As South Korean PPAs close in on grid parity, what does it mean for offtakers?

In March 2025, South Korea its 11th Basic Plan for Electricity Supply and Demand (BPLE), setting the direction for the country’s power system through 2038. The plan is a direct response to growing electricity demand driven largely by energy-intensive sectors like data centers and semiconductor manufacturing. 

Most notably, the BPLE accelerates the rollout of renewable energy, particularly across solar  and offshore wind.

This momentum positions Power Purchase Agreements (PPAs) as a key enabler of renewable investment, providing investors and developers with the financial certainty needed to secure financing.

Renewable demand is rising faster than supply, creating a widening shortfall.

Corporate demand for renewable energy in South Korea is largely driven by the global RE100 initiative and its domestic counterpart, K-RE100. Both programs share similar eligibility criteria and compliance options, including PPAs, RECs, Green Premiums, and on-site generation.

South Korea offers three main PPA pathways. In a South Korean Direct PPA (DPPA), the offtaker contracts with the generator via a renewable   power supplier, while a Third-Party PPA involves KEPCO   as an intermediary. Additional PPA charges such as network usage fees, transaction fees, additional settlement fees and power infrastructure fund fees are added to DPPAs, while Third-Party PPAs include all the previous additional PPA charges as well as power loss fees, welfare and special discount fees.   The Virtual PPA model, which is permitted under the DPPA scheme, typically involves the financial settlement of the PPA price against the KPX pool price, in return for Renewable Energy Certificates (RECs) to track against renewable consumption.

2024 was a record-breaking year PPA activity in South Korea, with an estimated 1.5 GW of capacity signed, making it the most active year on record. As of 2025, solar energy dominates the PPA landscape. 

Overview of South Korean PPA transactions to date

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Estimated PPA capacities signed from 2022 to 2025*

* PPA signed capacities are tabulated based on year of contract signing

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To date, K-RE100 has attracted 991 companies, which together reports using 910 GWh of renewable energy. However, most remain far from meeting their commitments. Likewise, among the 36 South Korean corporates in the global RE100, the majority had achieved less than half of their renewable targets by 2023. Taken together, both domestic and international RE100 participation reveal a substantial gap between ambition and delivery, one that translates into a strong pipeline for future PPAs and a major opportunity for developers.

Progress of South Korean corporates toward global RE100 targets (as of 2023)

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Why PPAs are set to win the race to grid parity 

South Korean corporates have three procurement options for green attributes: fully bundled PPAs, spot RECs , and the KEPCO Green Premium  . In 2024, Green Premium dominated as the main procurement method for green attributes (~98%) due to its low price and simplicity, though it suffered from credibility issues. However, that dynamic is shifting towards PPAs.

Past and future price trajectory of green energy procurement options in South Korea

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KEPCO’s recent industrial tariff hikes are reshaping the economics of corporate energy sourcing. As retail tariffs rise, adding Green Premiums makes less economic sense, prompting many companies to re-evaluate the case for switching to PPAs. 

Meanwhile, solar-backed PPAs are benefiting from falling equipment costs and more favourable financing conditions, resulting in lower PPA prices and making them increasingly competitive. If KEPCO’s retail tariffs continue to rise, the economic case for PPAs will strengthen further. In fact, for many load profiles, the all-in delivered cost of a PPA (including additional PPA charges) is already approaching (or even undercutting) the combined cost of retail tariff electricity plus the Green Premium or spot RECs.

What does this mean for offtakers? 

Before entering South Korea’s PPA market, offtakers should assess all available routes to market to support informed cost benchmarking. For offtakers, all PPAs carry price risk, where regulated tariffs (with or without green value) may fall below the strike price, reducing the economic value of the hedge. 

Renewable PPAs also involve intermittency risks, as generation may not consistently match demand across all intervals. This creates shape and volume deviations that require offtakers to buy additional energy at KEPCO’s retail tariff price. These risks can be mitigated through contractual clauses that shift responsibility for 24/7 load-matched delivery to the developer, which is a nascent developing requirement from offtakers. 

With a clear view of costs and risks, offtakers are better equipped to make informed decisions and contract with commercially viable projects. As market conditions evolve and PPAs become more competitive, South Korea presents a growing opportunity for offtakers to go green and support renewable investment.

How Baringa can help

Baringa works with offtakers, investors and developers across South Korea’s energy sector.

Our South Korea Wholesale Electricity Market Report offers in-depth analysis and insights into the nation's evolving energy landscape, helping clients identify optimal investment opportunities and strategic entry points. We also provide fundamentals based competitive analysis for renewable auctions based on our deep experience from not just South Korea but with other similar auctions around the world.

Would you like to learn more about the opportunities for investment? Or do you need support for market entry? Get in touch with our team.