Rooftop Solar or Direct PPA: Which Pays Back Faster for a Korean Plant?

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Whether to put solar panels on the factory roof yourself or sign a PPA with a generator is the question that comes up most often at auto-parts and semiconductor suppliers. Both count as 100% under RE100 and both are preferred by global buyers, yet when the decision actually has to be made it is hard to tell them apart.

The core difference between the two

Self-generation (self-consumption) — you install solar on your own roof or land and use the electricity it makes in your own plant. (Panels on the roof, the electricity used as your plant's own.)

Direct PPA — you buy electricity made by a renewable generation business under a long-term contract of 10~20 years. It is delivered over KEPCO's transmission network. (An agreement with a generator nearby, delivered over KEPCO's lines.)

A worked example: comparing 20-year ROI

What follows is an illustrative example built on assumptions. Real figures vary with roof conditions, sunlight, the contract price and interest rates.

Example company A — 5,000MWh of electricity a year · a roof of about 5,000 pyeong (a Korean unit of area), enough for 1MW · an industrial tariff of about KRW 175/kWh · a business running 20 years or more

Self-generation saves the larger amount, but 1MW covers only 26% of consumption and KRW 1.2 billion is tied up at the start. A PPA puts no strain on your funds and gets you to 100% RE100 at once, but the saving is smaller. Put the two together and you take the advantages of both.

So which one fits your company?

Impact · Which choice works better, by condition

Self-generation is the answer

Gain

Companies with the land, the funds and the long-term intent

• The roof or land is large enough to install 1MW or more
• Own capital, or a facility investment loan, is available
• A clear intent to keep the business running 20 years or more
• Dealing with global buyers who stress additionality

A direct PPA is the answer

No change

Companies that need their funds in the core business and need to move quickly

• A cramped site, or a leased factory
• Cash liquidity comes first
• 100% RE100 needed within 1~2 years
• Mid-sized or larger with high consumption, so credit is stable

Both combined is the answer (most cases)

Gain

Mid-sized manufacturers using 1,000~10,000MWh a year

• There is a roof, but 100% from self-generation is not possible
• The aim is to maximise 20-year ROI
• Self-generation 20~30% + PPA 70~80%
• The standard mix for a Korean supplier

A five-minute self-check

Answering the questions below will point you in a direction.

1. Can you install 1MW or more on the factory roof or land?
2. Do you have own capital of KRW 1 billion or more, or access to a facility investment loan?
3. Is your intent to keep the business running 20 years or more clear?
4. Are your customers top-tier global buyers who require additionality?
5. Do you have to reach 100% RE100 within 1~2 years?

• Three or more yes → self-generation plus a PPA
• No on 1 and 2 → a direct PPA on its own
• Yes on 1 and 2, and yes on 5 as well → PPA first, with self-generation to fill in

Questions we are often asked

Self-generation looks cheaper, so why do so many companies go for a PPA?

With self-generation, cash is tied up for the payback period of about 5~7 years. If investment in the core business is urgent, or the factory is leased, it is hard to put a large sum in at once. A PPA also reaches 100% RE100 the moment the contract is signed, whereas 1MW of self-generation covers only 26% — so if a buyer wants it now, a PPA is the faster route.

Does the PPA price rise every year?

The price at signing is fixed for 10~20 years. KEPCO's industrial tariff is on a rising trend, so the structure is one where a PPA becomes more favourable as time passes. That said, it often starts out slightly more expensive than KEPCO's price.

Can we also take a PPA after installing self-generation?

You can. A structure of 26% self-generation plus 74% PPA is the standard for Korean mid-sized manufacturers. The two do not conflict.

In summary

This is a sensible order to work in.

1. Check whether installation on the factory roof is possible (strength, area, sunlight)
2. Simulate the ROI of self-generation (savings and payback period by installed capacity)
3. Get quotes from PPA generators for the remaining demand
4. Decide from the point of view of maximising the cumulative saving over 20 years

For most companies the answer is self-generation 20~30% plus a PPA 70~80%. The stronger the demands from EU CBAM and global buyers become, the faster the ROI on generation you build now will improve.

• [Source: Corporate Energy Transition Center — practitioner analysis by the centre director, drawing on 12 years of KEPCO RE100 portfolio experience, written 2026.5]
• [Source: Korea Energy Agency, K-RE100 scheme guidance]
• [Source: KEPCO industrial electricity tariff]

Note: The investment costs, savings and payback periods in this piece are illustrative examples built on assumptions; the real figures vary with roof conditions, sunlight, the contract price and interest rates. A site assessment is needed before you commit.