First Half 'RPS Fixed Price Contract Competitive Bidding' Conducted... Stable Profit Securing Possible

[Asia Economy Reporter Kwangho Lee] The largest-ever fixed-price contract competitive bidding for the Renewable Portfolio Standard (RPS) will be conducted. The fixed-price contract competitive bidding system is implemented to create a stable investment environment for solar power producers amid fluctuations in the System Marginal Price (SMP). It allows for more stable revenue securing compared to the uncertain spot market.

The Korea Energy Agency announced on the 1st that it has publicized the "2020 First Half RPS Fixed-Price Contract Competitive Bidding Implementation Plan."

At the request of 22 obligated suppliers, including Korea Hydro & Nuclear Power, who have renewable energy supply obligations, the Energy Agency is selecting long-term contract project operators for 20-year contracts on Renewable Energy Certificates (REC) trading between obligated suppliers and power producers.

For this bidding announcement, six obligated suppliers?Korea South-East Power, Korea Southern Power, Korea East-West Power, Korea Western Power, Korea Midland Power, and Korea Hydro & Nuclear Power?requested the selection of 200 MW each, totaling 1,200 MW. This is a significantly increased scale compared to the 500 MW capacity in the second half of last year, marking the largest ever.

The contract price between solar power producers and obligated suppliers is the sum of the SMP and the REC price. Power producers can choose between a variable contract, where total revenue changes according to SMP fluctuations, and a fixed contract, where total revenue remains fixed regardless of SMP changes.

To protect small-scale operators, the Energy Agency plans to prioritize selecting at least 50% of the capacity for small-scale operators with less than 100 kW. To foster the energy storage system (ESS) industry and promote investment, ESS facilities linked with solar power will also be included in the bidding targets. Additionally, considering the expansion of large-scale solar power due to the increased competitive bidding scale, an additional completion deadline will be granted for facilities of 1 MW or more.

Applicants wishing to participate in the bidding should check the application period according to their facility capacity and submit the application form and attached documents through the Energy Agency’s Renewable Energy Center RPS Fixed-Price Contract Competitive Bidding System.

For facilities under 100 kW, applications will be accepted from the 2nd to the 10th, and for those 100 kW or above, from the 13th to the 17th. The final selection results will be announced on the 26th of next month, and selected operators are scheduled to sign 20-year REC sales contracts with obligated suppliers in June.

Lee Sang-hoon, Director of the Energy Agency’s Renewable Energy Center, expressed, "Since this bidding is conducted on the largest scale ever, it is expected to contribute to stabilizing REC prices and creating a stable investment environment for small-scale operators."

The operator of Giyeong Solar Power Plant 2 located in Changnyeong-gun, Gyeongnam, selected in the second half of last year’s competitive bidding, said, "Since SMP and REC prices are generally heavily influenced by the economy, the fluctuation range of REC trading prices is large, so I thought that trading in the spot market would result in somewhat unstable profits. However, after being selected in the fixed-price contract competitive bidding, although the fixed contract price is lower than expected, the stability is guaranteed, so from the operator’s perspective, it is reassuring."

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