The South Korean government has designated seven regions, including Jeju Island and Haenam in South Jeolla Province, as distributed energy zones, granting them regulatory exemptions and access to lower electricity rates.

The Ministry of Trade, Industry and Energy announced on Wednesday that it held a working committee meeting on distributed energy zones and selected seven out of 11 applicant local governments as final candidates.

A distributed energy zone is a system designed to address problems caused by the centralized power grid reliant on long-distance transmission, by producing electricity closer to the point of consumption.

Once designated as a special zone, regulatory exemptions allow for the development of new energy businesses, and direct electricity trading becomes possible, promoting competition among local power producers.

Jeju Island, Busan, Uiwang in Gyeonggi Province, and Pohang in North Gyeongsang Province were selected for New Industry Activation Type zones.

Jeju plans to pilot a project that uses electric vehicles (EVs) as energy storage systems (ESS), charging and discharging to participate in the electricity market.

This involves supplying or selling unused power during driving.

Busan will establish the country’s first ESS farm with a capacity of up to 500 megawatt-hours, which will supply power to Eco Delta City’s data centers and port vessels.

Uiwang will use ESS to directly supply electricity to nearby EV charging stations. Pohang will test the supply of carbon free electricity generated by ammonia-based hydrogen engine power facilities.

Regions selected for the Demand Attraction Type zones include Ulsan, Seosan in South Chungcheong Province, and Haenam.

Ulsan and Seosan plan to have local power products supply electricity at reduced rates directly to petrochemical companies in local industrial complexes.

Haenam aims to attract an artificial intelligence (AI) data center to the large-scale solar power complex in Solasaedo.

The New Industry Activation Type zones not only benefit from regulatory exemptions but also receive up to 2 billion won in government funding per zone.

Demand Attraction Type zones receive reduced ancillary costs for electricity trading and preferential treatment in grid impact assessments.

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