South Korea plans to provide new incentives for renewable producers and consumers as its seeks to double power from green sources to 11 percent of the country’s electricity supply by 2025 from 4.5 percent last year. Seoul will implement a competitive market auction system for power producers as early as the first quarter of 2017, shifting away from the current feed-in-tariff system, the country’s energy ministry said in a statement on Wednesday.
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The new system means utilities can buy electricity from renewable power producers via tenders and fixed-price deals for up to 20 years – helping green energy producers ensure stable profits.
The move comes after Asia’s fourth-largest economy said in July it would pump 42 trillion won ($35.85 billion) into meeting its pledge at the Paris Climate summit last year to cut greenhouse gas
emissions by 37 percent by 2030.
“The penetration rate of renewable energy sources is expected to grow up to 11 percent by 2025, and we can meet this goal 10 years earlier than we have aimed,” Energy Minister Joo Hyung-hwan said at a meeting with power generators and companies.
Joo said Korea’s upcoming power supply plan, due to be released next year, will be more environmentally friendly in line with the country’s new renewable plans.
At present, utilities can purchase electricity from renewable producers at prices set by the government via feed-in tariffs (FIT). That has allowed producers to secure sales of renewable energy at fixed prices, but has not stoked lower prices through competition.
“We are planning to set a long-term goal to generate 30 percent of our power with renewable energy sources by 2030,” Lee Jong-sik, executive vice president of Korea Southern Power Co Ltd (KOSPO), told Reuters.
In addition to the competitive auction system, the ministry will expand subsidies to cover up to 50 percent of the cost of installing solar power systems in homes and schools.
With the new plans, the ministry expects green energy sources to supply 11 percent of the country’s total electricity by 2025. The aim is to increase installed capacity of renewable energy power to 45.5 gigawatts (GW), from 13.7 GW in 2015. Korea currently generates nearly 40 percent of the country’s electricity from coal, followed by nuclear power at 30 percent with the rest coming from oil, gas and renewable energy sources.