1. Korea’s Policy Direction for R&D and Dissemination of New & Renewable Energy Korea Energy Management Corporation OCTOBER, 2003

2. CONTENTS  Energy Statistics in Korea  History of NRE policies  Definition of NRE  Investments for NRE R&D and Dissemination  Status of NRE in Korea  Strategy for NRE R&D and Dissemination Strategy for PV, Fuel Cell, Wind Power

3. Energy Statistics in Korea ’97’98’99’00’01’02 GDP Growth (%) 5.0-6.710.99.33.16.3 Primary Energy Consumption Growth (%) 9.3-8.19.36.42.95.4 Energy/GDP Elasticity 1.861.220.850.680.920.85 Overseas Dependency (%) 97.697.197.2 97.3 ▣ GDP Growth and energy consumption

4. ▣ Primary Energy consumption PetroleumCoal Atomic Energy LNGOthers Share (%) 49.123.414.211.22.1 (year 2002) * Others include hydro power and NRE

5. ▣ Promulgation of the Promotion Act for NRE Development (1987) ▣ 10-year National Plan for Energy Technology Development (1997) ▣ Basic Plan for NRE Technology Development and Dissemination (2001) ▣ Amendment of the Promotion Act for NRE Development, Utilization & Dissemination (1997, 2002) ▣ 10-year National Basic Plan for NRE Technology Development and Dissemination (2003, not announced yet ) History of NRE policies

6. Definition of NRE ▣ The Definition of NRE is classified into the following two types - Renewable energy : Solar thermal, Photovoltaics, Biomass, Wind, Small-hydro power, Geothermal, Ocean, Waste - New energy : Fuel cell, coal conversion (liquefaction and gasification), Hydrogen Energy

7. Investments for NRE R&D and Dissemination ▣ Budget put into the NRE technology R&D from 1988 to 2002 amounts to 248.2 billion Won (includes 97.5 billion Won of private matching fund) ▣ In addition, 76.8 billion Won of subsidies and 305.8 billion Won of low interest loan have been invested for NRE dissemination. Solar Thermal Photo- volataics FuelCell Biomass Energy Waste Energy Coal Gasfica- tion Wind Power Others 15.137.570.727.524.028.223.022.2 * 1$ = 1,200 won

8. Status of NRE in Korea ’98’99’00’01’02 Annual Growth Rate(%) Primary Energy Consumption 165,932181,363192,887198,410209,1125.9 NRE Consumption 1,7161,9012,1312,4572,92214.2 Share (%) 1.031.051.111.241.40- (Unit : 1,000 TOE) ▣ Consumption of NRE by Year * NRE Consumption Prospected for 1.7%(2006), 2.2%(2011)

9. ▣ NRE consumption according to resources in 2002 ResourcesDissemination ExampleShare(%) Solar Thermal Approx. 190,000 Solar Hot Water System 1.2 PV 5,418 ㎾ p for Electrification and Street light, etc 0.2 Wind 13,259 ㎾ in 86 units, in Jeju Island etc 0.1 Biomass 108 unit of Industrial and Municipal biogas system 4.1 Waste 438 unit of Industrial and Municipal solid waste incinerators 93.4 Small Hydro 42 MW in 30 Units, such as Reservoir and Waste Water Disposal Plant 1.0

10. ▣ Targets for NRE supply : 2%(‘03), 3%(‘06) and 5%(‘12) Connecting R&D Program with Dissemination Program R&DInfrastructureDissemination Priority Selection and Concentration 3 High-Priority Areas : Photovoltaics, Wind Power, Fuel Cell Performance Evaluation & Demonstration Program Certification of NRE Product Obligatory installation for Public Sector Compensation for Cost Difference of NRE Power Generation Subsidy and Loan Program Strategy for NRE R&D and Dissemination

11. ▣ R&D Goal Cell Efficiency : 12%(’02) 15%(’06) 17%(’12) System Price(million won/kW) : 15(’02) 12(’06) 8(’12) Generation Cost(won/kWh) : 996(’02) 750(’06) 310(’12) ▣ Major R&D Project Develop 3 ㎾ Generation System for Residential Houses(’04) Develop 10 ㎾ Generation System for Commercial Buildings(’06) Develop Thin film Solar Cell (’12) Strategy for PV* * Not officially announced

12. Strategy for PV ▣ Dissemination Goal PV System for Residential House(3kW) : 10,000 houses(’06) 100,000 houses(’12) PV System for Commercial Buildings(10kW) : 5,000 buildings(’06) 40,000 buildings(’12) PV System for Industrial Buildings(20kW) : 5,000 buildings(’06) 30,000 buildings(’12) 1.3 GW by 2012

13. Strategy for Fuel Cell ▣ R&D Goal Develop 3kW PEMFC for Residential House(’04) Develop 250kW MCFC System(’08) Develop 10/50kW PEMFC for Commercial Buildings (’12) Manufacturing Cost : Under $1,500/kW Operating lifetime : Over 40,000 hr Develop Portable DMFC & PEMFC(’08)

14. Strategy for Fuel Cell ▣ Dissemination Goal 250kW MCFC : 6 units (’08) for Demonstration 3kW PEMFC/SOFC for Residential Houses : 10,000 units(’12) 10kW PEMFC for Commercial Buildings : 2,000 units(’12) 370MW by 2012

15. Strategy for Wind Power ▣ R&D Goal Wind Turbine System : 750kW ~ 1MW(’05) 1.5MW(’08) 3MW(’12) Manufacturing Cost : 600~700$/kW(’12) ▣ Dissemination Goal 13MW(’02) 350MW(’07) 1,900MW(’12)

16. Thank you