President Lee Jae-myung stated on July 13 at the Blue House National Fiscal Strategy Meeting that South Korea may need to adjust household electricity rates, which currently stand at 150-160 won per kilowatt-hour compared to industrial rates of approximately 180 won per kilowatt-hour, contingent on establishing protections for low-income households. Lee also emphasized the need to accelerate deployment of air-source heat pumps to improve power usage efficiency and reduce reliance on imported fuels. Climate and Energy Minister Kim Sung-hwan explained that the current rate structure disadvantages export-competing industries such as steel and petrochemicals. The government plans to expand heat pump adoption starting in Jeju and southern coastal areas this year, with extensions to new apartments and single-family homes next year, while maintaining initial subsidy support at approximately 70% of the 14 million won installation cost per household.
Lee Proposes Household Electricity Rate Adjustment Conditional on Low-Income Protections
President Lee stated during the meeting that if income concerns were not a factor, household electricity rates would need adjustment. Minister Kim explained that industrial electricity rates are approximately 180 won per kilowatt-hour, while household rates range from 150 to 160 won, making industrial rates about 20 won higher. Kim noted that industries paying significantly higher electricity costs face difficulties in international competition, particularly in sectors like steel and petrochemicals.
President Suggests Voucher System for Low-Income Electricity Support
Lee indicated that rate adjustments must include separate support for low-income households. He stated that a voucher-type support system would be necessary because the electricity rate structure itself cannot identify high-income versus low-income users. After learning that annual electricity voucher budgets range from 800 billion to under 1 trillion won, Lee remarked that the amount was too small and proposed holding policy discussions on the matter.
Government Plans Heat Pump Deployment Expansion Starting This Year
Lee conducted a focused review of air-source heat pump deployment expansion measures. Heat pumps are systems that draw heat from external air to provide heating, cooling, and hot water, using electricity instead of city gas. Minister Kim cited initial installation costs and higher electricity rates compared to city gas as reasons for slow domestic heat pump adoption. This year, the government began household heat pump deployment in Jeju and southern coastal areas not connected to city gas pipelines. Starting next year, the system will be available as an option in new apartments and single-family homes.
Lee Directs Maintenance of 70% Subsidy Level for Heat Pump Installations
Lee proposed using time-of-use pricing to supply inexpensive electricity during daytime surplus periods and enable heat storage, suggesting this could partially resolve heat pump inefficiency issues. Minister Kim explained that Europe increased heat pump deployment after the Russia-Ukraine war, providing approximately 40% of initial installation costs as subsidies. Current heat pump installation costs per household are approximately 14 million won, with combined central and local government support operating at about 70% during the initial phase. When informed that the government may reduce the support ratio below 50% in the future, Lee instructed to maintain sufficient support levels first before gradually reducing them. He added that budget burdens should be increased for consideration, as rationalizing energy use is a national priority requiring maximum speed in transition.
FAQ
What did President Lee Jae-myung propose regarding household electricity rates on July 13?
President Lee stated at the Blue House National Fiscal Strategy Meeting that household electricity rate adjustments may be necessary, conditional on establishing protections for low-income households, because current household rates of 150-160 won per kilowatt-hour are lower than industrial rates of approximately 180 won per kilowatt-hour.
Why does South Korea plan to accelerate heat pump deployment?
President Lee emphasized that heat pump deployment must be accelerated to improve power usage efficiency and reduce reliance on imported fuels. Heat pumps use electricity instead of city gas to provide heating, cooling, and hot water by drawing heat from external air.
What subsidy level did President Lee direct for heat pump installations?
Lee instructed that the current 70% subsidy level for heat pump installations, which cost approximately 14 million won per household, should be maintained sufficiently before any gradual reductions, stating that budget burdens should be increased to support the national priority of rationalizing energy use.
