[Featured Stock] CS Bearing Surges Benefiting from Fixed-Price Bidding System and Inflation Reduction Act

[Asia Economy Reporter Lee Seon-ae] On the 8th, CS Bearing's stock price surged sharply.

As of 10:05 AM on the same day, it was trading at 12,700 KRW, up 14.41% compared to the previous trading day. This is interpreted as being influenced by the news that the fixed-price bidding system, which was only applied to solar power generation, will be expanded to wind power generation as well.

According to related industries, the Korea Energy Agency announced on the 3rd a draft partial amendment to the "Regulations on the Issuance of Supply Certificates and Operation of the Trading Market," which includes applying the fixed-price bidding system to wind power. The public opinion collection process will be conducted until the 17th, followed by a preparation period, and the first bidding will begin within the year. The fixed-price bidding system is a system that allows renewable energy power producers to enter into contracts to supply RECs (Renewable Energy Certificates) at a fixed price for 20 years with new renewable energy suppliers through competitive bidding. The industry credits the fixed-price bidding system as the reason for the domestic solar power annual installation capacity growing up to 4GW (gigawatts). The wind power industry, including the Wind Power Association, has been urging the introduction of the fixed-price bidding system, which was only applied to solar power, to wind power as well. Wind power projects are large in scale and take more than five years from preparation to completion. During this period, variables such as SMP (System Marginal Price), REC, and raw material prices, which affect the profitability of wind power generation, often change, causing delays or abandonment of projects.

With the application of the fixed-price bidding system, stable profitability will be guaranteed, making financing for wind power projects easier and expanding installation capacity. In particular, since the contribution to the domestic industrial ecosystem is evaluated when selecting the winning bidder, benefits to the domestic wind power industry are expected.

Meanwhile, news that the US Senate passed the $558 trillion "Inflation Reduction Act" also had an impact. This bill includes an investment of 479 trillion KRW in energy security and climate change response. The bill provides tax credits and incentives worth billions of dollars over 10 years for investments in manufacturing facilities for electric vehicles, wind turbines, and solar panels, and invests an additional $30 billion in production tax credits to accelerate domestic manufacturing of solar panels, wind turbines, batteries, and critical mineral processing. It also includes provisions to impose fines for excessive methane emissions, a greenhouse gas.