Energy policy
The government’s core approach to phasing out coal-fired power
22 Aug 2026 · SuhngJoon Han
The government’s core approach to phasing out coal-fired power is to consolidate KEPCO’s five generation subsidiaries into one integrated power company and transform it from a coal-focused utility into a renewable energy, ESS, and power-flexibility company. However, the final consolidation structure, headquarters location, and the scale of new nuclear and LNG capacity have not yet been decided.
1. Main restructuring proposal
The leading proposal is to consolidate the five companies below:
Category Current direction
Companies KOEN, KOMIPO, KOWEPO, KOSPO, and EWP
Corporate structure Merge the five companies into one integrated generator
Business focus Shift from coal to renewables, ESS, hydrogen, and system flexibility
Coal generation Target complete phase-out around 2040
Main objectives Reduce duplicated functions, concentrate investment capacity, redeploy employees, and accelerate renewable development
Proposed schedule Finalize the restructuring plan in 2026; launch the integrated company as early as July 2027
The five companies together would form a large public utility with estimated annual revenue of approximately KRW 29 trillion, around 13,000 regular employees, and roughly 53 GW of generation capacity, based on 2025 figures.
2. Why consolidation is being considered
Declining coal-generation business
As the coal phase-out schedule becomes more concrete, a substantial portion of the five companies’ existing core assets will be retired or converted. Their current structures—built around coal and thermal generation operations, maintenance, fuel procurement, and overseas thermal projects—will become increasingly difficult to maintain.
The government aims to combine overlapping functions in renewable development, overseas projects, research and development, procurement, and finance. The goal is to increase the scale and execution capability of renewable-energy investment.
Large-scale energy-transition investment
Solar, offshore wind, ESS, pumped-storage hydropower, and grid projects require substantial upfront capital and long development periods. The government therefore believes it would be more efficient to coordinate them through one integrated investment and decision-making structure rather than having five companies pursue similar projects separately.
With electricity demand expected to rise sharply because of AI data centers and semiconductor clusters, the integrated company could evolve beyond a conventional generator into a comprehensive energy-infrastructure company involved in:
Large-scale solar and offshore wind development.
ESS and pumped-storage projects for grid stability.
Clean hydrogen and ammonia power generation.
PPAs and direct electricity supply to industrial complexes.
Conversion of retired coal sites into renewable-energy, data-center, or battery facilities.
3. Potential post-merger business model
Becoming a renewable-energy specialist
The government has stated that the five companies should be consolidated and transformed into renewable-energy-focused enterprises.
The transition would likely involve more than simply installing additional solar capacity:
Large-scale solar: Use retired power-plant sites, industrial rooftops, reclaimed land, and other underutilized areas.
Offshore wind: Leverage the companies’ experience in large-scale power development, construction, and operations.
ESS and pumped storage: Balance renewable intermittency and provide peak-power capacity.
Clean-hydrogen generation: Convert existing LNG or coal facilities and participate in clean-hydrogen power auctions.
Overseas renewables: Consolidate fragmented overseas development teams and projects to achieve economies of scale.
As the government moves toward a 2040 coal phase-out, new support for coal–ammonia co-firing projects may become more limited.
4. Workforce and regional economic measures
The greatest challenge associated with coal closures is the economic impact on plant employees and host communities. The government is treating this as a central element of a just transition.
Workforce redeployment
Possible measures include:
Retraining coal-plant workers for LNG, biomass, and hydrogen facilities.
Moving employees into renewable-energy development, construction, operations, and maintenance.
Transitioning workers into ESS, grid, safety-management, and environmental-restoration roles.
Providing voluntary-retirement and reemployment support for eligible workers.
Using natural attrition and reduced recruitment to manage workforce levels gradually.
A key rationale for consolidation is to create one organization capable of absorbing coal-sector expertise into expanding renewable-energy businesses.
Regional economic support
Areas such as Taean, Boryeong, Dangjin, Samcheonpo, Hadong, Yeosu, and Ulsan have relied on power-plant tax revenue, contractor activity, and employee spending. Potential replacement measures include:
Converting retired plant sites into solar, ESS, and hydrogen complexes.
Reusing existing ports, cooling-water systems, substations, and transmission connections.
Establishing offshore-wind operations and maintenance hubs.
Attracting battery, power-equipment, and hydrogen-industry clusters.
Creating regional transition funds and special legislation.
Locating regional offices or new-business divisions of the integrated company in affected areas.
The location of the integrated headquarters is already a major issue, with several regions—including Chungcheongnam-do, where many coal plants are located—competing to attract it.
5. Possible organizational structure
One proposal raised by politicians and industry participants is a KEPCO holding-company structure:
KEPCO Holdings: Group strategy, joint fuel procurement, and coordination of large-scale investment.
KEPCO: Transmission, distribution, and retail sales.
Integrated generation company: Existing thermal, LNG, and renewable businesses of the five subsidiaries.
KHNP: Nuclear and hydroelectric operations.
Compared with a simple merger, this model could make it easier to coordinate investment and the overall energy mix across the KEPCO group. However, it would also raise concerns about increased market concentration and the governance implications of expanding KEPCO’s influence.
6. Timeline and uncertainties
The schedule currently being discussed is:
Third quarter of 2026: Target for finalizing the restructuring proposal.
Second half of 2026: Discussions on legislation and institutional changes.
Around January 2027: Possible target for passage of a special integration law.
July 1, 2027: Proposed launch date for the integrated generation company.
This is a reported target timetable rather than a confirmed government schedule. Labor negotiations, headquarters relocation, asset and debt transfers, executive appointments, regional opposition, and parliamentary approval remain important variables.
7. Industry implications
Potential benefits
Larger investment capacity for renewables and ESS.
Elimination of duplicated functions and overlapping projects.
Stronger execution capability for offshore wind and grid projects.
More systematic redeployment of coal-generation workers.
Greater public-sector capacity to supply electricity to national megaprojects.
Stronger bargaining power in fuel procurement and equipment investment.
Main risks
A simple legal merger could create a larger but less agile organization.
Weaker competition between public and private generators could reduce efficiency.
Renewable investments may underperform if the integrated company lacks development expertise.
Stranded assets, retirement costs, and compensation expenses could increase after coal closures.
Regional conflict may emerge over the headquarters and regional-office locations.
Combining the five companies’ debt and bond issuance could significantly increase the integrated company’s influence in the domestic capital market.
Bottom line
This is not merely a corporate merger of five public generators. It is an attempt to transform them into a national investment platform for renewables, ESS, hydrogen, and grid flexibility after the coal phase-out.
The most likely model is a single integrated company, but its success will depend less on the merger itself than on four practical issues: converting retired coal sites, redeploying workers, executing large-scale renewable investments, and maintaining a competitive relationship with private power producers.