South Korea is on course to install barely half its 60GW renewable energy target by the end of the decade as policies fail to match its government's 'Green New Deal' aspirations, said Fitch Solutions in a new report.

“While we forecast relatively strong growth rates for South Korea’s non-hydro renewables sector, we believe that they will still fall significantly below government targets due to several challenges in the sector,” the analysts wrote.

Fitch Solutions expects the East Asian country’s renewables capacity to more than double from end-2019 to 2029 to 31.9GW, far below the government’s target of 60GW, as renewable power remains more expensive than nuclear or fossil generation in South Korea, and economically unviable without sufficient subsidies.

In line with a re-election pledge earlier this year to establish a 'Green New Deal' similar to that of the EU, the government of President Moon Jae-in in early September had promised to close 30 coal-fired power stations.

Later in the month, the National Assembly passed a ‘climate emergency’ resolution, forcing the government to review its energy policies and calling for a net zero emissions target by 2050.

The government said it will look to invest about 73.4 trillion South Korean Won ($64.1bn) over the next five years to expand the country’s renewables capacity, electric and hydrogen mobility, and the development of ‘smart green cities’.

But since a landslide re-election in April, the government still hasn’t adopted appropriate policies, nor provided detail on how it intends to achieve the goals under the Green New Deal, Fitch Solutions said.

Offshore wind potential

With a mountainous geography and a growing public backlash and limited land availability of large-scale solar and onshore wind projects (as well as a backlash against rooftop PV in the capital Seoul), the potential for renewables growth will remain largely concentrated in the offshore wind sector, the analysts expect.

“While offshore wind remains an underdeveloped sector in the South Korean renewable energy industry at present, the project pipeline in the sector is strengthening and contains more than 8GW of projects, in line with growing investor interest in the market,” the report stated.

However, it said: “Given the country’s exposure to global energy price fluctuations, alongside the burden of rising import costs and energy security concerns, the long-term viability of Moon's energy plan remains in question. In particular, his energy plan has been subjected to strong and growing opposition, particularly from his political opponents since 2018.”

It remains uncertain if the existing policies and plans under the New Deal will remain after his term ends in 2022, Fitch Solutions added.