'Solar Incentive' REC Price Drop Puzzles Industry... Government Says "No Decision Yet on Weighting Review in July"

[Asia Economy Reporter Moon Chaeseok] The battery energy storage system (ESS) industry is struggling with falling REC prices ahead of the reduction in benefits from renewable energy certificate (REC). The government has stated that it has not yet decided whether to temporarily extend the REC weighting, which is set to decrease from 5.0 to 4.0 in July, back to the previous 5.0.

According to the Korea Power Exchange on the 20th, the REC spot market price as of the 18th was 41,521 KRW (mainland average), down from 77,186 KRW last year. REC is a certificate that proves power producers have generated electricity using renewable energy facilities.

Currently, prices are declining due to oversupply from solar power and other sources. An official from the Ministry of Trade, Industry and Energy explained, "As solar power production increases, REC prices naturally fall, and since cell and module prices also drop similarly, unit costs and installation fees decrease accordingly."

In this situation, the REC weighting for solar-linked ESS, one of the renewable energy incentives, will be lowered from 5.0 to 4.0 starting in July. A REC weighting of 5.0 means that when a company produces 1 REC, the government recognizes it as 5 RECs.

Last year, when the ESS industry faced a crisis due to fires, the Ministry extended the weighting of 5.0 for six months, but it is uncertain whether this extension will continue after July.

An official from the Ministry said, "The reduction to 4.0 in July has already been announced to the industry. Because the industry temporarily halted factory operations due to ESS fires, the weighting was extended to 5.0 for six months, but it has not yet been decided what will happen to the weighting after July."

According to the government and industry, renewable energy power producers typically install ESS to store electricity and trade it in the market, so REC prices are directly linked to the ESS industry. The industry is concerned that the decline in REC prices will reduce demand for new ESS installations, naturally leading to decreased sales.

This content was produced with the assistance of AI translation services.