Revised renewable energy promotion law promulgated Tuesday; public hearing on subordinate regulations set for Sept. 30

A renewable energy facility under installation. [Korea Herald DB]
A renewable energy facility under installation. [Korea Herald DB]

South Korea will phase out its Renewable Portfolio Standard, or RPS, five years after its introduction. Renewable energy certificates for existing operators will continue to be issued for up to 20 years.

In place of the RPS, a fixed-price competitive bidding system will take effect, under which selected renewable energy generators will sell electricity to Korea Electric Power Corporation at a long-term fixed price.

The Ministry of Climate, Environment and Energy said the revised Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy was promulgated Tuesday.

The RPS required power generators above a certain capacity to supply a set proportion of their total output using renewable energy.

Operators could meet the obligation either by directly installing renewable energy generation facilities to produce electricity or by purchasing renewable energy certificates, or RECs, from other renewable energy generators.

The ministry said the RPS had helped expand renewable energy but that volatile REC prices had increased business uncertainty, and that the complexity of the certificate trading structure had limited the government's ability to drive down the cost of renewable power generation and grow the domestic renewable energy industry.

The RPS will be wound down in stages. RECs for existing operators will continue to be issued for up to 20 years, and the REC spot market will remain in operation through Dec. 31, 2029.

The fixed-price competitive bidding system, set to take effect next year, will allow renewable energy generators that win bids within a government-set price ceiling to sign long-term fixed-price power purchase agreements with Korea Electric Power Corporation.

Because generators can sell electricity at a predetermined price over the long term, the system guarantees stable revenue for operators and reduces financing costs when raising capital.

From the government's perspective, setting a price ceiling creates an incentive to lower the cost of renewable power generation, while allowing authorities to select operators based on non-price factors such as contributions to industry development, supply chain resilience and energy security.

The ministry has pre-announced subordinate regulations needed to implement the revised law and will hold a public hearing on the RPS overhaul on Sept. 30 at the Eliana Hotel in Gangnam-gu, Seoul.

Those wishing to attend can register through the ministry's website or that of the Korea Energy Agency.


oskymoon@heraldcorp.com