Over the past three years, the share of renewable generation in South Korea has grown from 3.6% in 2016 to 5.4% in 2019. The Renewable Portfolio Standard (RPS) and Renewable Energy Certificate (REC) systems contributed to this growth by mandating large generators equal to or above 500MW of capacity to meet certain share of generation with renewables or by procuring RECs from renewable power producers and by allowing renewable developers to have additional revenue stream by selling RECs to the obliged generators. Spot REC prices once hovered around 110,000 KRW per REC in H1 2018, but have steadily declined down to 29,900 KRW per REC on 3 March 2020.
As the REC price decline continues, industry stakeholders have expressed concerns. Some countermeasures are now being discussed. In order to facilitate the discussion, The Lantau Group presents our perspective on the REC price forecast and its implications.