Government Expands Offshore Wind Subsidies... Reduces Mountain Solar Power That Created 'Mindungsan'

Implementation of 'Partial Amendment to the Renewable Energy Supply Obligation System' with Revised REC Weighting

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kwon Haeyoung] The government is significantly increasing subsidies for offshore wind power to accelerate its deployment. While subsidies for mountain solar power, which has raised concerns about natural landscape damage and mountain safety, were reduced to restrict new entries, they were not completely abolished. The government issues Renewable Energy Certificates (REC) to power producers using renewable energy, and these producers sell the RECs in the market for money. By adjusting the REC weighting according to the energy source, the government is effectively expanding or reducing subsidies.

The Ministry of Trade, Industry and Energy partially revised the 'Guidelines for the Management and Operation of the Renewable Portfolio Standard (RPS) and Fuel Blending Obligation System' (hereinafter referred to as the RPS Notice), which will take effect from the 28th. The revision was finalized after gathering opinions through the 'REC Weighting Reform Public Hearing' held on the 6th, administrative notice, and circulation among related ministries and local governments.

According to the revised REC, the basic REC weighting for offshore wind power has been raised from the current 2.0 to 2.5. An additional weighting of 0.4 is granted for every 5 meters of water depth and every 5 km of connection distance.

An official from the Ministry of Trade, Industry and Energy explained, "For offshore wind power, the weighting was significantly increased to reflect the high facility investment costs depending on installation conditions such as water depth, as well as the linkage effects with upstream and downstream industries such as steel and construction, and regional economic revitalization." He added, "For offshore wind projects that have completed environmental impact assessments, expected weightings are provided in advance to reduce uncertainties in project promotion and facilitate financial procurement, enabling prompt project advancement."

The weighting for building-mounted solar power remains at previous levels: 1.5 for less than 3 MW and 1 for 3 MW or more.

Floating solar power was partially adjusted to reflect a larger reduction in generation costs compared to general sites and economies of scale. For floating solar, the weighting changes are as follows: under 100 kW increases from 1.5 to 1.6; 100 kW to under 3 MW decreases from 1.5 to 1.4; and 3 MW or more decreases from 1.5 to 1.2.

In particular, mountain solar power weighting was lowered from 0.7 to 0.5 to maximally suppress new entries due to concerns about natural landscape damage and mountain safety.

[Image source=Yonhap News]

To minimize the use of fossil fuels such as coal, the weighting for Integrated Gasification Combined Cycle (IGCC) and waste heat utilization was abolished.

Additionally, the Ministry of Trade, Industry and Energy plans to improve REC supply and demand conditions to support producers struggling from recent REC price crashes caused by oversupply.

First, with the amendment to the Renewable Energy Act taking effect on October 21, an annual increase plan for the Renewable Portfolio Standard (RPS) will be prepared and applied starting from next year's mandatory supply volume. The RPS requires power producers above a certain scale to supply a minimum portion of their total power generation from renewable energy. The RPS cap will be expanded from 10% to 25%. The share of the volatile REC spot market will be gradually reduced, and long-term fixed contracts will be expanded. Regulations will be revised so that companies participating in RE100 (Renewable Energy 100%) can obtain renewable energy certification by purchasing RECs, and a REC trading system will be established and implemented next month.

An official from the Ministry of Trade, Industry and Energy explained, "For renewable energy producers whose weighting is lowered or excluded due to this revision, transitional measures are in place to allow them to receive the previous weighting."

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