South Korea's ministry of trade, industry and energy (Motie) has raised the country's renewable portfolio standard (RPS) policy to 12.5pc for 2022.
The South Korean government has adopted a more aggressive stance on renewable energy as it looks to reach its greenhouse gas reduction targets. South Korean power producers with more than 500MW of capacity were previously obligated to produce 9pc of their output from renewable sources in 2021, with the expectation of reaching 10pc in 2022.
The government will increase the mandatory renewable energy ratio to 14.5pc in 2023, 17pc in 2024, 20.5pc in 2025 and 25pc in 2026.
Motie's revised RPS policy, announced in a legislative notice, comes after the country's renewable energy target was increased from 10pc to 25pc in April 2021. The annual RPS targets are designed to help South Korea reach its 2030 greenhouse gas reduction target of 40pc and achieve carbon neutrality by 2050.
Most independent power plants (IPPs) in South Korea are not subject to the RPS programme if their power capacity is below 500MW. IPPs that co-fire imported wood pellets usually do so to earn renewable energy credits (RECs) to sell on the spot market. The policy revision is likely to address oversupply of RECs in the market.
Most stakeholders did not object to the revised RPS yearly ratio. All 23 utilities directly affected by the revision gave their agreement, as did 183 related companies, with 47 giving vague or mixed responses and two disagreeing, Motie said.
Motie will calculate and release the mandated renewable supply volume for each company in January 2022.
Some market participants are not expecting any impact on imported wood pellet demand in South Korea, as Motie halved the number of RECs earned by South Korean state-controlled utilities co-firing imported wood pellets to 0.5 REC/MWh in July 2020, reducing the incentive to co-fire imported wood pellets.
The government has been more inclined towards the use of unused woody biomass as an alternative, although supply is unable to meet the market's demand. Current supply accounts for only 6-9pc of demand and prices are not as competitive as those for imported wood pellets, one market participant said.
