Companies and Experts Unite in Calling for Improvement of PPA Customer Electricity Tariffs

KCCI Hosts Energy Policy Forum

As the June grace period for the PPA-exclusive electricity tariff plan (hereinafter referred to as the PPA tariff plan) comes to an end, there are calls to delay its introduction and rationalize the application criteria. The PPA tariff plan applies when electricity users cannot procure the required power solely from renewable energy and purchase the shortfall from KEPCO. This tariff plan has a higher basic charge than the general tariff plan, leading to its rejection by companies.

The Korea Chamber of Commerce and Industry (KCCI) announced on the 21st that it held a "PPA Tariff Issue Diagnosis Forum" at the KCCI conference room in Jung-gu, Seoul. Experts and companies who participated as keynote speakers and designated discussants at the forum expressed concerns about the feasibility of implementing the PPA tariff plan, stating, "The PPA tariff plan obstructs companies' use of renewable energy, so revision rather than a grace period is necessary."

The first presentation was given by Professor Lee Sang-jun of Seoul National University of Science and Technology, who explained the "Importance of PPA as a Means to Achieve RE100 and the Need for Support." Professor Lee said, "PPA is a means to secure renewable energy volumes stably over the long term, so demand for PPA is expected to increase in the future," adding, "Companies attempting to sign PPAs are experiencing confusion due to contract changes and delays caused by the PPA tariff plan. It is necessary to examine the fact that East Asian countries like Japan and Taiwan, which face similarly unfavorable renewable energy procurement conditions as we do, are implementing support systems to activate PPAs." Since 2020, Japan has subsidized one-third of the cost of PPA power generation facilities and has also implemented a subsidy system for PPA power market prices. Taiwan supports grid usage fees for renewable energy power generation companies according to the proportion of renewable energy generation, regardless of whether they are large or small and medium-sized enterprises.

Jeon Yo-han, team leader at Ørsted Korea and a panelist at the discussion, said, "During the PPA signing process with Taiwan's TSMC, Taiwan's grid usage fee support system ultimately reduced the cost burden on companies procuring renewable energy," adding, "We could feel the impact of government support systems on PPAs in the global market, and as global companies increasingly require renewable energy use in their supply chains, support systems considering the export competitiveness of Korean companies are necessary."

The second presenter, Kim Beom-jo, managing director of KEI Consulting, gave a presentation on "The Impact of the PPA Tariff Plan and Improvement Tasks." Managing Director Kim said, "KEPCO has an obligation to supply the shortfall power to PPA customers, and as the number of PPA customers increases, a method to recover the cost of supplying the shortfall power must be established," but also noted, "Considering that the domestic PPA system is in its early stages, it is necessary to set application criteria that consider not only changes in KEPCO's supply costs but also the proportion of renewable energy use by companies."

Do Chang-wook, director of the Korea Electronics and Telecommunications Industry Promotion Association, cited a company located in Gumi whose PPA introduction was delayed due to the PPA tariff plan. He said, "This company saw an increase in electricity charges of 2.8 billion KRW in the first half of this year, and it was reviewed that electricity charges would increase by an additional 150 million KRW if the PPA was introduced," adding, "This cost is equivalent to the company's entire operating profit last year."

Kim Hyun-sun, team leader at LG Innotek and a panelist at the discussion, said, "The uncertainty of the PPA system makes active participation in the renewable energy market difficult," adding, "KEPCO's decision on the PPA tariff plan should be made quickly, and a mechanism to prevent retroactive application to existing contracts is also requested." Kim Sung-won, deputy general manager at KEPCO, said, "If a method to recover fixed costs from PPA customers is not established, KEPCO has no choice but to pass that burden on to general customers," adding, "We plan to finalize the application plan for the PPA electricity tariff soon, and since we have listened extensively to companies and gathered expert opinions at today's forum, we will refer to them in our decision."

Cho Young-jun, director of the KCCI Sustainability Management Center, said, "While PPA has the advantage of securing renewable energy stably, the burden of having to consider future forecasts, contract prices, and methods is significant, and raising electricity charges is not appropriate," adding, "Considering the reality that companies must use renewable energy due to requests from global companies, we hope KEPCO will make a reasonable decision."

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