June 11 (Asia Today) — South Korea needs to reform its electricity market to respond to surging power demand from artificial intelligence and the expansion of renewable energy, the Korea Chamber of Commerce and Industry said Wednesday.

The chamber said the current power market structure is not enough to support private investment or the growth of new energy businesses, including energy storage systems and virtual power plants.

The business group raised the issue during a seminar in Seoul co-hosted with the Korean Resource Economics Association. Participants discussed ways to reform the electricity market and promote new energy businesses as AI adoption and renewable power generation expand.

“As the power industry shifts from a centralized structure to a distributed and digital-based system, various new businesses are emerging,” said Cho Hong-jong, president of the Korean Resource Economics Association and a professor at Dankook University. “To make the energy transition a reality, it is necessary to build a competitive system based on market principles.”

Joo Sung-kwan, a professor at Korea University, said South Korea’s current electricity market has structural limits because wholesale prices are set a day before electricity is supplied, based mainly on fuel costs.

“This creates significant rigidity because real-time supply and demand conditions cannot be flexibly reflected in prices,” Joo said.

Joo said the market needs pricing signals that respond to supply and demand. Prices should rise when electricity supply is tight to encourage lower consumption and fall when supply is sufficient to promote use, he said.

For new energy businesses to secure profitability and increase investment, Joo said South Korea should move from the current day-ahead market to a real-time market. He also called for a price-bidding system in which power generators and electricity retailers submit bid prices.

Panelists also said South Korea needs a market environment and regulatory system that can attract private investment.

Lee Seo-jin, a professor at Hongik University, said tailored compensation systems for new energy businesses and a predictable policy environment are more important than simple market opening.

Huh Yoon-ji, a professor at Dankook University, said wholesale price normalization and retail electricity rate reform must proceed together to secure economic viability. She also called for independent governance to supervise the electricity market.

Industry officials said the pace of reform should accelerate.

Lee Hyo-seop, vice president of Encored, said his company is preparing a virtual power plant business using AI-based forecasting technology, but uncertainty over the schedule for electricity market reform is making business development difficult.

Yeom Sung-oh, Seoul representative of Gurin Energy, said power supply flexibility and sustainability will be crucial in the AI era. He called for preemptive institutional support covering power grids, energy storage systems and data centers.

The Korea Chamber of Commerce and Industry said private-sector energy businesses are essential to address rising electricity demand from AI and the growing variability of renewable energy.

“Companies need a more predictable electricity market so they can invest in high-cost new technologies,” said Kim Min-seok, head of the chamber’s Green Energy Center. “Institutional foundations, including regulatory innovation and a supportive market environment, must be established.”

“To secure competitiveness in power infrastructure in the AI era, discussion on electricity market reform can no longer be delayed,” Kim said.

— Reported by Asia Today; translated by UPI

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