"Renewable Energy Also Ranked by Price for Dispatch Order"...Pilot Project in Jeju Next February

Starting February next year, renewable energy in Jeju Island will also participate in bidding in the electricity market and compete. The 'dispatch priority' system, which operates power plants with lower generation costs first, will be applied to renewable energy as well.

On the 28th, the Ministry of Trade, Industry and Energy announced that the amendment to the Electricity Market Operation Rules containing these details has been finalized after review by the Electricity Committee and will be announced for six months starting from the 29th, followed by implementation.

Currently, the electricity market establishes generation plans on an hourly basis one day in advance, which limits the ability to respond to the variability of renewable energy such as wind and solar power occurring on the day. Therefore, starting with the Jeju region, where the share of renewable energy is high and supply-demand stability and output control issues are urgent, market system reforms are being promoted to strengthen the responsibility of renewable energy and enhance the flexibility of the power grid.

This Jeju pilot project mainly includes the introduction of a renewable energy bidding system, and the establishment of a real-time market and ancillary services market. The renewable energy bidding system aims to have renewable energy, which is currently purchased preferentially without separate bidding, submit bids including price and forecasted generation, thereby centralizing dispatch and establishing the principle of output control based on price mechanisms. Controllable renewable energy with a single or virtual power plant (VPP) capacity exceeding 1 MW will receive compensation equal to that of general power plants, such as capacity payments, when participating in the electricity market bidding (mandatory participation if exceeding 3 MW), and will bear responsibility as a main power source by complying with dispatch instructions.

Additionally, to improve the accuracy of electricity trading by reflecting real-time supply and demand conditions, a 15-minute interval real-time market will be established in addition to the existing day-ahead market. An ancillary services market, which commercializes reserve power, will also be introduced to provide incentives for flexible resources that can complement the high variability of renewable energy.

An official from the Ministry of Trade, Industry and Energy stated, "This market reform will strengthen the price function of the electricity market and contribute to maintaining a more efficient and stable power supply system by making renewable energy a main resource. It is expected to serve as an opportunity to promote competition in the wholesale electricity market as renewable energy, which has no fuel costs, participates in bidding."

The Jeju pilot project will undergo trial operation starting this October and will be implemented in the Jeju region from February next year, followed by nationwide expansion.

(Photo for reference)

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