East Asia Alternative Energy Futures Workshop October 9-10, 2013, Asia Pacific Research Center Stanford University

Transcription

1 East Asia Alternative Energy Futures Workshop October 9-1, 213, Asia Pacific Research Center Stanford University

2 I Long-Term Energy Projection in East Asia II Energy Saving Potentials in China, Japan, Korea III Ⅳ, The Current Status of NRE in Korea The 3 rd Basic Plan for NRE in Korea Ⅴ Roadmap for NRE Deployment in Korea Ⅶ Ⅵ Major Policy Tools: FIT, RPA, RPS RPS Target and Implementation Plan

3 This section is produced based on the interim report, Analysis on Energy Saving Potential in East Asia. ERIA Research Project Report 212, No. 19. Any quotation needs to contact the editor, Shigeru Kimura.

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5 GDP Growth Rate GDP per Capita % Actual Forecast ,$ per person(real price at 2 value) / 198 2/ / 2 22/ / / China s economy will gradually grow at a moderate pace due to the shift from export and investment-driven growth to domestic consumption-led growth. Other factors, including decrease in labor, environment and resource constraints, are additional reasons for the moderate growth. GDP per capita is expected to reach 9,2 USD (at 2 price) in 235, a four-fold increase from that in 21. 5

6 Raw Material Production(2=1) Industrial Structure Steel 6 Cement 5 4 Ethylene % 37% 39% 41% 43% 46% 34% 35% 46% 5% 51% 49% 37% 28% 15% 8% 6% 5% Tertiary Industry Secondary Industry Primary Industry Raw materials production will continue to increase in the future. However, the growth rate will be moderate. Although the share of secondary industry will remain at around 5%, that of heavy primary industry is likely to decrease over time. The share of tertiary industries will keep expanding. 6

7 Million people 1,6 1,4 1,2 1, % 1, 5% 8 66% 6 59% 1,263 7% 1,338 1,388 1,393 1,382 8% 12% 17% 2% 68% 72% 71% 69% 66% Age 65~ Age 15~ % 28% 25% 19% Age 17% 15% 14% ~ Population will increase at.1% annually and will peak at around 1,4 million by 225. By then it will be surpassed by India. The share of population over 65 will reach 2% in 235 from 8% in 21. Labor force population will peak by 215 and turn to decrease. 7

8 BAU APS 3 Mtoe Actual Forecast 3 Mtoe Actual Forecast Mtoe 25 1,516Mtoe increase from 199 to 21 increase from 21 to Building etc. Transport 26% 17% Building etc. Transport 24% 18% 382Mtoe ( 13.5%) Non-energy Industry Transport Building etc % 14% 54% 1% Industry 47% 1% % 14% 54% 1% Industry Nonenergy Nonenergy 46% 12% Energy demand of heavy industry which has been strong up to now will grow relatively slowly in the future. Energy demand of the bldgs and transport sectors will increase substantially. The share of the bldgs will reach 26% in 235 (from 22% in 21). Energy demand in APS will be 13.5% lower than in BAU. Energy demand of the buildings and industry are expected to have large potential for reduction. 8

9 12, 1, 8, 6, 4, 2, TWh Power Generation 1,356 1,62 4, ,273 6, , ,469 1, , ,11 6,12 8,31 1,977 1, , BAU APS Renewables Hydro Nuclear Natural gas Oil Coal 1% 8% 6% 4% 2% % Power Generation Mix 1% 4% 5% 13% 2% 16% 17% 17% 16% 3% 2% 2% 8% 6% 8% 8% 1% 71% 78% 78% 65% 6% 25% 15% 4% 43% BAU APS Renewables Hydro Nuclear Natural gas Oil Total power generation will increase from 4,28 TWh in 21 to 1,9 TWh in 235. Power generation from gas, nuclear and renewables will substantially increase, while hydro power will represent moderate growth. The share of coal will gradually decline from 78% in 21 to 6% in 235 in BAU. In APS, generation from nuclear, hydro and renewables will sharply expand to substitute a further decline in coalfired generation. The share of coal will decline to 43% in the APS. Coal 9

10 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Mtoe Actual BAU 2,163 Mtoe 4% 19% 72% Forecast 2% Renew ables Hydro Nuclear 3% 5% 14% 18% 57% Gas Oil Coal Mtoe 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 APS Actual Forecast 12% 18% 4% 19% 52% 72% 5% Renew ables 5% 8% Hydro Nuclear Mtoe ( 19.3%) Gas Oil Coal TPED will increase at AAGR of 3.% in BAU driven by a robust economic growth. Coal will grow substantially led by the power sector, and oil will expand reflecting rapid motorization. Natural gas will increase sharply for the household and commercial usage, especially in urban areas. In APS, TPES is 19% lower than in BAU with installation of nuclear and renewable energy. 1

11 Coal Oil Gas Nuclear Renewables Industry Transport Other Transformation 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Mtoe Mtoe -27% % -33% by energy 46% 37% % % -18% -13 by sector % -51 5% 4% 3% 2% 1% % -1% -2% -3% -4% 2,213 BAU 3,474 3,227 APS 4,585 3, TPED Mtoe ( 19.3 %) In APS, TPED will be 886Mtoe lower (19.3%) than that in BAU. The power sector provides the largest potential for energy savings. Coal, oil and gas will be reduced by 27%, 33% and 18%. Nuclear and renewable will in crease to 48% and 37% TPED Growth Rate % Actual Forecast / / / / / / 21 BAU / 21 APS 11

12 2,5 toe/million 2 US Dollars 2, 1,5 1, (1) 512 (75) BAU 36 (53) 475 (7) APS 29 (43) By 235, energy intensity will drop to 36 toe/1 6 US$(2 price) in BAU, 47% lower than in 21 Energy demand per capita is projected to reach 3.32 TOE per person in 235 in BAU. Energy-GDP elasticity will decrease to.53 in the coming two decades from.59 in the last two decades. 12

13 4 Mt-C BAU 3693 (256) (25=1) 225 (14) 2957 (25) 2677 (186) APS 2654 (184) ,38 MtC ( 28%) Decomposition of CO 2 Emissions CO 2 emissions has increased 4% b/w 21 & 25. In BAU, CO 2 emissions will reach 2,957 Mt-C in 22, and 3,693 Mt-C in 235. In APS, CO2 emissions will peak around 225 due to energy saving and fuel switching to nonfossil fuels. In 235, it will be 1,38 Mt-C (28%) lower than that in BAU BA U A PS CO 2Emissions C Carbon Intensity (C/E) Energy Saving (E/Y) Economic Growth Y 1.2 C = (C/E) * (E/Y) * Y ΔC = Δ(C/E) + Δ(E/Y) + ΔY Decarbonization / Energy-Saving/ Economic-Growth 13

14 National Target : 4 ~ 45% reduction by 22 2 (25=1) BAU 42% decrease from 25 level APS 48% decrease from 25 level China New Policy Target:4-45% carbon intensity(co2 /GDP ) reduction b/w 25 & 22. Carbon intensity in 22 will decrease 42% in BAU and 48% in APS from 25 level Carbon intensity in 235 will improve from 25 level by 62% in BAU and 72% in APS. 14

15 5 GW BAU APS BAU APS BAU APS BAU APS Hydro Nuclear Wind Solar In 21, the total installed capacity of hydro is over 217GW. Hydro power will grow to 36GW in BAU and 443GW in APS. In 21, the total installed capacity of wind power reached 42GW, and rank 1 st in the world. Wind power will grow to 241GW in BAU and 424GW in APS until nuclear power reactors in operation, 28 under construction. Nuclear capacity will raise to 111GW in BAU and 162GW in APS by

16 China will maintain fast GDP growth, and its energy demand and CO2 emissions will continue to increase, but slower than in the last 2 years. Energy and CO2 emission intensity will decline with the implementation of sound energy efficiency and non-fossil policies. A further potential for energy saving in China, with around 5 % of this achievable through structural change of the economy. It is urgent to lengthen the life cycle of buildings and infrastructure: current short life time results in excessive production of energy intensive products such as steel and cement. Energy efficiency in buildings and transport will be more important. In addition, market uptake of clean energy technologies is vital for a future environmental friendly energy market structure. It is important to implement market-based measures to motivate enterprises and consumers to take action: energy pricing reform such as removal of energy subsidies, establishment of energy and/or carbon taxes 16

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18 National Target : Energy intensity 3% improvement between 25 and 23 Energy Policy of Japan Strategic Energy Plan (approved by the Cabinet in June 21) highlights the following three issues surrounding the energy sector: (1) Tight energy demand and supply situation in the world, and resulting energy security challenges to Japan (2) Need for more comprehensive and strong energy policy against climate change, and (3) Energy and environment sector to serve as a main driving force of economic growth. And, the Strategic Energy Plan highly depended on the Nuclear. Under hot debate!! 18

19 AAGR(%) GDP Population Growth rate of GDP, Population Macro economy GDP is assumed to increase at an AAGR of 1.1% between 25 and 235. Population will be decreasing at AAGR of.5% between 25 and

20 Nuclear power plants Renewable Energy 45 4 Capacity (GW) APS BAU 3 25 TWh Assumptions BAU +2 new plants & 4 years APS +2 new plants & 5 years BAU APS Nuclear Japanese government try to decrease the dependence on Nuclear. We assumed 2 scenarios which are based on the plant life. APS is longer than BAU Renewables (excl. Hydro) We assumed that FIT and some policy incentives are expected to push increase of RE. In APS, the amount of power generation from RE will be almost 2 times as large as BAU. 2

21 BAU APS Mtoe 4 Actual Forecast Mtoe Actual Forecast % 36% 24% Non-energy Building etc. Transport 11% 39% 18% % 35% 24% Non-energy Building etc. Transport 13% 35% 17% 38 Mtoe ( 13%) 5 28% Industry 32% % Industry 35% BAU: Energy demand in the transport sector will decrease due to the improvement in fuel economy Industry sector will initiate a steady effort to save energy. Building sector will increase energy demand because people will buy more home appliances APS: Energy demand will be 38 Mtoe lower (13%) in 235 than that in BAU. 21

22 1,4 1,2 1, Power Generation Power Generation Mix TW h , , BAU ,1 6 Renew ables APS H ydro N uclear N atural gas oil coal 1% 8% 6% 4% 2% % Hydro Renewables 1% 3% 15% 11% 7% 1% 18% 7% 14% 24% 26% 7% 11% 14% 2% 27% 39% 46% 3% 9% 7% Oil-fired Nuclear Gas-fired 27% 3% 1% 14% Coal-fired 22% 26% 6% 19% BAU APS Power generation will keep increasing in BAU. In APS, Japan will have a further progress in energy saving and peak-out of power generation. The share of nuke will decrease in BAU. It will keep current amount of power generation in APS Renewable energy will strongly expand. It will have 5 times increase from the current share. 22

23 BAU APS 6 Mtoe Actual Forecast Hydro 6 Mtoe Actual Forecast % 17% 41% Nuclear Gas Oil 6% 5% 28% 32% % 17% 41% Nuclear Gas Oil Hydro Renewables 12% 14% 2% 58 Mtoe ( 13%) 1 23% Coal 27% % Coal 3% 21% TPED will keep decreasing until 235 in BAU A continuous improvement of fuel economy will result in decreasing oil demand Too difficult to construct many brand-new nuke plants. The share of non-fossil fuel w/o nuke in TPED will be around 8% in 235 in BAU. TPED will be 58 Mtoe lower in APS than that in BAU by 235. In APS, the share of renewable energy will strongly increase to 12% in the fuel mix in

24 Coal Oil Natural Gas Nuclear Renewables Mtoe Mtoe % +78% BAU APS TPED Mtoe ( 13 %) % % % TPED will keep decreasing gradually. TPED will reach 458 MTOE by 235. Energy saving potential in 235 will be 58 MTOE. Coal, oil and natural gas demand will be reduced by 31%, 18% and 38%, respectively. Nuke and RE will push up the total primary energy demand. Energy intensity will get a 3% improvement by 235 from 21 in BAU. In APS, it will be 38%. 24

25 (21=1) APS 1 5% improvement from BAU 28% improvement from Decomposition of CO 2 Emissions C = (C/E) * (E/Y) * Y ΔC = Δ(C/E) + Δ(E/Y) + ΔY BA U A PS CO 2Emissions C Carbon Intensity (C/E Energy Saving (E/Y Economic Growth Y Decarbonization / Energy-Saving/ Economic-Growth Energy intensity will decrease by 41% between 21 and 235 in APS. Carbon intensity (CO 2 emissions per GDP) will improve by 28% between 21 and 235 in BAU and 5% in APS. 25

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27 / 198 GDP Growth Rate Population % Actual Forecast 6.1 2/ / 2 22/ / / % 3 2 Million % 47. 7% 62% 69% 72% 72% % 16% 7% 27% Age 65~ Age 15~ 59% % Age 26% 21% 16% 14% 14% ~ GDP will increase gradually, and AAGR between 21 and 235 will be 3.1%. In 235, GDP per capita will reach 33,2 USD( 2 real price), doubling that in 21. Population will increase at.2% a year until reaching the peak at 52 million in 23. The share of elders will reach 27%, almost doubling the younger generation. The share of labor force will decrease to 59% in

28 BAU APS 25 Mtoe Actual For ecast 25 Mtoe Actual For ecast Mtoe 2 increase from 199 to 21 increase from 21 to Mtoe 28% Building etc. Tr ansport 26% 14% % Building etc. Tr ansport 26% 13% 19Mtoe ( 8.3%) Industry Transport Building 1 etc. Nonenergy 19% Industry 35% 1 19% Industry 3% 5 28% 24% Nonenergy 28% % 24% Nonenergy 31% BAU: Final energy demand will increase at 1.5% per year during the outlook period. Final energy demand by Industry and non-energy use will respectively increase at 1.9% and 2.1%/yr. Building energy will increase at 1.3%/yr. Transport energy will increase at only.1% yr. APS: Energy demand will be 19Mtoe lower (8.3% ) in 235 than in BAU. Industry sector will contribute nearly half of the reduction of energy demand. 28

29 1, Power Generation TWh 879 1% Power Generation Mix 6% 1% 1% 5% 7% Renewables Hydro Renewables Hydro 8% 5% 38% 3% 28% 45% Nuclear BAU APS Nuclear Natural gas Oil Coal BAU: Power generation will increase at 2.3%/yr and reach 879 TWh in 235. APS: Power generation will rise to 783 TWh in 235, 11% lower than that in BAU. The share of nuke will be the key in fuel mix. In BAU, nuke generation in 235 will be 66% more than that in 21, and maintain its share at nearly 3%. In APS, nuke will share 45% in 235. In both scenarios, w/o nuke, coal and gas will be major fuel resources for power generation. 6% 4% 2% % 9% 18% 17% 1% 12% 21% 18% 4% 1% 12% 1% 39% 44% 48% 34% BAU APS Natural gas Oil Coal 29

30 Mtoe Actual 18 Mtoe BAU For ecast 2% Renew ables 17% 17% Nuclear Gas Mtoe Actual APS Forecast 3% Renew ables 28% Nuclear 34Mtoe ( 9.1%) % Oil 16% 32% 38% Coal 31% 3% % 15% Gas 16% 32% Oil 38% Coal 22% 3% In BAU, TPED will grow at annual rate of 1.2%, reach 368 Mtoe in 235 from 247Mtoe in 21. The share of oil will drop to 32% in 235 from 38% in 21. By 235, TPED in APA will be 34 Mtoe lower (9.1% down) than that in BAU. Contrary to the fast increase of nuclear, shares of coal and oil will decrease during the outlook period. 3

31 Coal Oil Gas Nuclear Renewables Industry Transport Other Transformation Mtoe Mtoe % % BAU 28 44% -21% APS 5% 4% 27% 3% 2 2% 1% -1% -4-5 % % -13% -8% -1% -2% -3% -4% TPED Mtoe ( 9.1 %) Compared with the BAU, in APS, industry and power sector will contribute most of the saving of the final energy demand. Coal, oil and natural gas demand will be respectively reduced by 36%, 9% and 21%. Nuclear and renewable will in crease 44% and 27%. by energy by sector 31

32 4 toe/million 2 US Dollars Improvement (21-235) TPED Growth Rate GDP Growth Rate % Actual Forecast (1) (82) 246 (8) 31% 213 BAU (69) 194 (63) 37% APS 5 199/ 198 2/ / 2 22/ / / / BAU Energy intensity(tped/gdp) will decrease during the outlook period. The average annual change rate will be -1.5% in BAU, and -1.8% in APS. Energy intensity in 235 will be 31% lower in BAU and 37% lower in APS than those in 21. Energy demand per capita will increase from 5. toe in 21 to 7.1 toe in 235 in BAU. APS 32

33 Mt-C 123 (25=1) 151 (123) 176 (143) 153 (124) BAU APS Mt-C ( 29%) CO 2 emissions has increased 23% in 21 from that in 25. In BAU, CO 2 emissions will reach 176 Mt-C in 22, 43% up from 25. In APS, CO 2 emissions will decrease to 153 Mt-C in 22. In 235, CO 2 emissions in APS will be 61 Mt-C (29%) lower than that in BAU. 33

34 (25=1) APS 12 BAU 2% improvement from Decomposition of CO 2 Emissions BA U A PS CO 2Emissions C Carbon Intensity (C/E) Energy Saving (E/Y) Economic Growth Y % improvement from C = (C/E) * (E/Y) * Y ΔC = Δ(C/E) + Δ(E/Y) + ΔY Decarbonization / Energy-Saving/ Economic-Growth CO 2 emissions per GDP in 22 will improve from 25 level by 2% in BAU and 3% in APS. CO 2 emissions per GDP in 235 will improve from 25 level by 35% in BAU and 54% in APS. Development of Energy saving and nuclear will contribute most of the reduction. 34

35 Primary E demand in Korea is projected to continue increasing at 1.6% during the outlook period, driven by expanding industry & non-energy use. In the longer term, Korea needs to transform its industrial structure into a less energy-intensive one. Nuke expansion is a policy agenda of the highest priority in Korea. Fossil fuel demand and CO2 emissions will heavily depend on the scale of the nuke program. Korea has promoted diversification of energy sources and suppliers to mitigate risks associated with excessive external energy dependence. A larger uptake of new and renewable energy will contribute to enhance energy security as well as environmental preservation. It is highly recommended that Korea keep up with the current policy goals of transforming into a less energy-intensive, greener economic structure to keep a balance between energy, economy, and the environment. 35

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37 Year Legislation Notes / ~ ~ 213 Promulgation of The Promotional Act of NRE Development Promotional Act of NRE Development, Utilization and Deployment (1 st Amendment) Promotional Act of NRE Development, Utilization and Deployment (2 nd /3 rd Amendment) The 2 nd National Basic Plan for NRE Technology Development & Deployment Promotional Act of NRE Development, Utilization and Deployment (4 th Amendment) The 3 rd National Basic Plan for NRE Technology Development and Deployment Promotional Act of NRE Development, Utilization and Deployment (5 th Amendment) The 4 th Nat l Basic Plan for NRE Technology Development & Deployment (underway) Legal basis for NRE R&D activities Amendment for legal basis for NRE dissemination Obligation on public bldgs (const. cost), certification, FIT 1 year plan, target: 3%(26), 5%(211) Including standardization, RESCOs. etc. Target: 22(mid), 23 (long), NRE industry promotion RPS: 212(2%) 222(1%) Obligation on public bldgs (load) The 2 nd Nat l Energy Basic Plan NRE industrialization, Export 37

38 118 billion in billion in 212 (8 times ) R&D Focus: Strategic technologies(solar PVs, Wind, H2/FC) and human resource development, etc. Market development, large-scale deployment: subsidies, loans, feed-in tariffs(fit) * 212 Total R&D Deployment (subsid, Loan) Feed-In Tariff Note: * If test bed and export subsidies are included, it amounts to 1,14.8 (Unit: billion won) 38

39 11 Categories: Solar PVs, Solar Thermal, Wind, Hydro, Wastes, Bioenergy(LFG, Bio-diesel), Geothermal, Marine, Hydrogen, Fuel Cell, Coal Liquefaction/Gasification NRE Deployments (thou. toe) 6,856 7,583 4,879 4, ,858 6, NRE Share in TPES (%) < Composition of NREs (211) > < Power Generation from NREs (211) > Waste 67.5% Hydro 12.7% Bio 12.7% Wind 2.4% PV 2.6% Fuel Cell.8% Waste and hydro power account for more than 8% of TPES Hydro 62.9% Wind 12.1% Solar PV 128% Bio (LFG) 7.4% Fuel Cell 4.1% Biogas 6.2% 39

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41 Sustainable Energy Development via New & Renewable Energy Goal I : NRE Deployment 11% by 23 Goa II : Fostering NREs as Green Growth Industry Strategy I Strategy 2 Strategy 3 Strategy 4 Industrialization Larger Deployment Infrastructure Market Mechanism TRM/PRM Validation/Demonstration Complex Codes & Standards Export Industry Million Green Home NRE Design in Bldg & New Towns Larger Role of Local Autonomies Tech. Convergence Industrial Codes Finance mechanism & funding Removing barriers Statistics & DB RPS/RFS Integrated Policy Green Pricing Tradable RECs 41

42 Business As Usual: BaU Continuation and Maintaining of the Current Policy:Annual growth Rate similar to that between 23 and 27 Way higher as compared to those growth rate of 1.3% and.9% in the primary energy consumption during the same period Strengthened Policy Strengthening R&D and Deployment Policy Annual growth rate: much higher than those of BaU BaU Policy Share(%) Thou.TOE 6,36 7,39 1,323 13,233 19,558 Share(%) Thou.TOE 6,36 7,566 11,731 17,52 33,27 6.3% 5.3% 8.8% 7.8% 42

43 Deployment of NREs based on Cost-effectiveness Biofuels, Ligneous Biomass, Tidal Power, etc. Expansion of resource-recycled energy system based on wastes-to-energy Strategic R&D and deployment: wind, solar PVs, H2/Fuel Cells As a result, energy mix in NRE consumption shifted into a balanced one Wastes % % Bio E % % PV/Wind % % 35, 3, 25, 2, 15, 1, 5 Policy BaU 3.5% 2.6% 3.1% 6.1% 4.2% 11.% 5.7% 35, 3, 25, 2, 15, 1, 5 Solar Th Solar PV Wind Bio Hydro Geotherm Ocean Wastes 2.2% 5.7% 11% 1 3 TOE TOE Bau 23Policy 43

44 Solar PVs Wind Bio Hydro Geothermal Tidal Wastes (.5) 138 (1.8) 22 (2.9) 987 (13.) 972 (12.8) 43 (.6) 7 (.9) 5,97 (67.4) 63 (.5) 313 (2.7) 1,84 (9.2) 2,21 (18.8) 1,71 (9.1) 28 (2.4) 393 (3.3) 6,316 (53.8) 342 (2.) 552 (3.2) 2,35 (11.6) 4,211 (24.) 1,165 (6.6) 544 (3.1) 97 (5.2) 7,764 (44.3) 1,882 (5.7) 1,364 (4.1) 4,155 (12.6) 1,357 (31.4) 1,447 (4.4) 1,261 (3.8) 1,54 (4.7) 11,21 (33.4) Avg. annual growth rate (%) Total 7,566 11,731 17,52 33, Primary Energy ( MMTOE) Share 2.98% 4.33% 6.8% 11.% (Unit: 1, toe) 4. 44

45 Development of Smart Energy System & Zero-Energy House to be applied to Million Green Home 22 System development and performance test for NRE complexes Solar PVs + Solar thermal + Geothermal with energy efficiency technologies and electricity IT optimal system for a local community Integration of Industrialization and Deployment Package deal with Design + Installation and construction + Operation Technology transfer of and cooperative R&D with foreign companies IEA (IA, RETD), APP-REDG T/F, IRENA etc. Development of renewable energy resource map and harnessing system of NREs based on GIS/RS Identification of detailed resource-base, exploring how to harness them by NRE type Development of systems for economic feasibility assessment 45

46 , Solar PVs Green Villages Subsidy to NRE Facilities Feed-In-Tariff Million Green Homes Program <Smart Energy System, Zero Energy House, Wind 2(small turbine)> Loan for NRE Facilities Installation & Investment Local Autonomy s Subsidy Program Obligation of Public Building (Construction cost) R PA Biofuel Deployment Gradual Reduction in Subsidy Sunseting of FIT RPS RFS: BD2, BD85 FFVs Deployment Wind 2 (Deployment of 2,MW by 22) Obligation of Public Building (Energy Load) Strengthening of NRE Standardization/Certification 46

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48 Feed-In Tariff: FIT January 22 ~Dec. 211 Renewable Portfolio Agreement: RPA First MOU in Jul 25 Second MOU in Jul 29 Renewable Portfolio Standards: RPS The bill is under consideration in National Assembly Pricing mechanism to purchase the power generated by NRDs Voluntary agreement b/w government & energy public corporation for NRE use Target setting and pricing based on market mechanism Paying premium prices based on production costs by energy type Necessities Setting a target by levying mandatory volume or share on power generator Encouragement of technological advance based on market mechanism Larger uptake of NREs in response to the UNFCCC Fostering NRE industry via market expansion for NREs 48

49 Feed-In Tariff (FIT) Subsidize cost difference between a NRE-powered generation and power pool price Feed-In Tariff differentiated by NRE type has been in place since 22 Duration: either 15 or 2 years starting from the date of FIT subsidization Total of 345MW (248 sites) has been subsidized as of December, 28 Renewable Portfolio Standards (RPS) A portion of power production or sales to be generated by NREs A PowerGen meets the obligation by choosing one of options, either 1) generation by itself, 2) purchase contract with NRE generators, or 3) purchasing RECs in the secondary market Renewable Portfolio Agreement (RPA)has been implemented for public energy organizations in expectation of RPS implementation in 212 Initial RPS is 2% and increases by.5% per year 49

50 Power Source Eligible Facilities Category FIT( / kwh) Fixed Variable Wind 1 kw or larger Hydro 5 MW or smaller Commerce Others 1 MW or larger 86.4 SMP+15 1 MW or smaller SMP+2 1 MW or larger SMP+ 5 1 MW or smaller 72.8 SMP+1 CMW (incl. RDF) 2 MW or smaller - - SMP+ 5 Bio-Energy Marine Energy Fuel Cells LFG 5MW or smaller 2MW or larger 68.7 SMP+ 5 Less than 2MW SMP+1 Biogas 5MW or smaller 15kW or larger SMP+1 Less than15kw SMP+15 Biomass 5MW or smaller Ligneous biomass SMP+ 5 tidal range: With dike Tidal 8.5m or higher No dike MW or larger Power tidal range: With dike m or lower No dike kw or larger Note Reduction Rate: 2% Fossil Fuel content: Less than3% Biogas-based Reduction Other fuel-based Rate: 3% 5

51 Period Duration 3kW or smaller 3kW~ 2kW 2kW ~ 1MW ~ years ~ ~ ~ Open Area Using Structure Open Area Using Structure (Unit: \/kwh) 1MW ~ 3MW 3MW or larger 15 years years years years years years years years years years

52 368 billion won of subsidies for sites of 2,128, capacity of 1,54MW (211) Total Sites ,128 Capacity (kw) 5,73 18,618 47,14 17,618 2,7 12, , ,619 12,36 99,56 1,54 Generation (MWh) 155,15 269,458 39,856 39, , ,998 1,185,123 1,52,991 2,427,937 2,52,73 1,,492 Subsidies (b. won) ,14.98 Solar PVs take the largest share (86.5%) of subsidies 18.8% of generation (Unit: MWh, 1 6 Won) Mini-hydro LFG Wind Solar PVs Fuel Cells Biogas Biomass WTE Total Capacity (kw) 9,216 84,748 32,25 498,225 5,5 2,711 5,5 2,247 1,54,397 Generation (MWh) 2,32,84 2,47,36 3,141,296 1,896, ,13 3,618 37,28 1,383 1,111,492 Subsidies (b. won) ,836 84, ,14.98 Source: KERI,

53 RPS was a policy option to be introduced in 2 nd Basic Plan for NRE Development & Deployment (Dec. 23) Two national projects were conducted respectively by KEEI and KERI (25, 27) RPS introduction was publicly announced in Green Energy Industry Development Strategy (Sep. 28) and the 3 rd Basic Plan for NRE Development and Deployment (Dec. 28) Workshop was held for eligible entities and RPS mandated organizations (Jun, 29) Revised bill of NRE promotional law was submitted (Dec. 29) and passed in National Assembly (21) with articles for RPS implementation 53

54 Mandatory volume and Targets Institutionalization and system design Relevance and integration to Energy-related national plans National Energy Basic Plan, NRE Basic Plan, Elec Power Basic Plan Strengthened role of Power sector in promoting NREs Increasing NRE share and early reaching Grid Parity NRE market development for Green Growth, green tech. Promotion of NRE transactions through RECs trading, etc. Maximum utilization of domestic energy resources Development of NREs of good potential, ie, offshore wind etc. biomass General principles and standards of RPS mechanism Eligible power source, RECs, cost-transfer, etc. Staus of domestic power industry and technological level Mandated entities and independent and separate market for solar PVs Contribution to domestic NRE industry and technology Promoting strategic tehcnologies such as solar PVs, wind, fuel cells 54

55 Government (MOTIE) Mandatory target, grandfathering, RECs management Facility Cert RECs issuing Report of generation PPAs New & Renewable Energy Power New & Generator Renewable C Energy RECs sold New Power & Renewable Generator C Energy Power Generator C Grid-connected Obligation Power Gen Co. A Power Gen Co B Power gen Co C PPAs KEPCO (T & D) Observance Electricity Sold End-Users 55

56 Energy-Environment Policy Climate Change Policy (2 nd Commitment Period) Balancing b/w policy & market Target-setting based on economics Power Market Policy Market liberalization Electricity Tariff Market entrance Grid-connection RPS Cost transfer conflict Voluntary Programs Grid-connection (trading system, fund) RPS-neutral (trading of RECs or CERs) Mid- & Long-Term Power Supply-Demand Promotional Law of NRE dev. & Deploy. New & Renewable Energy Policy Items to be supported - Innovative future tech. - Deployment & outreach Supply-side Demand-side 56

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58 GenCos whose power generation capacity: larger than 5MW 6 major GenCos + PoscoPower, GS EPS, K-Power, GS Power, Mayar Yulchon, Hyundai Daisan Korea Water Resources Corp. and Korea District Heat Corp. GenCos Independent GenCos Public Corp. GenCos Independent GenCos Public Corp. Eligible Entities Law Presidential decree/rules Applied to business entities whose capacities are larger than a specific level and/or have specific business pattern 58

59 Total mandatory volume RPS(%) Solar PVs 2MW a year to be allocated up until 217 From 217 on to compete with other NREs New(MW) Accum(MW) ,2 1,2 1,2 1,2 1,2 1,2 1,2 59

60 Eligible power sources and technologies Solar PVs, wind, hydro, fuel cell, marine energy, geothermal, waste incineration conversion energy, municipal waste solid fuel combusted or converted energy IGCC: not decided (up to 1% of mandatory volume to be accepted??) Weighted RECs:.25 non-tradable RECs to be issued By-product Gas: excluded Flexible mechanism: borrowing and lending Up to 2% of mandatory volume is eligible for borrowing 3% to be permitted within 3 year after RPS launching Penalties for failing to meet the obligation Payment of 1.5 times as high as RECs for eligible power source or technology 6

61 NREs In General Solar PVs Weight Eligible Power Sources or Technologies Reference Alternative Group I.5 WTE, LFG WTE, LFG, IGCC Group II 1. Group III 1.5 Hydro, Onshore wind, Bio-E, Geothermal, Tidal power I Offshore wind Tidal power II Other marine energy Group IV 2. Fuel Cell Hydro, Onshore wind, Bio-E, Geothermal Tidal power I Wind(offshore) Tidal power II, other marine E, Fuel Cell Group I 1. Open site (3kW or larger) Open site Group II 1.2 Open site (3kW or smaller) Building Group III 1.5 Building Note: tidal power I (sea dike length up to 1km), tidal power II (sea dike of 1km or longer) 61

62 June 21: Presidential decree and rules to be completed March 3: Public Hearing June 3: Presidential decree and rules August 31: public notices or bulletins to be written October 31, 21: RPS RECs trading system to be established RPS operation rules and RPS integrated operating system to be established 211: RPS simulation exercise and RPS trading system modified and adjusted Issuing mock RECs and trading among eligible public as well as private entities Jan 1, 212: RPS was launched 62

63 Kyung-Jin BOO Professor, PhD/Urban Affairs & Public Policy Technology Management, Economics, Policy Program Seoul National University THANK YOU!!