[대전환시대 에너지 빅뱅] New and renewable energy expansion first year…

▲ President Moon Jae-in is presiding over the 2050 Carbon Neutral Cross-Ministry Strategy Meeting held at the Blue House on November 27 last year. yunhap news

[에너지경제신문 이원희 기자] The new year’s great transformation is about new and renewable energy. This is because it is the first year of the full-scale expansion of new and renewable energy in the new year, and a major reorganization of the system for the expansion of renewable energy by the government is predicted. In the case of expansion of new and renewable energy, the construction of a large-scale wind power generation complex, which was announced in the new year, is expected to stand out following solar power. In addition, the activation of distributed energy, which is considered the cornerstone of the expansion of new and renewable energy, is also expected thanks to the government’s policy.

President Moon Jae-in declared carbon neutrality in 2050 last year and said that he would achieve zero domestic carbon emissions for future generations. Prior to this, the government formulated a renewable energy 3020 plan to reduce carbon emissions by 24.4% compared to 2017 by 2030.

More than 80% of greenhouse gas emissions come from the energy sector. This is why the government wants to expand new and renewable energy, which is an energy generation that does not emit or emit less carbon. According to the’Renewable Energy 3020 Plan’, the government has set a goal of 20% of renewable energy generation by 2030, and decided to supply more than 95% of the new facility capacity as clean energy such as solar and wind power. By 2030, the cumulative capacity of renewable energy generation facilities must increase to 33.7% (63.8GW) of the total.

In order to achieve this goal, the annual increase in the capacity of renewable energy generation facilities should be remarkable. As of last year, the renewable energy generation capacity was 19,966MW, which is 15% of the total generation capacity of 12,8609MW. Looking at the amount of power generation, there is a long way to go. Last year, the share of renewable energy generation was only 6.5%. In short, it means that the new and renewable energy industry needs a major transformation.

Renewable energy means new energy and renewable energy. New energies include coal-gasification combined cycle (IGCC) and hydrogen fuel cells, and renewable energies include solar, wind, hydro, and bio. This means that the government’s goal of 2030 is to achieve 63.8GW of cumulative renewable energy generation facility capacity with only renewable energy.

◇ Expansion of renewable energy such as full-scale construction of wind farms

Excluding new energy such as fuel cells and IGCC, the total facility capacity of renewable energy set by the government for the new year is 21,900MW. The capacity of renewable energy power plants built until last year is 19,015 MW. To achieve the target, the total capacity of renewable energy in the new year must be increased by an additional 15% (2885MW). As such, the completion schedule for the new year has already been confirmed for 915MW, which is 31% of the capacity of the additional expansion facility.

▲ A panoramic view of Solar Power Complex in Haenam, Jeollanam-do. yunhap news

Solar power accounts for a whopping 61% (565.32MW) of the capacity of power generation facilities confirmed for completion in the new year. In particular, at the end of the new year, a solar power generation facility in Taeanan-myeon, Chungnam, which is three times larger than the solar power complex (100MW) in Haenam, Jeollanam-do, currently the largest solar power plant in Korea, will be built. The largest floating photovoltaic facility in Korea with 40.32WM will be completed at Hapcheon Dam in Gyeongnam.

In the case of wind power generation, an additional 194.5MW power plant will be completed, including the Girim Wind Power Plant in Yeonggwang, Jeonnam. Currently, the total installed capacity of the wind power plant is 1622 MW, and when 194.5 MW is completed as planned in the new year, the total installed capacity of the wind power plant will increase by 12% to 1816.2 MW. In this case, wind power generation exceeds 1805 MW of total facility capacity of a hydro power plant, making it an energy source that occupies the second highest share of renewable energy after solar power.

In particular, the construction of offshore wind power plants is expected to stand out among wind power generation in the new year. The government plans to expand the capacity of offshore wind power generation facilities to 12GW by 2030. The government has already announced that it plans to designate an offshore wind power business area in the first half of the new year as the’offshore wind power consideration zone’ and promote the offshore wind power project. KDB Future Strategy Research Institute introduced in the ‘2021 Industrial Outlook’ that “Offshore wind power has fewer civil complaints than onshore wind power, and the market outlook is bright due to a lot of wind.”

For bio power generation, GS EPS Dangjin Biomass Power Plant 105MW will be completed in the new year.

In order to achieve the new year’s total renewable energy generation capacity target of 2885MW, the government needs to build a new 1970MW renewable energy power plant by fostering small-scale renewable energy power plants in addition to the 915MW scheduled for completion in the new year.

◇ Major reorganization of the system such as RPS and REC

In order to increase the number of renewable energy power plants as the government aims, the government support system must be supported. Renewable energy is still receiving government support because its power generation cost is still high. Representative systems include the mandatory renewable energy supply (RPS) and the renewable energy supply certificate (REC). The government is obliged to fill part of the power generation amount with new and renewable energy for power generation enterprises or large enterprises that own power plants of 500MW or more. REC is a certificate given to renewable energy generators, and if power generation companies that need to fill RPS cannot generate new and renewable energy by themselves, they purchase REC from renewable energy generators and fill them. REC is traded through the market. However, in December of last year, the REC price was 3,2994 won based on solar power, down 24% from 43,408 won in January last year. Solar power companies that have become difficult have demanded measures from the government.

▲ This year’s solar renewable energy supply certificate (REC) price change.

Last year’s RPS mandatory supply ratio was 7%. The mandatory supply is calculated by multiplying the mandatory supply ratio by the amount of generation excluding new and renewable energy from the total generation of 22 power generation companies including the public and private sectors last year. Last year, the mandatory supply was 31,401 GWh. The mandatory supply ratio for the new year was originally set at 8%. However, the Ministry of Trade, Industry and Energy revised the enforcement decree to promote the supply of new and renewable energy and raised the mandatory supply ratio for the new year to 9%. Even assuming that there is no change in total power generation excluding new and renewable energy, if the mandatory supply ratio increases by 2 percentage points, the new year’s mandatory supply will increase by at least 8971 GWh (28%) compared to last year. If the RPS supply increases, the number of REC purchases by power generation companies increases, and the REC price may increase.

Changes in REC weights are also drawing attention. Even for the same renewable energy generation, additional RECs are issued according to the weight. If the REC weight of a general solar power plant is 1.0, the fuel cell gives a weight of 2.0. Even when generating the same amount of power, fuel cells can receive twice as much REC as solar power.

Solar power generation companies have pointed out the problem of issuing RECs to new energy that emits carbon. Currently, the REC system recognizes IGCC and hydrogen fuel cells that emit carbon as new and renewable energy and issues RECs. In the National Assembly, Lee So-young and Democratic Party lawmaker proposed a bill to exclude IGCC from new and renewable energy. In addition, Democratic Party lawmaker Kim Seong-hwan proposed a bill that not only IGCC but also fuel cells should be excluded from renewable energy. Hydrogen fuel cells will be separated from RPS by 2022 and treated separately as a hydrogen power generation mandatory (HPS). Next year’s move to separate HPS may materialize.

The Ministry of Industry must reorganize the REC weight every three years according to the law. The previous reorganization took place in 2018. Three years later, the new year’s REC weight should be reorganized. Whether new energy that emits carbon will be excluded from RECs is an important part of the reorganization of REC weights next year.

There may also be a weight shift between renewable energies that do not emit carbon. The government announced in October last year that it was going to reorganize in the direction of increasing the weight of offshore wind power to foster offshore wind power. The new year is expected to be a year in which a sharp nervous war between renewable energy sources, an understanding struggle, and a tight tug of war unfold over the reorganization of the renewable energy REC weight.

◇ Attention as an activation period for distributed energy

In the new year, attention is also drawn to the activation of distributed energy to expand new and renewable energy. Distributed energy refers to energy in the form of producing energy near demand sites, unlike large-scale centralized power generation such as thermal and nuclear power plants. Renewable energy generation, which can be distributed and deployed in regions, mainly takes the form of distributed energy. The Ministry of Industry said, “For carbon neutrality, distributed energy is not an option, it is essential.” The government plans to establish a decentralized energy activation roadmap at the beginning of the new year.

▲ Energy storage system (ESS) at Aseong Solar Power Plant in Goesan, Chungnam. Photo = KEPCO Industrial Development

The government’s decentralized energy activation roadmap will include the energy storage system (ESS) support policy required for distributed energy, the establishment of a virtual power plant (VPP), and the introduction of a regional distributed energy special zone. ESS can complement the generation of new and renewable energy, which is highly volatile. In the case of solar power, the amount of power generated during the day is large, but the amount of power generated at night is small, so variability can be reduced by storing the amount of electricity in the ESS during the day and using it at night. VPP is a system that virtually integrates distributed energy. According to the government plan, VPP gathers 40MW or less renewable energy power plants and integrates them as a single power plant. It becomes easier to manage distributed power plants, reducing the variability of renewable energy. The Distributed Energy Special Zone is to give special cases, such as permitting electricity transactions, by taking a specific area where distributed energy has been developed as a model example.

In the industry, it is a position that the policy base for distributed energy must be prepared in a hurry. The industry emphasized, “The domestic distributed energy is in its infancy, so the environment for distributed energy has not been created,” and emphasized that “the business can be activated only when a policy for activating distributed energy is in place.” What specific policies will be formulated to activate distributed energy this year is important in the growth of the renewable energy industry.

President Moon declared in November last year that he would not hand over the greenhouse gas reduction plan to the next government. To this end, the 2050 Carbon Neutral Committee was set up under the direct control of the President, and a new vice minister dedicated to energy was also established in the Ministry of Industry. This year is virtually the last year of President Moon’s tenure. How well to lay the foundation for new and renewable energy at the end of the term remains an important task for the government.