State-run Korea Electric Power Corp. will set aside 2 trillion won ($1.6 billion) to create a fund for backing new energy businesses, the government announced Thursday.

“Korea needs to make bold investments and purse technology development in new energy businesses in a bid to create the nation’s new growth engine and respond to climate change,” said Kim Sung-yeol, chief of electricity promotion division at the Ministry of Trade, Industry and Energy.

The active role of KEPCO -- which is responsible for more than 90 percent of the nation’s electricity generation -- is necessary for the technology development of the new energy business, since the private sector is reluctant to make investments, the statement added.

KEPCO will set aside 1 trillion won by October and then another 1 trillion won will be financed until next year. Private energy companies and financial institutions will be allowed to join the creation of the fund, KEPCO said.

The 2 trillion won fund will be invested in new renewable energy, electric vehicles, energy storage systems and a reduction in greenhouse gas emissions through diverse funds -- such as angel funds, venture capital funds and private equity funds, according to the government.

An asset management company to operate the fund will be selected in July, KEPCO said.

By Shin Ji-hye (shinjh@heraldcorp.com)