Revitalization of New, Renewable Energy
The Ministry of Trade, Industry & Energy held a conference on November 30 and released a series of measures for the promotion of the new and renewable energy industry.
According to the measures, the ministry is going to bring in long-term fixed-price contracts in order to deal with the volatility of the system marginal price (SMP) and the price of the renewable energy certificate (REC), which has resulted in unpredictable incomes and financial institutions’ reluctance to provide project financing. The SMP per kWh dropped from 166 won (US$0.14) to 92 won (US$0.08) between the first half of 2012 and the second half of last year. The long-term fixed-price contracts are to eliminate this price uncertainty by means of 20-year contracts. In the case of the REC, which is already subject to a fixed price, the contract period is to be extended from 12 years to 20 years.
The ministry is expecting that the adoption of the new system will lead to more investment in new and renewable energy projects by individuals and financial institutions. In particular, the new and renewable energy projects of 800 MW worth of 3 trillion won, which has been delayed owing to the difficulty in financing, will be restarted.
The government’s measures, in turn, are expected to result in an increase in the ratio of the use of new and renewable energy to the use of primary energy sources such as petroleum, coal and nuclear power from 4.5% to 11% between 2015 and 2025.
The conference was attended by 14 companies, including LS Industrial Systems, Samsung SDI, Hyundai Motor Company, POSCO Energy and Shinsung Solar Energy, as well as nine state-run enterprises and four financial consulting agencies such as the Korea Electric Power Corporation and the Korea Development Bank.