South Korea will introduce new regulations to promote renewable energy use, Yonhap news agency reported Thursday.

The Ministry of Knowledge Economy said lawmakers passed a bill earlier in the day that will make it mandatory for local power companies to generate a certain percentage of electricity by harnessing the energy created by the sun, wind, water or terrestrial heat, the agency reported.

The requirement will apply to all power suppliers with capacity exceeding 500 megawatts. These companies, including affiliates of the state-run Korea Electric Power Corp. (015760.SE) and the Korea District Heating Corp. (071320.SE), will have to increase renewable power production from 2.0% of their total output in 2012 to 10% in 2022, Yonhap said.

Under the plan, the companies will also be given a separate solar energy production quota of 120 megawatts in the first year, gradually increasing to 200 megawatts 10 years later, it said.

Yonhap cited the ministry as saying that since the new rules will go into effect within two years, the existing feed-in tariff system that provides state subsidies to power producers generating clean electricity will only be used until the end of 2011.

"The switch is expected to boost renewable energy production and create new investment in the construction sector," Hwang Soo-sung, head of the ministry's renewable energy division, was quoted as saying.

The market for renewable energy may reach KRW4.1 trillion in 2012 and surge to KRW54 trillion by 2022, he was cited as saying.

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