ECONOMIC IMPACT ANALYSIS
Transmission & Substation Network Investments in South Korea
Quantifying the macroeconomic ripple effects and spatial equity implications of South Korea's KRW 72.8 trillion investment (2024-2038) in its electricity transmission and substation network.
Executive Impact Summary
The 11th Long-term Plan for Transmission and Substation Equipment (LPTSE) is a critical national infrastructure initiative. Our analysis reveals its profound economic contributions:
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Total Production Induced
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Value-Added Created
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Wages Generated
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Employment Opportunities
These figures underscore the LPTSE's role as a powerful macroeconomic catalyst, driving significant growth across multiple sectors of the Korean economy over the 2025–2038 period.
Deep Analysis & Enterprise Applications
Select a topic to dive deeper, then explore the specific findings from the research, rebuilt as interactive, enterprise-focused modules.
Our approach integrates a demand-side IO model with a novel transmission and substation investment sector, calibrated to recent national tables. This allows for disaggregating investments across key sectors and estimating production, value-added, wage, and employment multipliers.
LPTSE investments are disaggregated into five primary sectors: capacitors, rectifiers, and electric transmission equipment (15.51%); electric wires and cables (7.91%); other electrical equipment (0.23%); architecture-related services (14.38%); and other constructions (61.97%). These shares are empirically grounded in KEPCO cost data.
Using a multiregional IO (MRIO) model, we trace inter-industry flows across 17 South Korean regions. This reveals spatial asymmetries where coastal generation regions bear infrastructure burdens while benefits accrue nationally, particularly in the Seoul Metropolitan Area (SMA) through supply-chain linkages.
Methodological Scheme for LPTSE Impact Analysis
Identify key investment sectors (collaboration with experts)
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Estimate national IO multipliers for each sector
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Estimate four national economic effects
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Spatially disaggregate investments (collaboration with experts)
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Multi-regional IO analysis
Production-Inducing Multiplier
1.76 KRWEach KRW 1.0 of LPTSE investment induces KRW 1.76 in total output across the South Korean economy, highlighting its significant ripple effect.
| Economic Effect (per KRW 1.0 Investment) | LPTSE Implementation | Electricity Generation Sector |
|---|---|---|
| Production-inducing effects | 1.7614 | 1.6317 |
| Value-added creation effects | 0.7437 | 0.1153 |
| Wage-inducing effects | 0.4253 | 0.1372 |
| Job-creation effects (per KRW 1 Billion Investment) | 7.9410 jobs | 2.0703 jobs |
The East Coast HVDC Corridor Challenge
The planned 8 GW HVDC line from the East Coast to the SMA is South Korea's longest grid project, crucial for evacuating renewable and nuclear power. Despite its national importance, it faces significant NIMBY (Not-in-My-Back-Yard) barriers, causing multiyear delays and cost escalations. The denial of a key substation expansion in Hanam City, for instance, led to protracted litigation. This case highlights the structural equity challenge where exporting regions bear burdens while demand centers accrue benefits, underscoring the need for regionally differentiated compensation.
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Estimated Annual Savings
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Employee Hours Reclaimed Annually
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Addressing Complications in LPTSE Implementation
South Korea faces several critical challenges in realizing the full economic effects of LPTSE investments. Proactive policy interventions are required to overcome these hurdles:
KEPCO's Financial Crisis
KEPCO, the primary investor, is facing a serious financial crisis with substantial debt. Steady increases in electricity retail rates or government financial support are essential for funding LPTSE.
Local Opposition & Siting Delays
Significant local opposition, particularly for the East Coast-SMA HVDC line and Southwest-SMA submarine cables, causes delays and cost increases. Enhancing public acceptance through robust compensation and streamlined permitting is crucial.
Technical Challenges of HVDC
Large-scale HVDC systems, like those connecting mainland to Jeju Island, have experienced frequent malfunctions. Government support for R&D is needed to ensure stable operation of new HVDC infrastructure.
Attracting Private Investment
Current laws prohibit private operators in the TSE sector, but attracting private capital could ease KEPCO's burden. Social consensus and appropriate public discourse are needed to facilitate private participation without misconceptions of privatization.
Spatial Equity and Land-Use Planning
Infrastructure burdens are concentrated in generation-rich and transit regions, while macroeconomic benefits accrue in demand centers like SMA. Governance must integrate territorial equity principles and benefit-sharing mechanisms to mitigate conflicts and ensure fair distribution.
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