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Amendments to the Administrative and Operative Guidelines of the New & Renewable Energy Renewable Portfolio Standard and Renewable Fuel Standard

2021.10.18

On July 28, 2021, the Ministry of Trade, Industry and Energy (the “MOTIE”) amended the Administrative and Operative Guidelines of the New & Renewable Energy Renewable Portfolio Standard (“RPS”) and Renewable Fuel Standard (“RFS”) (the “Amendment”) to revise the renewable energy certificate weighted value (“REC Weighted Value”) for each renewable energy source.  Key amendments affecting the REC Weighted Value are as follows. 
 
 
1. The REC Weighted Value for offshore wind power has increased. 
 
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The MOTIE significantly raised the REC Weighted Value for offshore wind power, citing (i) that offshore wind power costs are high depending on installation conditions, (ii) forward and backward linkage effects on the steel and construction industries, and (iii) revitalization effects on the local economy.  The base REC Weighted Value for offshore wind power has been increased to 2.5, and additional provisions related to water depth and distance to grid connection have been added in the Amendment. 
 
 
2. The REC Weighted Value for solar energy has been adjusted taking into account conditions of the installation location and the costs of power generation. 
 
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<ul>
	<li>The REC Weighted Value remains the same for solar energy generated from solar panels installed on buildings.  The MOTIE explained that although the cost of generating solar energy has decreased due to market maturity, it decided to maintain the current REC Weighted Value in anticipation of effective utilization of available roofs and rooftops on the existing buildings and facilities.</li>
	 
	<li>The REC Weighted Value for floating solar energy has been slightly adjusted to reflect the decline in power generation costs and the effect of economies of scale.  The current REC Weighted Value of 1.5 shall be applied, if the owner of a medium and large scale floating solar energy generator obtains the power generation business license by October 28, 2021.</li>
	 
	<li>The REC Weighted Value has been decreased for solar energy generated from solar panels installed on the forests (mountains) and fields as a barrier to entry into the market.  The measure takes into account the continuous damage to the natural landscape and issues regarding the safety of surrounding mountain areas.  The current REC Weighted Value of 0.7 shall be applied, if the owner of the solar panels installed on the forests (mountains) and fields obtains the power generation business license by October 28, 2021.</li>
</ul>
 
 
3. The REC Weighted Value for (i) fuel cell has been partially lowered, (ii) tidal energy (without seawall, with bottom-fixed turbines) has been lowered to 1.75 (current REC Weighted Values are between 1.0-2.5), and (iii) thermal energy from heated water (drain water/sewage) has been lowered to 0 to minimize use of fossil fuels. 
 
<img alt="" height="314" src="http://www.jipyong.com/origin/newsletter/kli/21_202110_2/img/table3.gif" width="817" /> 
 
Power generation businesses that generate power from the above renewable energy sources may continue to be subject to the current REC Weighted Values if they meet the following requirements. 
 
<img alt="" height="222" src="http://www.jipyong.com/origin/newsletter/kli/21_202110_2/img/table4.gif" width="817" /> 
 
In addition to the Amendment, the MOTIE announced that it plans to continue its effort to (i) stabilize the REC prices, (ii) expand the supply of new and renewable energy, (iii) prepare a proposed amendment to increase the annual RPS target, and (iv) increase the number of long-term fixed-price contracts.

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