SEOUL – A recent survey by the Korea Chamber of Commerce and Industry (KCCI) reveals that nearly 40% of South Korean manufacturing firms are considering shifting to alternative power procurement methods due to the escalating industrial electricity rates imposed by Korea Electric Power Corporation (KEPCO).

The KCCI's survey, which polled 300 domestic manufacturers, found that 11.7% of companies are already actively pursuing cheaper electricity options, such as self-generation or direct purchases from the wholesale power market. An additional 27.7% indicated they would explore these alternatives if electricity costs continue to rise.

This growing interest in alternative power sources stems from the significant increase in industrial electricity rates over the past two decades. Since 2000, industrial rates have surged by 227%, far outpacing the 42% increase in residential rates. Notably, industrial rates have taken the lead, surpassing residential rates in 2023 and becoming the highest among all usage categories.

The survey highlights the severe financial strain these rising costs place on manufacturers. A staggering 78.7% of respondents reported that current industrial electricity rates pose a substantial burden, with 46.4% describing the impact as "very large," leading to a contraction in business activities. Furthermore, 79.7% of companies reported a decline in operating profits due to increased electricity expenses, as they struggle to pass on the added costs to consumers in a highly competitive market.

In response to these challenges, manufacturers are calling for a cautious approach to further rate hikes, emphasizing the need to consider the broader economic impact. The survey also identified key policy priorities for alleviating the burden of electricity costs, including:

Expanding low-cost energy sources (71.0%)
Increasing financial support and tax incentives for energy-efficient facilities (51.7%)
Diversifying rate structures to enhance consumer choice (43.3%)
Moreover, the industry recognizes the growing demand for electricity from data centers and semiconductor plants, driven by advancements in artificial intelligence. To address this, 74.3% of respondents support the introduction of distributed power systems, enabling localized electricity generation.

Cho Young-jun, head of the KCCI's Sustainable Management Initiative, stressed the importance of a supportive electricity market for sustainable growth, given South Korea's reliance on energy imports and export-driven economy. He called for a strategic approach to electricity rate setting and power system development to foster the growth of future high-tech industries and enhance national competitiveness.

[Copyright (c) Global Economic Times. All Rights Reserved.]