Efficient power grid planning and connection management are essential for expanding grid integration of renewable energy. In Korea, KEPCO currently oversees both grid planning and connection management. However, given KEPCO's financial ties to thermal generation assets and its statutory obligations to reinforce and maintain transmission and distribution facilities, it is difficult to expect KEPCO to have strong incentives to proactively expand grid integration of renewable energy, whose output is inherently more volatile.

In the United Kingdom and the United States, grid construction planning and generation facility connections are managed through an "independent regulatory agency" and a "system operator." In both countries, the system operator develops long-term transmission grid plans, grid owners implement construction accordingly, and the system operator also manages grid connections. In addition, the independent regulatory agency governs the authority of grid owners and the system operator through regulatory rules or contractual instruments, and determines transmission grid charges independently from the government — thereby preventing conflicts of interest on the part of grid owners and promoting efficient grid operations.

To incentivize KEPCO to expand grid integration of renewable energy and to promote efficient grid operations, this report proposes the following reform directions.

Separation of Grid Ownership, Operation, and Regulation

To counter KEPCO's conflict of interest with respect to expanding grid integration of renewable energy, authority over transmission grid planning and connection management should be transferred to the system operator, the Korea Power Exchange (KPX) — in a manner comparable to the roles assigned to NESO and ISOs/RTOs. In addition, a higher-level independent regulatory agency, modeled on Ofgem or FERC, should be established to define the scope of authority delegated to the system operator and to approve the operational rules developed by the system operator based on stakeholder input.

Ensuring the Independence of the System Operator and the Regulatory Agency

KPX should move away from its decision-making structure centered on traditional power sources by ensuring broader participation from diverse member companies and relevant stakeholders in its governing bodies. The independent regulatory agency should be established as a new central administrative agency placed directly under the Prime Minister's Office, separated from the Ministry of Climate, Energy and Environment, in order to ensure its independence. It should also be endowed with quasi-legislative functions, enabling it to independently establish regulatory rules — following the model of Ofgem or FERC.

Reforming Grid Connection Policies for Fairness and Efficiency

As demonstrated by the U.K.'s Connection Reform and the U.S.'s Order No. 2023, Korea should likewise shift the principle governing the order of grid connections for generation facilities — moving away from a first come, first served approach toward a first ready and needed, first served principle. Rather than relying on reactive measures that separately withdraw and reallocate phantom capacities, renewable energy facilities that are ready for connection should be granted timely access to the grid under the oversight of an independent agency.