South Korea Targets 2040 Coal Phase-Out with LNG Shift
A new policy framework proposes replacing 39 of 60 operating coal units with LNG and pumped storage by 2038, while designating up to 10 units as emergency reserves to ensure grid stability.
South Korea has outlined a concrete roadmap to eliminate coal from its power mix by 2040, targeting the replacement of 39 currently operating units with liquid natural gas and pumped-storage hydroelectricity by 2038. The plan, presented by Hanyang University at the Ministry of Climate, Energy and Environment’s recent public forum, seeks to transition 27 units reaching their 30-year design life by 2036 into LNG facilities. This shift aims to address regional supply needs, specifically allocating replacement capacity for the Seoul metropolitan area and the Honam region to support industrial demand.
The strategy introduces a novel concept of 'security power sources' to mitigate supply risks during the transition. Up to 10 of the 21 units scheduled for closure between 2037 and 2039 will be designated as reserve assets. These units will not participate in the standard electricity market under normal conditions but will serve as backup power during emergencies such as peak demand spikes or renewable energy shortfalls. This approach mirrors overseas precedents where coal plants were retained as reserves rather than immediately dismantled, ensuring grid stability while the broader phase-out proceeds.
Regional Allocation and Infrastructure Shifts
The replacement strategy is geographically specific, linking new LNG generation to regional load centers. Capacity replacing Yeongheung Units 1 and 2 will be directed to the Seoul metropolitan area, while replacements for Dangjin Units 5 and 6 will serve the Honam region. This allocation supports the Southwest region’s megaproject and industrial growth. Four units with undetermined replacement locations are being strategically evaluated for relocation to areas with high industrial energy requirements, ensuring that the shift from coal to gas aligns with economic infrastructure needs.
To offset the retirement of 12 units totaling approximately 6.8GW between 2037 and 2038, the plan leverages 7.5GW of capacity from 13 pumped-storage hydroelectric projects currently under construction. This mix of gas and hydro storage is designed to absorb the shock of removing coal capacity without compromising reliability. The phased closure of the remaining 21 units, totaling 19.1GW, will occur sequentially between 2037 and 2039, avoiding a sudden drop in generation capacity that could destabilize the grid.
Operator Support and Security Reserves
Recognizing the financial burden on operators facing early closure, the plan proposes preferential treatment in bidding for new energy storage projects, such as battery energy storage systems. Additionally, the conversion of some private generators to LNG combined heat and power generation is under consideration for post-2030 operations, particularly where local heat demand remains significant. This dual approach aims to maintain operator viability while facilitating the technological transition away from fossil fuels.
The designation of security power sources will be refined in the next Basic Plan for Long-Term Electricity Supply and Demand. Authorities will review the distribution of renewable energy and regional grid conditions to determine which of the 21 units are best suited for reserve roles. This evaluation will consider plant performance and contribution to grid stability, ensuring that only the most reliable assets are retained for emergency use. The framework acknowledges that complete immediate dismantling is not always optimal for supply security, a stance supported by analysis of international coal phase-out cases.
Grid Stability During Transition
The current coal share of total power generation stands at 28.7% in 2025, with 60 units in operation. The proposed plan addresses the transition of this significant portion of the energy mix. By replacing 39 units with cleaner alternatives and retaining a subset as reserves, the strategy aims to balance environmental targets with operational reality. The involvement of academic and industry experts in the formulation process, including presentations by Hanyang University and the Korea Energy Economics Institute, underscores the technical rigor applied to this structural change in the power sector.
