2001~2011 : FIT: Feed-In-Tariff 2012~present : RPS Spot market : auction, once a month (

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3 2001~2011 : FIT: Feed-In-Tariff 2012~present : RPS Spot market : auction, once a month ( 13+α regulated generators - 8 publicly owned - 5 privately owned REC : Renewable Energy Certificate 1MWh = 1REC 3

4 i REC i,r,t + solar r,t (T r,t 1 R r,t 1 ) s t r, t { } (1) i REC i,r,t + SREC r,t (T r,t 1 R r,t 1 ) s t r, t { } (2) SREC r,t solar r,t i, t (3) Target percentage Year Target 2.0% 2.5% 3.0% 3.5% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% *The generators are permitted to borrow up to 20% (30% in the first three years) of the total REC requirement from the following year Target Amount of SREC Year Target 276, ,000 1,156,000 1,577,000 1,577,000 4

5 Most of, but not all, new and renewable technologies Solar PV, Onshore and Offshore wind, Hydro, Biomass, Biogas, Landfill gas, Fuel Cell, IGCC, Refuse derived fuel (RFD), Municipal solid waste, off-gas, tidal Passing inspection for completion and operation on and after September 2010 Energy Group REC type Technology REC multiplier Additional Information Solar Energy SREC Solar Photovoltaic 0.7 / 1.0 / 1.2 / Four multipliers based on the locations Wind Energy Onshore Wind 1.0 REC Offshore Wind 1.5 / Two multipliers based on the distance from coastline (<5km: 1.5, >5km: 2.0) Hydro Energy REC Hydro Exclusion of the pumped storage power plants - Non-tradable REC issued. Bioenergy LFG 0.5 REC Biogas 1.0 Biomass 1.5 Waste Energy Off-gas Non-tradable REC issued REC - Up to 10% of a regulated generator s REC requirement MSW 0.5 RDF 1.0 New Energy Fuel Cell 2.0 REC IGCC Non-tradable REC issued - Up to 10% of a regulated generator s REC requirement 5

6 2011 (Before RPS) 2012 (After RPS) Capacity Generation Capacity Generation (%) (%) (%) (%) (MW) (MWh) (MW) (MWh) General Hydro ,178, , ,440, Small Hydro , , Solar PV ,348, , Wind , , MSW , , LFG , , Off-Gas ,640, ,166, Bio-Energy , , Fuel Cell , , Ocean (Tidal) , Total 3, ,190, , ,586, Total ELC 492,846, % 503,796, % 6

7 Less cost-competitiveness Design a separate certificate market Short installation time & relatively easy approval process Most briskly propagated The separate market impede, rather than facilitate, the expansion of solar PV Intricate approval process & Expensive LNG Obstacles on propagation Inefficient design of multipliers 7

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9 Develop a RES for electricity sector Reproduce and interpret the initial experience via model Predict the possible future results of Korean PRS Indicate the potential problems and reasons 9

10 Region : 16 ( ) Time horizon : 2011~2022 Time Slice : Month/ WD&WE/ D&N&P 10

11 2011 (Before RPS) 2012 (After RPS) Capacity (MW) (%) Generation (MWh) (%) Capacity (MW) (%) Generation (MWh) (%) Coal Steam Turbine 24, ,515, , ,329, Natural Gas Steam Tur bine Natural Gas Combined Cycle ,232, ,452, , ,266, , ,396, Oil Steam Turbine 4, ,456, , ,553, Oil Combined Cycle , , Oil Internal Combustion , , Nuclear 18, ,723, , ,327, Hydro 1, ,597, , ,969, Pumped Storage 4, ,232,985-4,256,763-4, ,683,262-4,789,137 - New & Renewable Energy 1, ,592, , ,617, Community Energy 2, ,429, , ,912, Total Generation 79, ,846, , ,796,

12 (1) Current Capacity (MW) (2) Current + Planned (MW) (2)/(1) Current + Planned + Potential (MW) General Hydro 1,631 1,631 1,631 (3)/(1) Small Hydro Solar PV 690 1, , Wind 477 7, , MSW LFG Off-Gas Bio-Energy , Fuel Cell 56 3,490 3,490 Ocean (Tidal) 255 1, , Total 4,084 17, , Total ELC capacity 81, ,321~144,121 N&R Share : 12~21% 12

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14 Renewable Energy Resource Map in Korea, New & Renewable Energy Data KIER e.g. Onshore wind 14

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16 - Marginal Value of Transferred RECs and SRECs (billion KRW million USD) Total Penalty ~ ~75 80 ~ ~98 27 ~ ~ ~ ~ ~ ~1, ~1,350 16

17 The 5 th basic plan on electricity demand and supply (Dec. 2010) Design of RPS policy(late 2011) The 6 th basic plan (Feb. 2013) - Aggressive target 10% - Increase in the projection of electricity demand : Mostly satisfying by Fossil fuel The 5 th basic plan vs. The 6 th basic plan - Demand in 2022(626TWh 672TWh) - Appropriate capacity in 2020 (107GW 144GW : 37GW) - Nuclear : 1.4GW - Coal : 11.7GW - LNG : 10.5GW 17

18 The 6 th basic plan on electricity demand and supply - WASP model - Simply implementing the RPS in the model Fails to incorporate the complex RPS mechanism into the model - REC Multipliers - Non-tradable RECs (Off-gas and IGCC) - Borrowing and Payback 18

19 The government amendments in progress Prediction for the possible effects of the modifications Projection of REC requirements in future Each regulated generator s counterstrategy : Investment vs REC Purchase Risk and Opportunity Analysis 19

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