South Korea replaces 15-year-old renewable portfolio standard

New projects will compete by power source and capacity to win contracts.

South Korea will replace its renewable portfolio standard (RPS) for new renewable energy facilities with a competitive contract market, after the National Assembly passed amendments to seven climate, energy, and environment laws on 20 August.

The new system will require renewable energy projects to compete by power source and facility capacity to win contracts. Successful bidders will receive long-term fixed-price power purchase agreements from Korea Electric Power Corporation (KEPCO).

The Ministry of Climate, Energy and Environment (MCEE) said the RPS, introduced in 2012, has supported renewable energy deployment but has had limitations in reducing generation costs and fostering domestic industry.

“After 15 years, the government is reforming its renewable energy deployment system,” the MCEE said.

Renewable Energy Certificates (RECs), which underpin the current system, will no longer be issued for new facilities from next year. 

Existing operators will continue to receive RECs, whilst the REC spot market will be phased out by 31 December 2029.

The new contract market will allow projects to compete within announced capacity and price ceilings. The government said long-term fixed-price contracts would provide stable revenues, reduce renewable energy project financing costs, and improve bankability.

The amendments also introduce measures to expand renewable energy grid access and construction.

Small-scale renewable projects of up to one megawatt with public-interest and community participation components will be eligible for priority grid access in areas surrounding national-scale power grids and other designated areas.

The amendments establish a legal basis for shared grid connection facilities, allowing multiple renewable energy projects to connect to the grid through common infrastructure.

Private-sector operators will also be allowed to participate in national key power grid development projects, subject to approval from the Power Grid Expansion Committee. The measure will remain in effect until December 2029.

Private operators will have to transfer completed facilities to KEPCO.

The legislative package also establishes a support framework for workers and regions affected by coal-fired power plant closures, covering phase-out plans, employment security, re-employment support, and alternative industries.

The MCEE said it will revise subordinate legislation needed to implement the seven laws passed by the National Assembly.