Publications
Publications
Electrification Pathways for Yeosu Petrochemical Complex: Strategies for a Clean Industrial Transition
This issue brief proposes electrification pathways utilizing distributed energy special zones and virtual power plants, focusing on electric furnaces and industrial high-temperature heat pumps as core technologies for replacing fossil fuel combustion with renewable electricity.
It examines renewable energy supply conditions, power procurement structures, and institutional and infrastructure prerequisites required to accelerate the transition toward a clean chemical industrial complex.
• Korea's petrochemical industry is undergoing structural transformation driven by global oversupply. The Yeosu Petrochemical Complex, the nation's largest basic petrochemicals producer, faces serious threats to its competitiveness and viability, yet government responses have focused narrowly on capacity reduction and restructuring with no clear transition roadmap. With Jeollanam-do now designated as a Distributed Energy Special Zone, the complex has a timely opportunity to accelerate its shift toward a clean chemical industry hub by leveraging the region's abundant renewable energy.
• Electric furnaces and industrial high-temperature heat pumps are the core electrification technologies for replacing fossil fuel combustion with renewable electricity. Jeollanam-do's renewable installed capacity is projected to reach 29 GW by 2030 and 62.5 GW by 2035, and direct trading under the Special Zone designation is expected to lower procurement costs below conventional PPA rates, improving the economic case for electrification.
• Realizing this transition requires resolving key institutional and infrastructure prerequisites: expanding renewable generation capacity near the complex, establishing a substation expansion plan aligned with electrification timelines, permitting concurrent use of existing PPAs alongside Special Zone direct trading, and formally recognizing Virtual Power Plant (VPP) operators as eligible direct trading counterparties.
• Scenario analysis shows that electricity demand will trough following NCC restructuring, then recover incrementally to approximately 23 TWh by 2035. Expanded district energy generation and growing direct procurement from distributed sources will contain overall cost increases, and surplus by-product methane from electric furnace adoption can be sold externally, further limiting the net cost burden.
• The first half of 2026, with the Petrochemical Special Act enforcement decree and the Comprehensive Support Measures for the Chemical Industry Ecosystem both pending, is a critical window to put in place the investment incentives and institutional framework needed for the Yeosu Petrochemical Complex to transition into a clean chemical industrial complex.