Government Releases Report on 10 Key Technologies
The authors are analysts of NH Investment & Securities. They can be reached at minjae.lee@nhqv.com and ys.jung@nhqv.com, respectively. -- Ed.
Having last year selected ten key technologies for achieving carbon neutrality by 2050, the Korean government recently published a report on the direction of development for these technologies. Energy transition-related technology development is to center upon improving efficiency and cutting prices. Tax credits for related technology development and facility investment are to begin in earnest from next year.
MSIT releases report on direction of development for ten key technologies
The Korean government announced its 2050 carbon neutrality strategy in Dec 2020, selecting key technologies and identifying the related direction of development. On Sep 12, the Ministry of Science and ICT (MSIT) published a detailed report on the direction of development for the ten technologies under focus.
As it is urgent to develop technologies that can help achieve carbon neutrality, the ten key technologies span across diverse fields, namely solar and wind power, hydrogen, bio energy, steel & cement, petrochemical, industrial process upgrading, transport efficiency, building efficiency, digitalization, and carbon capture, utilization, and storage (CCUS). Over the long term, the government is forecast to expand tax benefits for related technology development and facility investment, including 20~40% tax credits for R&D activities involving new growth engines and proprietary technologies.
Energy transition-related technology development to focus upon improving efficiency and cutting prices
Out of the ten key technologies, solar and wind power, hydrogen, and bio energy are related to energy transition. With respect to solar power, it is crucial to develop ultra-light solar cells and next-generation technologies that can increase efficiency, and to install floating solar power systems, at a time when commercial solar power technology has hit a wall and the need for diversification of locations for installation is growing. Over the mid/long term, technology development is to focus upon boosting solar module efficiency from 27% as of now to 40% by 2050, upping the efficiency of tandem solar cells and multi-junction solar cells, and reducing floating solar power system prices.
In the case of wind power, it is essential to make turbines bigger. Currently, the government plans to adopt larger wind turbines than today’s 5.5MW ones (eg, 15MW wind turbines by 2030 and 20MW wind turbines by 2040.) Efforts to develop large turbine blades, improve technological independence for key parts, develop floating systems, and boost operational reliability also need to be made. As major overseas wind turbine makers have already developed new 15MW turbines, the technological gap between domestic and overseas wind turbine players presents a concern.
As for hydrogen power, the government is aiming to secure technologies regarding all stages of hydrogen power development in order to build a hydrogen-based economy. Its goal includes lowering the supply price of hydrogen fueling stations from W7,000/kg today to W3,000/kg by 2040, while also lowering hydrogen power generation cost from W250/kWh to W131/kWh over the same period. Projects for mid-sized reformer systems and large-scale water electrolysis are underway. Meanwhile, development of fuel cell-based distributed generation systems, ammonia-fueled turbines, and hydrogen storage & transportation are all slated to be completed by 2030.
In addition, in order to solve renewable energy intermittency and ensure system stability, technological developments and investments for power systems, including large ESSs and AC/DC hybrid distribution systems (slated for 2022), are viewed as being essential.