Amendment to the "Detailed Licensing Standards for Power Generation Projects" Notice
The government has decided to strengthen the approval and extension requirements for renewable energy power generation projects such as solar and wind power. This move aims to address the issue of uncontrolled proliferation, based on the assessment that solar and wind power projects have increased indiscriminately.
On the 31st, the Ministry of Trade, Industry and Energy announced that it will implement the revised "Detailed Approval Standards for Power Generation Projects" starting from the 1st of next month.
According to the Ministry, the number of newly approved renewable energy power generation projects (based on projects exceeding 3MW) surged from 19 cases (1.4GW) in 2011 to 98 cases (10.3GW) in 2021, following policies to expand renewable energy dissemination.
An official from the Ministry stated, "Although new approvals have increased significantly, there have been frequent cases where project operators focused on profit by selling project rights midway or delaying projects rather than properly advancing them. The main point of this revision is to enhance the actual implementation capability of approved power generation projects and establish order in the electricity market by strengthening the approval requirements and wind resource measurement device standards."
First, the Ministry will strengthen the approval standards for power generation projects. Until now, the equity ratio in the financing plan was 10%, but it will be increased to 15%. Regarding credit rating, the exception clause for ratings below B has been removed, making a minimum rating of B mandatory.
The Ministry will also assess whether the 'initial development costs,' which are expenses incurred before construction such as permits and design, are secured. From now on, at least 1% of the total project cost must be secured as paid-in capital, and submission of expenditure and procurement plans (with evidence) for initial development costs will be mandatory.
The preparation period and construction plan approval period will also be improved. Considering the actual project advancement period, the preparation period for onshore wind power will be extended from 4 to 6 years, and for offshore wind power from 4 to 8 years. The renewable energy construction plan approval periods are designated as 2 years for solar and fuel cells, 4 years for onshore wind, and 5 years for offshore wind. In particular, a construction plan approval period will be granted at the time of approval (for projects of 10MW or more) to ensure timely implementation. The construction plan approval period will also be uniformly applied to existing approved power generation projects (10MW or more). The construction plan approval period refers to the time from approval to construction start, and the preparation period refers to the time from approval to project commencement. If construction or project commencement does not occur within the period, the approval will be canceled according to the Electricity Business Act.
Extensions of the project period will become more stringent. For the construction plan approval period, extensions will only be possible if the minimum environmental impact assessment is completed and the project operator submits a reasonable justification for the delay. For the preparation period, extensions will be granted if the operator proves that the minimum development activity permit has been or can be obtained and submits a reasonable justification for the delay. Until now, extensions were routinely allowed, but with this measure, extensions will not be possible without following certain procedures. The Ministry plans to grant a grace period for existing approved projects and apply the strengthened extension requirements thereafter.
The wind resource measurement device system will also be improved. Until now, wind measurement was required as a condition for power generation approval, and priority was given based on the order of installation when there was site overlap among operators. According to the Ministry, there have been frequent cases of installing measurement devices for the purpose of site preemption and resale. Additionally, numerous disputes among operators have occurred due to complex valid area regulations.
Therefore, a validity period has been introduced, requiring power generation project approval applications within 3 years from the installation permit date. Also, the classification criteria for valid areas, previously divided into 'simple areas, shared water surfaces, complex areas, and mixed areas,' will be simplified into 'offshore' and 'onshore.'
An official from the Ministry said, "The introduction of a validity period for wind measurement devices will prevent installations for resale purposes, and the simplification of valid areas is expected to reduce disputes among operators. The Ministry will continue to strengthen management and supervision of power generation projects to establish order in the electricity market and improve predictability of power supply and demand."
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