[긴급제언] RPS, this is not possible ①｜Unripe solar module carbon certification system-::: Global green growth media

Taeho Kim Co.) Representative of Energy Sharing and Peace / Adjunct Professor, Dongguk University (Doctor of Economics)

[이투뉴스/김태호] This year marks the beginning of the great transformation of Korean society in all areas, including energy, industry, and environment. President Moon Jae-in’s declaration of carbon neutrality following the Green New Deal is a commitment to the international community to do our part by 2050 to respond to the climate crisis. Now, carbon reduction must be considered in all stages of energy supply and consumption, production and management of companies, and the consumption behavior of citizens and the demands for corporate social responsibility will be even more intense. The green label of climate protection is attached to all products and services.

The Paris Agreement on Climate Change, which was negotiated by 197 countries in 2015, is a promise that’we will try to keep the global average temperature rise below 2 degrees and limit it to 1.5 degrees’. The’Global Warming 1.5℃ Special Report’ issued by the Intergovernmental Council on Climate Change (IPCC) in 2018 states that in order to keep the global average temperature rise below 1.5℃, the greenhouse gas emissions must be in a carbon-neutral state of ‘0’ by 2050. I noted that it is. In that respect, it is encouraging that US President-elect Joe Biden recently announced his willingness to rejoin the climate treaty and implement carbon neutrality.

The Korean government is also taking a quick step. By 2025, it is planning to invest 73.4 trillion won in green new deals, including 3,100 trillion won in green transition, 35.8 trillion won in low carbon and decentralized energy, and 7.6 trillion won in securing green technology. In addition, the President emphasized that the climate crisis should be overcome by implementing carbon neutrality and that the crisis should be used as an opportunity to take a leap forward as a leading country.

Among the many Green New Deal measures, the expansion of renewable energy is the best way to enable carbon neutrality and sustainable growth. The supply of renewable energy has expanded significantly over the past 20 years due to active policy assistance, and SMEs have actively participated in the production and distribution sectors, and have built a healthy ecosystem unlike the existing infrastructures centered on large corporations. In the market, it is said that it is a democratic industry because citizens can participate in the method of supplying renewable energy.

However, it is difficult to deny that, contrary to the achievements so far, policies and institutions are clearly aging. Resilience is falling, and regulation of regulations continues. The characteristics of the industry, which were regarded as small-scale democratic energy production methods, have changed into large-scale projects of hundreds of MW units. In other words, it became the center of large corporations, and large-scale construction companies took over business rights. Small businesses are having difficulties in securing their location due to the active regulation of local governments and Nimbi. To make matters worse, the central government is adding regulatory pressure measures such as forestry regulation and mandatory employment.

So, small power generation operators raise their voices every day. The problem is not one or two. Now, the old RPS system, which was the basis of the renewable energy supply policy, must be put on the operating table. The success of the Carbon Neutral Declaration should not take longer as it has an inevitable causal relationship with the success of renewable energy. We must be reborn with a completely new policy. To do that, you have to start with small things. The benefits can be maximized with effective detailed prescription. What detailed policies are needed to achieve the 2050 goals?

International competitiveness in the solar module sector must be raised

For the past 20 years, Korea has implemented FIT (Generation Difference Support System) and RPS system to expand renewable energy. A lot of budget was put in and the results were not small. It is still insignificant, but the rate of renewable energy is also increasing noticeably. Various types of investment were made, and a new type of market was created in which individual citizens participated in the infrastructure as investors. It is the era in which citizens generate electricity. The concept of energy production has completely changed.

However, the share of renewable energy localization in the global market is still low. Some say that the domestic production ratio is low even in the domestic solar market, and some view the entire industry pessimistically. What is important is that when the government establishes a subsidy policy for any policy, it must understand and implement the reality of Korean companies and industries from the beginning. While selecting a competitive localization field and adopting a Korean-style dissemination method that supports it, it is necessary to ponder how to increase public interest value with the same budget by considering ways to increase the scope of national benefits of new projects.

However, the market’s main opinion is that the current localization policy is being promoted without even a basic philosophy. With the Green New Deal and the Declaration of Carbon Neutrality, policies and directions must be newly refined in line with the expansion of domestic technology. In other words, it is necessary to select and focus on the field of localization. It is not a wise approach to increase the rate of localization in all renewable energy sectors. Incompetent industries or technologies cannot be sold to the global market no matter how much money is poured out. Don’t pour water on the poison. We have to find an area where we can really do well, and it should be competitive support, not craziness support.

With this declaration of carbon neutrality, we need to determine what industries we have strong points at this time. In that context, module production is the most competitive field among solar value chains. In the US residential solar power supply market, domestic companies occupy the first place in market share. Some SMEs import cells, process them with high efficiency, and export all of them to the US as’Made in Korea’ products. Even if the departure is late, the module market, which is shining in the export market, can be the key to improving the localization rate. This is why localization by selection and concentration should be considered prior to the renewable energy supply system. It is necessary to consider at which point in the value chain it can become the best in the world, and to modify and supplement the RPS system from that perspective even now.

Solar module’carbon certification system’ needs to be fully reviewed

The carbon emission certification system, which was recently implemented without taking into account such international competitiveness in the solar module field, is thus giving rise to profuse backstory. In the second half of this year, the government classified the carbon emissions by verifying the amount of carbon emission for each photovoltaic module applying for a bid on the basis of fostering a low-carbon market and industry in the REC open bidding market. The so-called’solar module carbon emission grade differential system’ was adopted. This system differentiates modules into three grades (first grade, second grade, and other grades) according to the entire value chain ranging from polysilicon to modules. Out of 10 points, 10 points for the 1st grade, 4 points for the 2nd grade, and 1 point for the 3rd grade (other than the grade) are evaluated separately from the price measurement evaluation (70 points). In the end, in order to select an out-of-class module for bidding, the bid price must be significantly reduced compared to the first-class module to bid.

The solar market is full of dissatisfaction with this system. As a result of the regular REC market bidding in the second half, the difference between the 1st and 3rd grades is estimated to be around 20 won per kWh. It is also a problem raised in the urgency of the announcement process, but the market is a major confusion even with the difference in price. Power generation companies have protested everywhere, and module manufacturing small and medium-sized enterprises are also deeply worried and sighing enough to consider bankruptcy. Market officials complained, “There are about two large companies that will benefit from this system, and we cannot help but ask who the policy is for.”

On the other hand, there are many voices asking why the Ministry of Industry has urgently implemented a system that aggravates market confusion during such a difficult business environment without careful review. We are wondering what is the background of applying this policy to solar modules that contribute to carbon reduction, leaving the fields with high energy consumption and high carbon emissions such as home appliances and steel.

Accordingly, the market has specifically pointed out the problems of this carbon emission differential system with the following logic and insisted on abolishing the policy. It is judged that the market’s problem with the fact that this system, which has a small effect and limited beneficiary range to large corporations, has been carried out without sufficient social discussions is quite correct. First of all, the carbon certification system graded the amount of carbon dioxide converted from the energy input from polysilicon to the entire module manufacturing process, but the grade differed greatly depending on the country in which each process was conducted. In addition, this rating has a great influence on the successful bid and fixed price when bidding for REC.

In other words, it can be seen that 1st grade is subject to incentives and other severe penalties. Since there is a difference in fixed price, the first, second, and other products are greatly affected by sales depending on which grade was used from the time of installation of the power plant. Even with the same 100kW power plant, the first-class product (A) using domestic wafers has to bear a significant difference in sales than the non-grade product (B) using Chinese-made.

The module’s carbon certification system was not fully informed in advance while implementing a price policy that had an important impact on business feasibility. It is a typical lack of communication and publicity. This is the first problem with the carbon certification system. For solar power plants installed by citizens, sales are vital. Considering the situation where licensing is difficult and maintenance costs such as fire are unexpectedly high, publicity should be sufficiently promoted so that citizen investors can review it in advance. However, it was notified just a few months before the city trip.

The second problem is that the power plant that has already been completed has no countermeasures. In other words, there was no such system at the time of construction, but it was already in operation after it was built, but sales were in a position to be cut. Businesses said they did not even review retrospective application. Third, it was applied first to the bidding market where small-scale citizen investment companies participate. It does not even apply to the large-scale voluntary contract market promoted by public enterprises. This is why the word’citizen investor is a stick’ comes out.

Market dissatisfaction exploded due to poor policy. On a cold winter day, small-scale power generators went out on the street. Regardless of the right and wrong of the system, at least a sufficient period of publicity should precede. To build a new power plant, it takes at least one to two years from site selection and licensing. However, after that period, I am building a power plant, but I will give a penalty for choosing a module out of grade. It’s a strange policy. Is the RPS market small? Can the new policy be applied to the subsidy market without prior notice? Doesn’t the government and policymakers know how many ordinary citizen investors are already participating in this market? Can I ignore it as a citizen’s small investment? The cause of the improvement of localization is unknown, but there are doubts about how to deal with the controversy over equity and preferential treatment that will be raised in the future, and whether it will result in a policy that will help strengthen domestic competitiveness.

Taeho Kim Co.) Representative of Energy Sharing and Peace / Adjunct Professor, Dongguk University (Doctor of Economics) [email protected]

Copyright © ::: Global Green Growth Media-E2News Unauthorized reproduction and redistribution prohibited