[Virtual Power Plant Era] Korean Market to Flourish in 2 Years

KPX's 'Jeju Island Renewable Energy Bidding System'
Nationwide Expansion After 2-Year Pilot Project
LS Electric and Others Promote ESS-Linked Business

Private companies are expected to actively participate in virtual power plants as early as two years from now.

According to the industry on the 19th, LS Electric will participate in the 'Jeju Island Renewable Energy Bidding System,' a two-year pilot project conducted by the Korea Power Exchange starting on the 29th. LS Electric will perform monitoring functions such as power supply and demand status, output control, and generation forecasting for Jeju Island's solar and offshore wind power through its own platform. The pilot project will be expanded nationwide after 2026.

An LS Electric official said, "We are proactively preparing because we believe the business growth potential is significant in the era of power purchase agreement (PPA) liberalization and smart grids," adding, "We will strengthen the company's business capabilities by securing digital transformation (DX) technology expertise in the existing power business."

The related industry expects that as the pilot project expands nationwide, the domestic virtual power plant market will officially open. This will open the way to provide a one-stop service including their own virtual power plant operation platform supplying to the Korea Power Exchange, power consulting services, and energy storage system (ESS) facilities.

As a result, large-scale users such as Samsung Electronics, which have joined the RE100 (100% Renewable Energy) campaign, will be able to freely use the renewable energy monitoring platform by signing B2B (business-to-business) contracts with virtual power plant operators. They will also be able to reduce renewable energy electricity supply costs by bulk ordering ESS at a lower price.

LS ELECTRIC headquarters in Anyang-si, Gyeonggi-do. [Photo by LS Electric]

When a 'free market' opens where power purchase agreements are made according to electricity prices without going through Korea Electric Power Corporation and its subsidiaries, RE100 member companies will be able to purchase electricity in a cheaper and more stable way among renewable energy options such as VPP electricity, green premiums, and renewable energy certificates (RECs) under the Emissions Trading Scheme (ETS).

Power equipment companies such as LS Electric are promoting renewable energy generation monitoring and consulting businesses linked with ESS. A virtual power plant is a next-generation power plant that can predict power generation from distributed power sources such as solar power scattered nationwide and power demand using artificial intelligence (AI) and automatic control technology, enabling power production, storage, and trading. Last September, a law allowing 'direct power trading' between private power producers and consumers without going through Korea Electric Power Corporation or its subsidiaries passed the National Assembly, opening the private market. Major companies participating in the VPP business include SK Telecom, SK Ecoplant (formerly SK Construction), and LS Electric.

An official from a power equipment company said, "If power trading is fully liberalized, RE100 member customers will have demand to purchase virtual power plant electricity at reasonable prices," adding, "If they purchase the systems created by virtual power plant operators in bulk, they will be able to secure power supply more stably."