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Busan Metropolitan City Designated as the Nation’s First “Special Zone for Distributed Energy”… A Leap Toward Becoming a Hub for New Energy Industries

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Busan Metropolitan City (Mayor Park Heong-joon) announced today (Nov. 5) that the Energy Committee, chaired by the Minister of Climate, Energy and Environment at 9:30 a.m., finalized the nation’s first designation of Busan as a Special Zone for Distributed Energy (hereinafter “Special Zone”).

In April, the city applied for the Special Zone designation to the Ministry of Trade, Industry and Energy (currently the Ministry of Climate, Energy and Environment). Following the Working Committee review in May, 25 projects from 11 local governments were narrowed down to 7 projects from 7 local governments (Busan, Ulsan, North Gyeongsang, Gyeonggi, South Chungcheong, South Jeolla, and Jeju).
Today, the Energy Committee finalized 4 projects from 4 local governments—Busan, South Jeolla, Gyeonggi, and Jeju—as Special Zones, while deferring the decisions on 3 projects from Ulsan, North Gyeongsang, and South Chungcheong.

The Special Zone for Distributed Energy is a system designed to establish a local production-and-consumption energy structure, in which electricity is produced and consumed near demand sites—an initiative included among the key national energy policies of the current government.

In particular, under the Special Act on the Promotion of Distributed Energy, businesses within designated zones can trade locally generated electricity directly without passing through the national power market, thereby contributing to the formation of an independent, community-level energy ecosystem.

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Busan has been designated under the New Industry Activation Type—one of the three types of Special Zones (Demand Attraction Type, Supply Resource Attraction Type, and New Industry Activation Type).
The city plans to focus on large-scale installation of Energy Storage Systems (ESS) and AI-based energy management optimization.

The designated area encompasses Eco Delta City, Myeongji District, and six industrial complexes in the Gangseo area (Myeongji-Noksan, Mieum, Shinho, Hwajeon, Saenggok, and the International Logistics City), covering a total of 49.9 square kilometers (approximately 15.11 million pyeong).

The core of the project, the Energy Storage System (ESS), utilizes lithium iron phosphate (LFP) batteries to store generated electricity and supply it when needed, enhancing both grid stability and energy price competitiveness.
Together with the ESS, the project will integrate an Energy Management System (EMS) and an AI-based Smart Grid to optimize energy supply and demand in real time, building a future-oriented energy model.

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Expected Benefits of the Busan Special Zone for Distributed Energy

[1] Electricity Cost Reduction
Through the installation of a large-scale ESS with a total capacity of 500 megawatt-hours (MWh), companies can charge electricity during off-peak hours and use it during peak times.
This is expected to reduce electricity bills by up to 8% per company and achieve an annual total savings of approximately KRW 15.7 billion citywide.

[2] Reduced Facility Investment Costs
For advanced industries such as semiconductors and data centers, establishing independent uninterrupted power supply (UPS) systems incurs significant costs.
By subscribing to shared ESS services within the Special Zone, companies are expected to collectively save about KRW 250 billion in facility investment costs.

[3] Mitigation of Renewable Energy Output Restrictions
Large-scale ESS will balance oversupply and undersupply of renewable energy, alleviating output restrictions for solar and other distributed energy sources.
This is projected to save about KRW 4.4 billion annually and provide a strong foundation for the activation of related industries.

[4] Enhanced Corporate Attraction
The ESS facilities within the Special Zone will have a total storage capacity of 500 MWh, equivalent to one day’s electricity consumption for approximately 42,000 households or enough to operate five advanced data centers.
This stable and cost-effective power supply base is expected to significantly facilitate the attraction of high-tech companies.

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Summary of Expected Impacts

• ●Electricity cost reduction: Up to 8% per company; citywide annual savings of KRW 15.7 billion

• ●Facility investment savings: KRW 250 billion reduction in installation costs for UPS and related systems

• ●Alleviation of renewable energy output limits: KRW 4.4 billion in annual savings

• ●Business attraction: Enhanced power supply reliability to support semiconductor, data center, and other high-tech industries

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Mayor Park Heong-joon remarked,

“The nation’s first designation of a ‘Special Zone for Distributed Energy’ will be a turning point that elevates Busan’s industrial and urban competitiveness beyond the level of stable power supply.
Taking this opportunity, Busan will move forward as a global eco-friendly energy hub city that achieves energy self-sufficiency and carbon neutrality.”

He continued,

“With citizens’ support and participation, we have secured KRW 29.9 billion in national funding for the Sajik Baseball Stadium reconstruction, realized the long-awaited designation of Geumjeongsan as a national park, achieved second place at the National Sports Festival held in Busan for the first time in 25 years, and are nearing 3 million foreign tourist visits.
Over KRW 100 billion in corporate investments and new job creation are also anticipated.”

He added,

“We are also making progress on major initiatives, such as launching the next-generation Busan-type express railway (BuTX) project following the completion of its private investment feasibility review.
Busan will continue to advance toward the future together with its citizens. I sincerely thank all citizens for their enduring trust and support for our city.”