Climate minister formally opens door to new nuclear plants as South Korea eyes 50 GW power gap by 2040

The Lee Jae Myung government, which has positioned itself as pragmatic, formally opened the door Monday to building additional nuclear power plants. The move stems from projections that more than 50 GW of additional electricity will be needed by 2040 to power the Yongin and Honam semiconductor complexes and a surge in AI data center construction.

Minister of Climate, Environment and Energy Kim Sung-hwan told the National Fiscal Strategy Conference, chaired by President Lee at Cheong Wa Dae on Monday, that the government would gather expert opinion and hold a public deliberation process before deciding whether to introduce new nuclear power plants and small modular reactors, with the outcome to be reflected in the 12th Basic Plan for Electricity Supply and Demand.

Senior government officials, including Kim, had repeatedly raised the possibility of building reactors beyond the two large nuclear plants and one SMR already planned under the 11th basic plan — particularly after the announcement of three major projects including the southwestern semiconductor industrial complex. Monday's statement marked the first official confirmation that such an expansion is under formal review.

A draft of the 12th basic plan is expected before this year's regular National Assembly session. Kim said the "confirmed" increase in electricity demand from the Yongin and Honam semiconductor complexes and AI data centers alone amounts to 30 GW. Factoring in potential demand and the electricity needed to electrify transportation and heating, he said more than 50 GW of additional power could be required by 2040.

Kim said the government would accelerate what he called an "energy great transition" — expanding renewable energy generation capacity to 100 GW by 2030 while integrating nuclear power in parallel.

He also said the government would pursue a "personal solar income" scheme to promote residential solar adoption, under which households would receive cash payments for surplus electricity rather than the current net-metering arrangement.

Under the existing system, households with rooftop solar installations can offset their electricity bills by returning unused power to Korea Electric Power Corporation through net metering. Cash settlement is technically possible but subject to significant restrictions on frequency and amount.

Kim also said the government aims to make 87 islands — including Ulleungdo, Baengnyeongdo and Chujado — fully powered by renewable energy by 2030.

On electric vehicles, he said the government would consider differentiating annual cost-deduction limits for corporate vehicle purchases, addressing a problem where companies avoid the more expensive EVs because of a uniform annual cap on deductible expenses.

The government is also reviewing subsidies for commercial operators who switch combustion-engine taxis and buses to electric vehicles, he said.

At the meeting, participants raised concerns that the government had plans for expanding power supply but lacked a demand-side strategy. Lee Sang-min, a senior research fellow at the Narasallim Research Institute, said that "for about 360 days of the year — excluding the height of summer and winter — there is a surplus of electricity," adding that "trillions of won are being spent to build power plants for those peak periods, while the generation facilities sit idle the rest of the time."

Lee went on to say that capacity payments are made even when generation facilities are idle and that all such costs are passed on to electricity bills, calling for demand-side innovation to accompany any expansion of supply.

President Lee acknowledged the point, saying it is true that "enormous amounts of electricity are left over outside peak hours" and that the pricing system needs to change — cheaper rates when power is abundant, higher rates when it is scarce.

When briefed that residential electricity rates are about 20 won per kilowatt-hour cheaper than industrial rates, the president said that "if there were no concerns about inflation or household income, the reality is that residential electricity rates should be adjusted." He noted that raising residential rates would require voucher support for low-income households but that the current budget for such programs is insufficient, and he proposed further discussion on the matter.

The meeting also addressed water supply plans tied to the three major projects and other major industrial initiatives.

The Ministry of Climate, Environment and Energy said the Yongin and Honam semiconductor complexes alone will require an additional 2 million tons of water per day by 2034, with advanced industries including AI data centers needing a further 1 million tons per day by 2040.

The ministry said it plans to integrate the country's dams — currently divided by purpose into power generation, flood control, agricultural and pumped-storage categories — so that all can be operated as multipurpose facilities.

The ministry also said it would expand water storage capacity by raising the height of the Dongbok Dam in Gwangju and other measures, while broadening the reuse of treated wastewater and expanding seawater desalination.