Energy industry fears 'falling to 20,000 KRW level’
Efforts from Ministry of Industry and Energy Corporations for stabilization are in vain
“The reorganization of the weighted value causes a drop i
The lowest price for Renewable Energy Certificate (REC) in the market dropped to 20,000 KRW level. There are concerns that the whole average REC price will soon drop to 20,000 KRW level. In the energy industry, although the government induces market revitalization by reorganizing the REC weight, but it is pointed out that the market adjustment with the REC weight is meaningless.
According to the Renewable one-stop business information comprehensive portal, the average price of land REC on the 13threcorded 30,023 KRW, and the lowest price dropped to 29,800 KRW. The average REC price this month was 30,021 KRW, down from 31,159 KRWlast month.
The Ministry of Trade, Industry and Energy and the Korea Energy Agency increased the number of REC in the contract market to prevent a drop in REC prices. During the first half of this year, the size of the competitive bidding for the Renewable Portfolio Standard (RPS) fixed price contract was doubled to 2.05GW compared to the same period last year. While expanding the size of the fixed-price contract, an attempt was made to stabilize the price by preventing REC from being oversupplied in the market, but the effect was negligible.
The energy industry diagnoses that the REC system is facing its limits.While the price of REC dropped sharply, the market has no choice but to respond more sensitively with the weight adjustment of REC from the government. The average price of RECs in the market as of July 2018, when the government reorganized the REC weights before, was 104,425 KRW, more than three times higher than this month.
There are even voices saying that the attempt to adjust the renewable energy market with the RPS system and REC weight is meaningless. The Ministry of Trade, Industry and Energy recently raised the weight of wind energy in the REC weighting reformation, but wind power industry points out that it is not a fundamental solution.
Korea Wind Energy Industry Association said, “The reorganization of the REC weight may cause a decrease in the REC unit price in the mid, longterm. There will be always problems with the structure as long as wind power and other renewable energy sources are calculated with current 'System Marginal Price (SMP) + REC' to set the unit price.”
At the public hearing on the reform of the REC system on the 6th, it was pointed out that the adjustment of the renewable energy market that relied on REC had reached its limit.
Changho Lee, anelectrical researcher at the Korea Electricity Research Institute, said at a public hearing, "If we need to continuously give high REC, the energy source is not sustainable in the long term.REC should only be used as an auxiliary means"
By Staff Reporter Sanggeun Byun (sgbyun@etnews.com)