The South Korean government will provide a total of 850 billion won to the Korea Electric Power Corporation (KEPCO) next year. This includes a cash injection of 500 billion won to alleviate the interest burden from accumulated deficits, as well as 350 billion won in government support for electricity discounts for vulnerable groups and educational facilities that KEPCO has been covering.
The Ministry of Climate, Energy and Environment announced on September 1 that the total expenditure for the 2027 budget and funds will increase by 18.3% (3.9737 trillion won) from this year, reaching a record 25.7319 trillion won. This is the largest budget in history, including projects under the Future Response Fund managed by the Ministry of Strategy and Finance.
The budget proposal for next year includes a new allocation of 500 billion won to improve KEPCO's financial structure. While there have been some past cash injections, such measures have not been taken recently.
Since 2021, KEPCO has faced a cumulative deficit of 34 trillion won due to soaring international energy prices and insufficient adjustments to electricity rates. The annual interest cost related to this deficit amounts to approximately 1 trillion won. The government plans to reduce KEPCO's financial burden by providing an amount equivalent to half of the annual interest cost.
The government will also support the 350 billion won in electricity welfare and special discount costs that KEPCO has been shouldering. This includes 197 billion won for welfare discounts for vulnerable groups and 153 billion won for heating and cooling costs for elementary, middle, and high schools, as well as support for damages from free trade agreements (FTAs).
A ministry official, during a briefing, confirmed that the total investment of 850 billion won can be viewed as a combination of the cash injection and electricity discount support, adding that additional costs for transmission network-related projects will also be covered.
The budget for financial support for renewable energy will more than double from 648 billion won this year to 1.5108 trillion won next year. The budget for solar loans for factory rooftops will increase from 122.9 billion won to 544 billion won, a 4.4-fold increase, and the number of households eligible for residential solar support will rise from 100,000 to 200,000.
Additionally, the government will enhance investments in the green transition of the economy and daily life. The budget for electric vehicle distribution will increase by 32.8% from 1.6114 trillion won to a record 2.1403 trillion won. The number of subsidized electric vehicles will expand from 300,000 this year to 430,000 next year, with electric trucks increasing from 35,000 to 61,000 and electric vans from 3,800 to 4,700.
Conversely, the budget for charging infrastructure will be slightly reduced. With approximately two electric vehicles per charging station already established, the government has determined that the previous year's budget execution rate was only about 60%. Instead of increasing the number of chargers, the focus will shift to enhancing rapid charging and services like V1G and V2G.
Furthermore, the budget for electrifying thermal energy, including heat pumps, will increase from 15.7 billion won to 85.9 billion won, a 5.5-fold rise. However, as the program only began full-scale distribution in August, sufficient verification of government-level results has not yet been completed. The targets for next year's joint housing demonstration and installation methods are still being discussed with the Korea Land and Housing Corporation (LH) and private construction companies.
No separate budget has been allocated in anticipation of new nuclear power plant construction as part of the 12th Basic Plan for Power Supply and Demand, due to the energy mix still being undecided. The budget for small modular reactor (SMR) manufacturing will increase from 18.8 billion won to 23.5 billion won.
The Ministry of Climate has restructured expenditures by approximately 2.7 trillion won through the termination and reduction of support for the Sunshine Income Village program, assistance for old diesel vehicles rated at level 5, and the installation of Internet of Things (IoT) systems at air pollution emission sites.
This budget proposal will be submitted to the National Assembly on September 2 and is expected to be finalized in December after review and approval by the Assembly.
Ministry of Climate Planning and Coordination Director Ahn Se-chang stated, "We have structured the budget to support the infrastructure needed for advanced industries, as well as the green transition through the distribution of renewable energy, electric vehicles, and heat pumps. We will work to ensure that this is reflected without issues during the National Assembly review process."
* This article has been translated by AI.
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