Energy Corporation Announces Results of Fixed-Price Competitive Bidding for Renewable Energy Supply Obligation (RPS)
Applications from Small-Scale Power Plants Under 100kW Increase by 37.8% Compared to Previous Half-Year... 12,469 Sites Registered
Average Price Drops About 5% from 159,000 KRW to 151,000 KRW
[Asia Economy Reporter Moon Chae-seok] In the first half of the year, the number of small-scale power generation businesses under 100kW that participated in the Renewable Portfolio Standard (RPS) fixed-price contract competitive bidding increased by 37.8% compared to the second half of last year. The average RPS price fell by about 5%. It is expected that the price uncertainty for businesses trading Renewable Energy Certificates (REC) in the spot market will decrease.
According to the "First Half RPS Bidding Results" announced by the Korea Energy Agency on the 26th, 12,469 small-scale power plants under 100kW participated in the bidding. The competition rate was 2.38:1. This is a 37.8% increase from 9,049 plants in the second half of last year. The increase in RPS selection capacity from 500MW to a record high of 1,200MW in the first half appears to have contributed to this "successful turnout."
The agency prioritizes small-scale businesses under 100kW to protect them, selecting more than 50% of the selection capacity. Businesses between 100kW and under 1MW are classified as "General Selection A," and large-scale power generation businesses over 1MW are classified as "General Selection B" for selection.
The approximately 38% increase in applications from power plants under 100kW compared to the second half of last year is interpreted as a result of aligned intentions between businesses seeking to reduce price volatility by securing 20-year fixed REC prices and the agency increasing the selection capacity. The fixed-price contract competitive bidding system is implemented to reduce the volatility of the System Marginal Price (SMP) and create a stable investment environment for businesses.
The agency selects long-term contract businesses for 20-year REC trading between 22 renewable energy suppliers and power generation businesses, including Korea Hydro & Nuclear Power. This first half bidding was conducted upon requests from six suppliers?Korea Hydro & Nuclear Power, Korea South-East Power, Korea Southern Power, Korea East-West Power, Korea Western Power, and Korea Midland Power?each requesting 200MW, totaling 1,200MW.
According to the agency, 7,974 medium-scale power plants between 100kW and under 1MW participated in the first half bidding with a competition rate of 9.63:1, and 164 power plants over 1MW recorded a competition rate of 2.17:1. The overall average competition rate, including small-scale power plants under 100kW, was 4.89:1. This overall average competition rate sharply declined from 7.3:1 in the second half of last year.
In fact, a total of 6,264 power plants were selected, about 2.4 times more than in the second half of last year. The increase in selection capacity to 1,200MW means that more companies can benefit from fixed-price contracts. By capacity, there were 5,187 plants under 100kW, 827 plants between 100kW and under 1MW, and 250 plants over 1MW.
The average selection price by capacity decreased compared to the second half of last year. For under 100kW, it was 161,927 KRW, down 3.5% from 167,828 KRW last year. For 100kW to under 1MW, it was 140,653 KRW, down 6.5%, and for over 1MW, it was 142,000 KRW, also down 6.5%. The overall average selection price was 151,439 KRW, a 4.9% decrease from 159,269 KRW last year. The overall average selection price for planned installations was 147,964 KRW.
Lee Sang-hoon, head of the New and Renewable Energy Center at the agency, said, "Through this largest-ever bidding, many power generation businesses that previously traded in the spot market have secured business stability by signing 20-year long-term fixed-price contracts," adding, "In the second half, we will strive to stabilize the solar power market further through comprehensive inspection and status analysis of the RPS market."
According to the agency, businesses selected through this bidding must sign a 20-year supply certificate sales contract with the suppliers within one month from the selection allocation date. Failure to sign the contract within the deadline may result in cancellation. The results of this competitive bidding selection can be checked by logging in with the business number and digital certificate on the "RPS Fixed-Price Contract Competitive Bidding System" website, where details can be viewed by power plant.
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