October 16 , 2007October 16 , 2007

Korea Energy Management Corporation

New & Renewable Energy Center

ContentsContentsStatus of NRE

NRE Policies

Status of NRE

Instability of energy market * Continuous High oil price expected* Continuous High oil price expected

Exhaustion of fossil fuel

* Oil production peak expected in 2020 * Oil production peak expected in 2020

(IEA)(IEA)

Obligation to reduction of GHG emission

* 10* 10thth Ranked in the World (2003) Ranked in the World (2003)

New &Renewable

Energy

New &Renewable

Energy

Need to Change Energy

Paradigm

Why Renewables ?Why Renewables ?

New Growth Engine

Brief HistoryBrief History

Made legal basis for NRE Technology Development •Promulgation of the Promotion Act for NRE Development19871987

Started NRE Deployment•Amendment; Act for NRE Development, Utilization & Deployment19971997

Obligation to the Public Office, Certification, FIT etc•Amendment of the Promotion Act for NRE Development, Utilization & Deployment

20022002

10-Year Nat’l Basic Plan For NRE Technology

Development and Deployment• Target : 3% by 2006, 5% by 2011

20032003

Standardization, RESCO etcAmendment of the Promotion Act for NRE Development, Utilization & Deployment20042004

Category by the ActCategory by the Act

11 kinds of New & Renewable Energy

Money InvestedMoney Invested

Budget Increased by 222% from 2004 to 2007

Unit : M US$

- Local Energy Development

Total

R & D

Deployment Subsidy

- General Subsidy

- Solar Roof System

- Renewable Energy Complex

Loan for Business

Feed-in tariff

2004 2005 2006 2007

73.2

66.9

94.0

92.3

124.5

137.5

132.6

154.1

9.7

6.3

36.9

14.0

23.3

16.0

40.0

13.0

28.0

49.0

47.5

13.0

41.0

49.0

51.1

13.0

50.0 117.0 121.3 121.3

6.3 20.8 26.3 27.0

196.4 324.2 409.6 435.1

- Local Energy

< Nat’l R&D Budget (Government Only)*>

0

50

100

150

200

250

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

others

clean energy technology

NRE technology

energy efficiency &conservation

Bu

dg

et (

Bill

ion

Wo

n)

* Only 4% of USA

AchievementsAchievements

Very Low Compared to Leading Countries

Ratio of NRE to Total Energy Consumption is 2.26% in 2006

Source : Energy Balances of OECD Countries, IEA, 2006. (Korea is from 2005, other countries from 2004)

2.26%

13.6%

5.9

4.2

3.8 3.2

AchievementsAchievements

0.13.613.5MWPV

0.732.598.7 MW Wind

0.734.71,337,443 m2Solar

Thermal

3.7181.3LFG(30MW, 16kNm3/h), Bio-diesel(191Mt/y), etc Bio

18.8918.51,584 MWHydro

75.93,705.5Waste gas incinerators(6,317t/d), Municipal waste incinerators(11,310t/d), etcWaste

%Amount(1000toe)CapacityResource

Amount and percentage of supply by individual energy resources(2005)

Waste & Hydro power accounts for the most

1995 1997 1999 2000 2001 2002 2003 2004 2005

200

120

90

60

30

1

(1000 toe)

Bio energySolar thermal

Wind

Most of energy sources, such as bio, wind, and PV, continuously increase

- Wind power generation has increased sharply since 2003

Most of energy sources, such as bio, wind, and PV, continuously increase

- Wind power generation has increased sharply since 2003

Deployment TrendDeployment Trend

PV

NRE Power occupies 1.1% of total power generation - The amount of NRE Power generation largely has been affected by hydro power generation

NRE Power occupies 1.1% of total power generation - The amount of NRE Power generation largely has been affected by hydro power generation

1995 2001 2002 2005

Total Power Generation 184,660 285,223 306,474 364,639

NRE Power Generation 2,762 2,349 3,330 3,950

NRE ratio 1.5 0.8 1.1 1.1

- Commercial use 2,759 2,341 3,318 3,928

- Non Commercial use 2.6 8.0 11.8 21.2

(Unit: GWh)

NRE Power GenerationNRE Power Generation

Hydro(93.5%), Wind(3.2%) and LFG(3.3%) are playing major roles in NRE Power generationHydro(93.5%), Wind(3.2%) and LFG(3.3%) are playing major roles in NRE Power generation

150

120

90

60

30

10

0

(GWh)

1998 2002 2003 2005

Wind LFG PV

1.4

129.8

24.814.8 14

70.8

100.2

129.6

NRE Power GenerationNRE Power Generation

7.03.7

7.7

Sharp increase of Wind power is owing to Feed in Tariff (107.29 Won/kWh)

Commercial Wind Farm(’05): Gangwon(28MW), Hangwon(10MW), Hankyung(6MW), Youngduk(40MW)

Power trade amount: 103GWh(’05)

Demonstration and evaluation : 750kW, 1.5MW wind power system

Construction of off-shore wind farm in Jeju

85MW

19,459MWh

129,888MWh

13MW

110,429MWh

Status of Wind Power Status of Wind Power

(’02)

(’05)

98MW

Feed-in-Tariff largely affects investment to PV

677.38 Won/kWh over 30kW, 711.25 Won/kWh below 30kW

5 Commercial PV Plant(’05), Total capacity 1.4MW

Power exchange amount; 524MWh(’05)

Production capacity of PV industry(’05)

Module: 95MW, PV cell : 8MW

7,044MWh

14,399MWh

7,355MWh

Status of PV Status of PV

5.4MW

(’02)

8.1MW (’05)

13.5MW

NRE Policies in Korea

Deployment TargetDeployment Target

8.00.2-Geothermal

9.72.10.1Wind

2.50.40.1Photovoltaic

2.40.70.7Solar Thermal

7.88.33.0Bio

12.323.627.6Hydro

57.364.768.5Waste

201120062003Resources

Annual Target (%)

5% of Total Energy Consumption by 2011

52.52.1Goal

R&D

Demonstration

InternationalCollaboration

RD&D RD&D

Deployment

Solar Roof

F I T

Public Obligation

RPA

Loan

DeploymentDeploymentInfrastructure Infrastructure

Certification

Human Resources

Development

RESCO

NRE Policy SchemeNRE Policy Scheme

Achieve 70~90 % level of advanced countries’ by 2011

PV, Hydrogen/fuel cell in the 3rd rank in the world

Hydrogen/Fuel cell, PV, Wind receive major support Integration of the stages of development, demonstration, deployment

7 areas such as Solar thermal, biomass and waste energy focused on commercialization

Multilateral: APP, IPHE, IEA/CERT, APEC etc Bilateral: China, Germany, Japan, Mongolia etc

General R&D

Large Project

R&D

Int. Collaboration

R&D PoliciesR&D Policies

Research & Development

<Certification Process><Certification Process>

Request for evaluation

(Manufacturer,

Importer)

Test

(Testing Laboratory)

Request forCertification

(Manufacturer,

Importer )

Certification

(Certification

Body)

CB: New & Renewable Energy Center - Inspection for certification - Issuing certificate - Post management for certified facilities

To Increase the reliability of NRE facilities for consumers and guarantee

the quality of the products 17 items : Solar panel, PV inverter, small wind system etc

To Increase the reliability of NRE facilities for consumers and guarantee

the quality of the products 17 items : Solar panel, PV inverter, small wind system etc

Certification

Strengthening InfrastructureStrengthening Infrastructure

Core Technology Research Center

Short-term re-education program to industries with various research facilities in the centers

* Fuel cell, PV, Wind

Specialized Graduate School Provide Master and Doctoral students for industries * Fuel cell, PV

Best Laboratory In-depth research to solve bottlenecks of technologies required by industries * Fuel cell, PV, Wind, Solar thermal, Bio-energy, Coal gasification

Human Resources Development Program

Strengthening InfrastructureStrengthening Infrastructure

Solar Bio Wind Hydro Coal-gas

561 38 99 18 10

Fuel cell Waste Geo Hydrogen Total

21 25 180 10 969

* A company can register several area, Net No. of RESCO is 648

Registration system for the specialized company in NRE

Pre qualification for government program (ex. Solar roof program)

Solar energy(PV, thermal) occupies 57%

Registration system for the specialized company in NRE

Pre qualification for government program (ex. Solar roof program)

Solar energy(PV, thermal) occupies 57%

Renewable Energy Service Company

< Status of RESCO (‘06) >< Status of RESCO (‘06) >

Strengthening InfrastructureStrengthening Infrastructure

~’98 ‘99 ’00 ‘01 ’02 ‘03 ’04 ‘05 ‘06 Total

Bud. 5,109 700 700 735 1,20

02,07

54,69

623,30

028,00

066,51

5

<Statistics><Statistics> [Unit: M won, 1000won=1US$]

Create initial markets for new technologies and systems

Establish and activate the deployment infrastructure of commercialized technologies and equipments.

Exhibition Prog: 80%, General Prog: 60%(PV, Wind), 50%(Sol.T., Geo), 30%(Waste)

Subsidy Budget(41.0 Billion won) for FY07 increase 46% compared to FY06

Create initial markets for new technologies and systems

Establish and activate the deployment infrastructure of commercialized technologies and equipments.

Exhibition Prog: 80%, General Prog: 60%(PV, Wind), 50%(Sol.T., Geo), 30%(Waste)

Subsidy Budget(41.0 Billion won) for FY07 increase 46% compared to FY06

Subsidy

Deployment ProgramsDeployment Programs

<Status of Regional Deployment Program> <Status of Regional Deployment Program>(Unit: M won, 1000won=1US$)

Support various projects carried out by local governments to

improve the energy supply & demand condition

The subsidy for building the infrastructure : up to 100% The subsidy for installing NRE systems : up to 70%

Support various projects carried out by local governments to

improve the energy supply & demand condition

The subsidy for building the infrastructure : up to 100% The subsidy for installing NRE systems : up to 70%

Regional Deployment

Deployment ProgramsDeployment Programs

-5,000

10,00015,00020,00025,00030,00035,00040,00045,00050,000

96 97 98 99 00 01 02 03 04 05 06

TotalWindPV

Year Number of Solar Roof HousesTotal

Capacity(kW)

2004  310, Single family houses 771

2005  907, Single family houses 2,356

2006 5,968, Single and multi family houses 7,348

Deploy 100,000 PV systems in residential houses by 2012

to foster PV facility enterprises .

Produce solar cells with low price & high efficiency The subsidy portion for each solar roof is 60%

Deploy 100,000 PV systems in residential houses by 2012

to foster PV facility enterprises .

Produce solar cells with low price & high efficiency The subsidy portion for each solar roof is 60%

100,000 Solar Roofs

<Statistics> <Statistics>(Unit: M won, 1000won=1US$)

Deployment ProgramsDeployment Programs

Compensates for the difference between NRE power generation cost and fossil fuel power generation cost to promote NRE.

From October 2006, the standard price has been modified and newly added .

Compensates for the difference between NRE power generation cost and fossil fuel power generation cost to promote NRE.

From October 2006, the standard price has been modified and newly added .

Feed In Tariff

< Fixed Standard Prices of individual resource (won / KWh) >< Fixed Standard Prices of individual resource (won / KWh) >

SMP : ’05 average(61.6won/kwh) The price is applied for 15 years

Capacity limit of the FIT is 100MW for PV, 1,000MW for Wind, 50MW for fuel cell

Tidepower Waste

Landfillgas

Hydro WindPhotovol-t

aicResource

62.81~

90.50 SMP+5

68.07 (20MW ↑)

74.99 (20MW ↓)

72.80~

86.04107.29

711.25 (30kw ↓)

677.38 (30kw↑)

Fixed Price

Deployment Programs Deployment Programs

<Statistics ><Statistics >

Newly Built Public Offices, which exceeds 3,000 square meters are to be equipped with renewable energy facilities; The Costs of them should be more than 5 % of their total construction expenses.

Newly Built Public Offices, which exceeds 3,000 square meters are to be equipped with renewable energy facilities; The Costs of them should be more than 5 % of their total construction expenses.

Obligation to the Public Institution

(Unit: M won, 1000won=1US$)

Deployment ProgramsDeployment Programs

Year The No. of Installation

Plan

Construction expenses (A)

Investment for NRE systems Investment ratio

ofNRE

systems(B/A)

Solar Thermal

Photovoltaic Geothermal Total(B)

2004   30  213 1.4 4.9 10.4 16.6 7.8 %

2005  113  868 2.7 14.8 34.5 52 5.9 %

2006 129 1,285 2.3 24.8 40.7 67.8 5.3 %

Total  272  2,366 6.4 44.5 85.6 136.4 5.8 %

Agreement between the Government & Public Energy Companies

KEPCO and 6 Other Companies

Korea District Heating Corporation, Korea Water Resources

Corporation plan to invest 1,260 M$ to NRE

120 M$ was invested in 2006, 430 M$ will be invested in 2007

An Introduction to RPS

Agreement between the Government & Public Energy Companies

KEPCO and 6 Other Companies

Korea District Heating Corporation, Korea Water Resources

Corporation plan to invest 1,260 M$ to NRE

120 M$ was invested in 2006, 430 M$ will be invested in 2007

An Introduction to RPS

Renewable Portfolio Agreement

Deployment ProgramsDeployment Programs

PV Wind Hydro Fuel Cell Others

Capa.(kW) 30,377 184,550 29,630 3,500 100,000

<Expected Investment to Power Generation Facility>

Loan & Tax Incentives

The government provides The government provides long-term, low rate loanslong-term, low rate loans for the for the consumers or manufacturers of NRE systems which have been consumers or manufacturers of NRE systems which have been completely commercialized. completely commercialized.

Loans are provided for Loans are provided for up to 90 %up to 90 % of the total cost of the total cost ( (up to 80 % for large corporations, up to 50% for publicup to 80 % for large corporations, up to 50% for public institution institution))

Total loans(~ 2006) : 619 billion won Total loans(~ 2006) : 619 billion won

10 10 percent of total investment in installation of NRE systems of NRE systems can be deducted from the income tax or corporate can be deducted from the income tax or corporate income tax. income tax.

Deployment ProgramsDeployment Programs

Cooperation Suggestions

OVER VIEW• Hosted by : Ministry of Commerce, Industry and Energy (MOCIE) • Organized by : Korea Energy Management corporation(KEMCO)

• History : launched(1975), the 27th (2007)

• Special Feature - the only total trade exhibition in energy industry in Korea - the biggest energy exhibition in Korea - certified by UFI(The Global Association of the Exhibition Industry)

2007 Show Report• Period : Oct. 2 ~ Oct. 5, 2007

• Venue : Pacific Hall, Convention & Exhibition Center (COEX), Seoul, Korea

• Exhibition Size : 10,368m2, 192 companies, 585 booths

• Visiors : 25, 314

Parts &

ComponentsFuel & Heat Usin

g EquiomentElectrical Equpm

entNew&Renewable

EnergyPublic and R&D Total

Companies 26 14 24 75 53 192

Booths 56 46 61 278 144 585

Gyeonggi Province Invites you

Strong Industrial BasePyeongtaek Oseong Complex Why Gyeonggi Province

11,736 Knowledge Based Companies- Semiconductor: World #2,5 enterprises , Gyeonggi 82.6% national production- TFT Display : Korea- 39% World Market, Gyeonggi- 44% of national display companies - Automotive : Korea - 5.5% World MS(5th largest), Gyeonggi- 4 major producers- Mechatronics : Gyeonggi- National #1 (1,577 companies)

2

Abundant Talented Human Resources - 700 universities, graduate schools in metropolitan area, 250,000 grandaunts (43% of nation)- 89,000 science and technology grandaunts per annum(42% of nation) - 77,797 R&D Personnel (33% of nation)

Well developed Traffic infrastructure-2 international airports -2 international sea ports-9 national express ways -6 railroads and 1 super express road (KTX)

Gyeonggi Province

Renewable energy as priority strategic industry

on planning

Strong GovernmentSupport for FDI

Vast overseas market

5

North East AsiaNorth East Asia

1919 % of World Population1 billion

Gyeonggi ProvinceGyeonggi Province

2222 % of national population 10million

2121 % of national GRDP

4848 % of national population23million

Metropolitan AreaMetropolitan Area

4444 % of national GRDP

TaxDeduction

Employment Subsidy

• $3,000/person max

• National Tax upto 7 yrs• Local Tax 15yrs • Tariff & VAT 3yrs

Road map comparision Recommendable sitesPyeongtaek Oseong Complex Incentives package

11-1

Employee Training Subsidy

Little or Free rent

• Foreign Industrial Complex

• 1% of public land price or Free

16* Detailed information of each item is in appendix

* Local tax : Acquisition tax / registration tax/property tax

• $3,000/person max

Grant• Grant for infrastructure

support • Negotiable according to

quality and size of investment

Strong Industrial Base Korea’s semiconductor export volume : US$34 billion Korea takes 41% of world market share in Memory IC amounting US$48.2billion

Pyeongtaek Oseong Complex Silicon Valley of Korea

Gyeonggi$24billion

82.682.6%

44.244.2%

53.953.9%

Source : Korea Semiconductor Institute Association, Invest Korea 2006 Korea Statistical Office (2004)

Gyeonggi159

Gyeonggi

45,602Semiconductor

Semiconductorproduction volume

Number of semiconductorrelated companies

Employee numbersin Semiconductor industry

13

Gyeonggi Province produces 82.6% of production volume of Korea, has 53% of national employees in semiconductor industries who are transferable to photovoltaic business