S. Korea to invest W1.9tr in power and water for mega-projects; EV subsidies raised

The government will invest 1.9 trillion won ($1.38 billion) in power and water infrastructure to support mega-projects aimed at building a foundation for future growth, with record allocations for electric vehicle subsidies and heat pump programs set to accelerate the country's green transition.

The Ministry of Climate, Environment and Energy announced Tuesday that its total expenditure for 2027 — covering both the budget and funds — will reach 25.73 trillion won, an 18.3 percent increase from this year and the largest in the ministry's history.

The 2027 budget proposal focuses on four priorities: expanding power and water infrastructure to support advanced industry growth, pursuing a bold energy transition for carbon neutrality and energy security, delivering a green transition that citizens can feel in their daily lives, and protecting the public from climate disasters.

The ministry plans to accelerate large-scale infrastructure construction to ensure timely power and water supply for advanced industries such as semiconductors and AI data centers.

The 2027 government proposal allocates 1.94 trillion won for this purpose, with 1.55 trillion won earmarked for the power sector and 386.2 billion won for water supply.

In the power sector, the government will step up preemptive investment to ensure grid construction keeps pace with advanced industry growth and the expansion of renewable energy.

Plans include building demand-attraction substations and installing transmission-side ESS, large-capacity virtual transmission network ESS, and power quality stabilization facilities to maximize the use of existing lines.

To build out the power grid on schedule, the government will also support expanded underground cabling for new transmission lines and the installation of shared connection facilities for offshore wind power.

Investment in securing water for advanced industries will also be strengthened.

The government will pursue water supply projects for the Honam region semiconductor industrial complex — including the expansion of Dongbok Dam — as well as water supply for advanced industries such as semiconductors and displays in the Chungcheong region. It will also inject 250 billion won into Korea Water Resources Corporation to ensure stable water supply, and will set aside a separate budget to handle industrial wastewater from the Honam semiconductor complex.

To advance carbon neutrality and energy security, the government will more than double its renewable energy financing budget to around 1.5 trillion won.

Particularly, the loan budget for rooftop solar panels on factory buildings will be raised 4.4-fold, from 122.9 billion won this year to 544 billion won. The financing method for the "Sunshine Income Village" program will be fully converted to an interest subsidy scheme, and a community solar ESS project linked to the program will be significantly expanded.

The renewable energy distribution support budget will also increase by about 40 percent from this year. The residential solar budget will be set at 75 billion won — roughly double the supplementary budget figure for this year — expanding the number of eligible households from 100,000 to 200,000 so that individuals can directly benefit from renewable energy production.

Investment in greening the broader economy and daily life will also be strengthened.

The EV subsidy budget will be expanded to 2.1 trillion won, with the number of subsidized vehicles rising from 300,000 this year to 430,000. The subsidy for purchasing electric delivery motorcycles will increase from 10 percent to 50 percent.

The heat pump electrification program will be scaled up about 5.5 times from this year. The government will also supply 750 billion won in transition bonds to help high-emission industries shift to low-carbon, eco-friendly operations, and will pilot a 300 billion won green local bond support program to help local governments expand green infrastructure.

The budget also includes measures to protect the public from increasingly frequent extreme rainfall, droughts and algal blooms.

To prevent urban flooding, the government will intensify investment in deep underground rainwater tunnels near Gangnam Station and Gwanghwamun, as well as an underground drainage channel in the Dorimcheon area, with the aim of completing major construction before the 2029 flood season. Investment in water quality improvement to address algal blooms will rise 74.7 percent from this year to 598.6 billion won. To promote domestic recycling of rare earth elements, the government will provide 8 billion won to recycling companies for dismantling and preprocessing equipment that separates and sorts rare earth permanent magnets from discarded electronics and appliances.

As the humidifier disinfectant damage relief system transitions to a tort compensation framework, the government's contribution will be sharply increased from 10 billion won this year to 244.7 billion won to ensure prompt compensation for victims.

The budget proposal will be submitted to the National Assembly on Wednesday and is expected to be finalized in December after legislative review and approval.