to recruit talent farther from the capital, lower electricity costs could provide an incentive for them to move into regional areas,” he added.
Officials are examining pricing models that prioritize large-scale electricity users, focusing on transmission costs and supply efficiency.
Climate, Energy and Environment Minister Kim Sung-whan points to a graph explaining the daily power supply and demand status to reporters in his office at Sejong Government Complex, Monday. Courtesy of Ministry of Climate, Energy and Environment
The pricing overhaul is being advanced alongside a broader shift toward renewable energy, which the government sees as both an environmental imperative and an industrial opportunity. The ministry plans to significantly expand renewable capacity, lower generation costs and ensure that economic benefits from solar and wind projects are shared with host communities.
Allowing local residents to share in renewable energy profits is expected to strengthen regional economies while improving acceptance of new projects. At the same time, the government aims to boost the competitiveness of domestic renewable industries as a future growth engine.
Meanwhile, industrial electricity rates remain a policy concern. While Korea’s prices are lower than in Europe, they are higher than in China, adding cost pressure on manufacturers.
To address this, the ministry is exploring time-of-use pricing aligned with renewable generation patterns — particularly midday solar output — which can reduce overall electricity costs for many businesses.
“Combined with regional pricing adjustments, the measures could help firms maintain competitiveness outside the capital,” Kim said.
Kim acknowledged that despite Korea operating one of the world’s most stable power grids, expanding renewable energy will require significant upgrades to transmission infrastructure and storage capacity. Managing supply fluctuations — including nighttime demand and low-wind periods — will be critical to maintaining reliability during the transition.
“New grid operation challenges arising from the renewable energy transition are issues the climate ministry and Korea Electric Power Corporation must address,” Kim said. “This is not a matter for debate — it requires concrete solutions.”