South Korea Smart Grid Market Assessment, By Network Area [Home Area Network, Neighborhood Area Network, Wide Area Network, Long Range Wide Area Network], By Components [Hardware, Software], By Application [Distribution Automation, Conservation Voltage Re

South Korea Smart Grid Market Assessment, By Network Area [Home Area Network, Neighborhood Area Network, Wide Area Network, Long Range Wide Area Network], By Components [Hardware, Software], By Application [Distribution Automation, Conservation Voltage Reduction, Substation Automation, Advanced Metering Infrastructure, Others], By Region, Opportunities and Forecast, 2017-2031F

South Korea smart grid market is projected to witness a CAGR of 18.6% during the forecast period 2024-2031, growing from USD 1.44 billion in 2023 to USD 5.62 billion in 2031. The market is driven by factors such as strong government support and ambitious policies aimed at revamping the nation's energy infrastructure. Recently, South Korea’s strategic smart grid roadmap has marked impressive growth, including extensive smart meter deployment, with fast nationwide coverage completion in the upcoming years. Moreover, the country leads in developing and implementing energy storage systems (ESS), continuing to develop a demand response (DR) market, and is making strides in hydrogen and fuel cell applications in transport.

Additionally, smart microgrids have shown progress in more than 1,250 systems in operation that interlink renewable energy sources at different sites. As of 2024, it has reached a combined storage capacity of 4.3 GWh. Furthermore, the market is driven by various factors including increasing energy demand, grid reliability needs, and ambitious renewable energy targets. The country has been proactive in terms of policies and incentives to utilities and consumers to execute smart grid initiatives for smart meters, advanced sensors, automation, and management systems to provide real-time monitoring and control of energy use. The Korean government has set an aggressive target to equip 22 million households with smart meters by late 2024, which shall reinforce South Korea's position in the forefront of a smart grid revolution.

As South Korea is highly dependent on fossil fuels to generate electricity, there is a significant need for smart grid solutions. For instance, in 2023, over 61 percent of the country's electricity supply was derived from coal, gas, and oil. Out of these, coal and gas contributed more than 32 percent and 27 percent respectively, while oil contributed around 0-1%. The dependence has created a need to diversify energy sources and enhance efficiency. Advanced metering infrastructure, distribution automation, and the integration of renewable energy sources are integral in minimization of South Korea's dependency on fossil fuels while optimizing its energy consumption patterns and grid management.

Industrial Energy Demand to Fuel Smart Grid Adoption

South Korea consolidated its position as the world's seventh-largest energy consumer in 2022, with the yearly electricity consumption reaching 547.9 terawatt-hours. It showed a year-on-year increase of 2.7 percent, driven mainly by brisk demand from industrial sectors due to its export-driven economy nature. It includes industries such as steel, petrochemicals, and electronics, which require huge energy inputs in their manufacturing processes and have contributed significantly to the country's overall energy demand.

The high energy intensity of these industries underlines the critical requirement for efficient management of energy. Smart grid technologies have been one of the key solutions that enable sophisticated capabilities in optimizing energy distribution, improving grid reliability, and operational cost reduction. Moreover, with South Korea's aspirations for reducing its carbon footprint and international climate-related commitments smart grids are necessary for effectively integrating renewable energy sources such as solar and wind power with grid infrastructure. The confluence of industrial demand and environmental imperatives underlines the rising momentum in South Korea's smart grid market.

Synergistic Impact of Government Initiatives and Technology

Digital advancements are crowned by significant initiatives such as the Digital New Deal, which aims to build robust digital infrastructure to support public services and commercial activities, and the Green New Deal, which is meant to install green infrastructure supporting energy supply and demand. The South Korean government is currently interested in energy-efficient infrastructure with these initiatives complementing each other in synergistically supporting the smart grid network. Further, technological progress in communication and data analytics has strengthened South Korea's smart grid market. These initiatives allow greater integration of renewable energies from solar and wind power to optimize their contribution to the overall energy mix while maintaining grid stability.

AMI to Revolutionize the Smart Grid Sector in South Korea

AMI is one of the key technologies promoted by the government to revolutionize the energy sector in South Korea. By measuring and managing electricity with accuracy, AMI allows communication in real-time, from utilities to consumers through the use of smart meters.

Through the installation of smart grid meters nationwide, the government opted deployment of AMI as the key component under the 2nd Intelligent Power Grid Master Plan, where 22.5 million homes and buildings will reap the benefits. The program enhances the operational efficiency of utilities and enables detailed data analysis for consumers to save energy and cut costs. Strategic promotion of AMI under the smart grid framework ignites innovation, increases reliability, and optimizes energy management in the nation, allowing rapid acceleration of the South Korean smart grid market to take place within the next couple of years.

Expansion Propelled by Regional Initiatives

Regions such as Jeju and Gyeonggi in South Korea are at the forefront in aiming sustainable energy future, which is poised to fuel demand in the smart grid market. For instance, the Carbon-Free Island JEJU by 2030 (CFI2030) policy shows commitment towards environmental care and technological innovation. By setting carbon neutrality, Jeju showcases a forward-thinking approach to energy management and environmental sustainability through the adoption of renewable energy, electric vehicles, smart grids, and microgrids.

Similarly, Gyeonggi Province launched the 'Gyeonggi RE100 Vision' in April 2023, aligning with the global RE100 campaign for the use of 100% renewable energy. The launch is intended to enhance renewable energy capacity to 9 GW by 2026, significantly expanding the renewable energy infrastructure. Public institutions in the province of Gyeonggi-do have committed to the adoption of renewable energy, setting goals of increasing generation from 5.8% in 2021 to 30% by 2030. The goal will improve the security and environmental sustainability of energy. Gyeonggi is expected to be included among the top places where renewable energy technologies are being adopted. Gyeonggi aims to target a 40% reduction in greenhouse gas (GHG) emissions by developing smart grid technologies that optimize the integration and distribution of renewable energy.

Future Market Scenario (2024 – 2031F)

Future strategies will prioritize efficient grid management to minimize congestion and ensure minimal curtailment of renewable energy sources. It will be facilitated by advanced smart grid technologies, crucial for dynamically balancing supply and demand.

Mass adoption of EVs will drive the need for strong EV-charging infrastructure as a part of smart grids, promoting low-carbon transportation in a great way, allowing flexibility and grid management in the forecast period.

South Korea is in stage 1 of variable renewable energy (VRE) integration. It means the country is in the initial stages of VRE integration into its power grid and in the forecast period it is expected to be characterized by the optimization of grid operations, increasing flexibility, and active VRE management to ensure stable and reliable grid operation. Currently, the low total capacity generation from VRE does not have a significant effect on the overall power system.

With growing concern for the efficient management of peak electricity demand, there will be a growing implementation of Demand Response (DR) programs. Additionally, increasing energy storage capacities will be important in increasing flexibility and resilience in grid infrastructures for South Korea.

Key Players Landscape and Outlook

Companies play a vital role in the South Korea smart grid market, using different ways to capitalize on the growing demand for efficient energy management solutions. IBM is known for its data analytics and cloud computing, making grid operations and energy use more efficient. On the contrary, Honeywell has strong automation and control systems that allows for optimized grid reliability.

Furthermore, one of the most influential players is Korea Electric Power Corporation (KEPCO), which aims to deploy Advanced Metering Infrastructure (AMI) systems aggressively. KEPCO planned to achieve more than 100% AMIs in new private buildings and over 50% in existing buildings in 2022. In 2025, KEPCO targets full coverage of AMI across all sectors, thus committed to totally monitoring energy use and enhancing its efficiency in South Korea's smart grid market.