1. October 16, 2007 Korea Energy Management Corporation New & Renewable Energy Center

2. Contents Status of NRENRE Policies

3. Status of NRE

4. Instability of energy market * Continuous High oil price expected Exhaustion of fossil fuel * Oil production peak expected in 2020 (IEA) * Oil production peak expected in 2020 (IEA) Obligation to reduction of GHG emission * 10 th Ranked in the World (2003) New & Renewable Energy New & Renewable Energy Need to Change Energy Paradigm Why Renewables ? New Growth Engine

5. Brief History Made legal basis for NRE Technology Development Promulgation of the Promotion Act for NRE Development 1987 Started NRE Deployment Amendment; Act for NRE Development, Utilization & Deployment 1997 Obligation to the Public Office, Certification, FIT etc Amendment of the Promotion Act for NRE Development, Utilization & Deployment 2002 10-Year Nat’l Basic Plan For NRE Technology Development and Deployment Target : 3% by 2006, 5% by 2011 2003 Standardization, RESCO etc Amendment of the Promotion Act for NRE Development, Utilization & Deployment 2004

6. Category by the Act 11 kinds of New & Renewable Energy

7. Money 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 6.3 20.8 26.3 27.0 196.4324.2 409.6 435.1 - Local Energy

8. Budget (Billion Won) * Only 4% of USA

9. Achievements 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

10. Achievements 0.13.6 13.5MW PV 0.732.5 98.7 MW Wind 0.734.7 1,337,443 m 2 Solar Thermal 3.7181.3 LFG(30MW, 16kNm 3 /h), Bio-diesel(191Mt/y), etc Bio 18.8918.5 1,584 MW Hydro 75.93,705.5 Waste gas incinerators(6,317t/d), Municipal waste incinerators(11,310t/d), etc Waste % Amount (1000toe) Capacity Resource Amount and percentage of supply by individual energy resources(2005) Waste & Hydro power accounts for the most

11. 1995 1997 1999 2000 2001 2002 2003 2004 2005 200 120 90 60 30 1 (1000 toe) Bio energy Solar 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 Trend PV

12. 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 1995200120022005 Total Power Generation 184,660285,223306,474364,639 NRE Power Generation 2,7622,3493,3303,950 NRE ratio 1.50.81.1 - Commercial use 2,7592,3413,3183,928 - Non Commercial use 2.68.011.821.2 (Unit: GWh) NRE Power Generation

13. Hydro(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 WindLFGPVPV 1.4 129.8 24.8 14.8 14 70.8 100.2 129.6 NRE Power Generation 7.0 3.7 7.7

14. 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 (’02) (’05) 98MW

15. 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 5.4MW (’02) 8.1MW (’05) 13.5MW

16. NRE Policies in Korea

17. Deployment Target 8.00.2- Geothermal 9.72.10.1 Wind 2.50.40.1 Photovoltaic 2.40.7 Solar Thermal 7.88.33.0 Bio 12.323.627.6 Hydro 57.364.768.5 Waste 201120062003Resources Annual Target (%) 5% of Total Energy Consumption by 2011 52.52.1Goal

18. R&D Demonstration International Collaboration RD&D Deployment Solar Roof F I T Public Obligation RPA Loan Deployment Infrastructure Certification Human Resources Development RESCO NRE Policy Scheme

19. Achieve 70~90 % level of advanced countries’ by 2011 PV, Hydrogen/fuel cell in the 3 rd 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 Policies Research & Development

20. Request for evaluation (Manufacturer, Importer) Test (Testing Laboratory) Request for Certification (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 Infrastructure

21. 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 Infrastructure

22. SolarBioWindHydroCoal-gas 56138991810 Fuel cellWasteGeoHydrogenTotal 212518010969 * 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 Strengthening Infrastructure

23. ~’98‘99’00‘01’02‘03’04‘05‘06Total Bud. 5,109700 7351,2002,0754,69623,30028,00066,515 [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 Programs

24. (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 Programs

25. YearNumber 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 (Unit: M won, 1000won=1US$) Deployment Programs

26. 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 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 Tide power Waste Landfill gas Hydro Wind Photovol- taic Resource 62.81~ 90.50 SMP+5 68.07 (20MW ↑) 74.99 (20MW ↓) 72.80~ 86.04 107.29 711.25 (30kw ↓) 677.38 (30kw↑) Fixed Price Deployment Programs

27. 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 Programs Year The No. of Installation Plan Construction expenses (A) Investment for NRE systems Investment ratio of NRE systems(B/A) Solar Thermal PhotovoltaicGeothermalTotal(B) 2004 30 2131.44.910.416.67.8 % 2005 113 8682.714.834.5525.9 % 2006 1291,2852.324.840.767.85.3 % Total 272 2,3666.444.585.6136.45.8 %

28. 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 Programs PVWindHydroFuel CellOthers Capa.(kW) 30,377184,55029,6303,500100,000

29. Loan & Tax Incentives The government provides long-term, low rate loans for the consumers or manufacturers of NRE systems which have been completely commercialized. The government provides long-term, low rate loans for the consumers or manufacturers of NRE systems which have been completely commercialized.  Loans are provided for up to 90 % of the total cost (up to 80 % for large corporations, up to 50% for public institution)  Total loans(~ 2006) : 619 billion won 10 of NRE systems can be deducted from the income tax or corporate income tax. 10 percent of total investment in installation of NRE systems can be deducted from the income tax or corporate income tax. Deployment Programs

30. Cooperation Suggestions

31. OVER VIEW Hosted by : Ministry of Commerce, Industry and Energy (MOCIE) Organized by : Korea Energy Management corporation(KEMCO) History : launched(1975), the 27 th (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 : 10,368m 2, 192 companies, 585 booths Visiors : 25, 314 Parts & Components Fuel & Heat Using Equioment Electrical Equpment New&Renewable Energy Public and R&DTotal Companies2614247553192 Booths564661278144585

33. Gyeonggi Province Invites you

34. Strong Industrial Base Pyeongtaek 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(5 th 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 Government Support for FDI

35. Vast overseas market 5 North East Asia 19 % of World Population 1 billion Gyeonggi Province 22 % of national population 10million 21 % of national GRDP 48 % of national population 23million Metropolitan Area 44 % of national GRDP

36. Tax Deduction Employment Subsidy $3,000/person max National Tax upto 7 yrs Local Tax 15yrs Tariff & VAT 3yrs Road map comparision Recommendable sites Pyeongtaek 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

37. 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 82.6 % 44.2 % 53.9 % Source : Korea Semiconductor Institute Association, Invest Korea 2006 Korea Statistical Office (2004) Gyeonggi 159 Gyeonggi 45,602 Semiconductor production volume Number of semiconductor related companies Employee numbers in 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