First Domestic ESS Central Contract Market Operator Selected... Winning Bid Price Reduced by 15%

As a result of the competitive bidding in the country's first centralized contract market for energy storage systems (ESS), competition among operators led to a winning bid price approximately 15% lower than the initially expected price.

On the 29th, the Ministry of Trade, Industry and Energy announced that three power plants (one in the east and two in the west) were selected as the final successful bidders in the competitive bidding for the 'Jeju Long-Duration Battery Energy Storage System (BESS) Centralized Contract Market.'

ESS is a representative flexible resource that contributes to grid stabilization and can respond to the variability of renewable energy. However, in the current unified electricity market, it has been difficult to recover investment costs, limiting its spread. Therefore, a contract market compensating at the winning bid price for 15 years was introduced, and it was first established in Jeju Island, where the proportion of renewable energy is high and output control issues are urgent.

This bidding was conducted by dividing the total capacity into east (35MW) and west (30MW) areas, considering Jeju grid connection conditions and the distribution of renewable energy generators. As a result of the bidding announcement held until October 27, a total of 13 power plants (11 companies, 206MW) participated, showing a competition rate of 3.6:1 (126MW, 7 cases) in the east and 2.7:1 (80MW, 6 cases) in the west. The final successful bidders were decided through evaluation by a committee of experts in each field and approval by the Central Contract Market Committee.

The bidding results showed an effect of reducing the winning bid price by about 15% compared to the initial expectation. Additionally, the Ministry of Trade, Industry and Energy expects that upon completion of ESS facility installation, anticipated in early 2025, the output control of renewable energy in Jeju will be significantly eased and power grid stability will be improved.

Lee Ok-heon, Director of the Electricity Policy Division at the Ministry of Trade, Industry and Energy, stated, "Through this bidding, we will further activate the spread of ESS, which plays an important role in stabilizing the Jeju grid, and also promote the establishment of electricity markets tailored to the characteristics of each power source." He added, "We plan to actively review industry and expert opinions raised during this bidding process and prepare for the next centralized contract market opening."

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