Carbon neutrality 'declaration' moves to 'power procurement' as manufacturers expand renewable energy purchase contracts

South Korean manufacturers are increasingly prioritizing the procurement of renewable energy for their operations, shifting from symbolic commitments to tangible power sourcing strategies. This move signifies a concrete step towards achieving carbon neutrality goals, with companies actively signing power purchase agreements (PPAs) to secure electricity generated from sources like solar and wind power.

HD Hyundai Infracore recently announced PPAs totaling 12.4 MWp for its Incheon plant, a move expected to boost its renewable energy usage from 19% to 43.9% by January 2027. Similar increases are planned for its Ulsan and Gunsan facilities. This transition is projected to reduce annual greenhouse gas emissions by 22,155 tons, equivalent to planting approximately 3.36 million pine trees.

Other leading manufacturers are following suit. Samsung Electronics' semiconductor division has entered into new PPAs amounting to 252 MW in South Korea and is exploring supplying products made with carbon-free energy to meet customer demands. Samsung SDI has also expanded its PPAs, increasing its renewable energy conversion rate significantly.

Hyundai Motor has secured 444 MW of PPAs for 2024, supplying renewable energy to its major domestic production sites and research centers. The company anticipates reducing annual greenhouse gas emissions by approximately 280,000 tons through these initiatives.

While the adoption of PPAs offers a stable and predictable method for sourcing renewable energy, many South Korean companies have historically relied on methods like the green premium system or renewable energy certificates (RECs). However, PPAs are becoming more prevalent as they directly integrate renewable energy generation into a company's power supply structure. Despite these efforts, South Korea's average renewable energy usage rate among companies participating in RE100 stands at 12%, considerably lower than the global average of 42%. Experts suggest that further systemic improvements, tailored strategies, and financial support are needed to bolster the transition, especially for small and medium-sized enterprises.