Kyung-Jin BOO

. Current Status & Future of NRE in Korea . 3rd Basic Plan for New & Renewable Energy . Major Policy Tools - FIT, RPA, RPS . RPS Target and Implemenation Plan

. Concluding Remarks

Year
1987

Legislation

Notes
Legal basis for NRE R&D activities Amendment for legal basis for NRE dissemination Obligation on public bldgs (const. cost), certification, FIT 10 year plan, target: 3%(2006), 5%(2011)

Promulgation of The Promotional Act of NRE Development Promotional Act of NRE Development, 1997 Utilization and Deployment (1stAmendment) Promotional Act of NRE Development, 2002/3 Utilization and Deployment (2nd/3rd Amendment) The 2nd National Basic Plan for NRE 2003 Technology Development & Deployment Promotional Act of NRE Development, 2004 Utilization and Deployment (4th Amendment) The 3rd National Basic Plan for NRE 2008 Technology Development and Deployment Promotional Act of NRE Development, 2009/10 Utilization and Deployment (5th Amendment) The 4th Natl Basic Plan for NRE Technology 2011 Development & Deployment (underway)

Including standardization, RESCOs. etc.

Target: 2020(mid), 2030 (long), NRE industry promotion RPS: 2012(2%) 2022(10%) Obligation on public bldgs (load)

The 2nd Natl Energy Basic Plan NRE industrialization, Export

11 Categories : Solar PVs, Solar Thermal, Wastes, Bio(LFG, Bio-diesel), Hydro, Geothermal, Marine, Wind, Hydrogen, Fuel Cell, Coal Liquefaction /Gasification
NRE Deployments (thou. toe)

NRE Share in TPES (%)

2005 2006 2007 2008 2009 < Composition of NREs (2009) >

2005

2006

2007

2008

2009

< Power Generation from NREs (2009) >

Solar PV 12.3% Bio (LFG) 9.7%

Waste 74.9% Hydro 10.0%

Bio 9.5%

Wind 2.4%
PV 2.0% Fuel Cell 0.3%

Waste and hydro power account for more than 85% of TPES

Hydro 61.1%
Wind 14.8%

Fuel Cell 1.8% Biogas 0.1%

Business As Usual: BaU

Continuation and Maintaining of the Current Policy: Annual growth Rate similar to that between 2003 and 2007 Way higher as compared to those growth rate of 1.3% and 0.9% in the primary energy consumption during the same period

Strengthened Policy
Strengthening R&D and Deployment Policy Annual growth rate: much higher than those of BaU

Deployment of NREs based on cost-effectiveness

Biofuels, Ligneous Biomass, Tidal Power, etc.

Expansion of resource-recycled energy system based on wastes-to-energy Strategic R&D and deployment: wind, solar PVs, H2/Fuel Cells As a result, energy mix in NRE consumption shifted into a balanced one
Wastes
35,000 30,000 25,000 20,000 15,000 10,000

Bio E

%
35,000

%
Solar Th Solar PV Wind Bio Hydro Geotherm Ocean Wastes

PV/Wind

Policy BaU

11.0%

30,000 25,000

11% 5.7%

6.1% 5.7%

20,000 15,000 10,000

2.6%

3.5%

4.2%

5000 103TOE

3.1%
2008 2012 2016 2020 2024 2028 2030

2.2%
2006 2030 Bau 2030Policy

5000 103TOE

(Unit: 1,000 toe)

2010

2015 63 (0.5) 313 (2.7) 1,084 (9.2) 2,210 (18.8) 1,071 (9.1) 280 (2.4) 393 (3.3) 6,316 (53.8) 11,731 270

2020 342 (2.0) 552 (3.2) 2,035 (11.6) 4,211 (24.0) 1,165 (6.6) 544 (3.1) 907 (5.2) 7,764 (44.3) 17,520 287

2030 1,882 (5.7) 1,364 (4.1) 4,155 (12.6) 10,357 (31.4) 1,447 (4.4) 1,261 (3.8) 1,540 (4.7) 11,021 (33.4) 33,027 300

Solar PVs Wind Bio Hydro

Geothermal
Tidal Wastes Total Primary Energy
(106TOE)

40 (0.5) 138 (1.8) 220 (2.9) 987 (13.0) 972 (12.8) 43 (0.6) 70 (0.9) 5,097 (67.4) 7,566 253

Avg. annual growth rate (%)

20.2 15.3 18.1 14.6 1.9

25.5
49.6 4.0 7.8 0.9

Share

2.98%

4.33%

6.08%

11.0%

Goals
Strategic Approach to Technological Innovation and Industrialization of NREs Strengthening R&D Infrastructure based on Technology Planning & Assessment

Approach
Establishment of Center for NRE Innovation 2020 Accelerating cost reduction by fostering leading companies Integration of Industry-Academy-Research consortium and R&D hub

Projects Short-term (2009-10) and Mid-term (2011-20) projects, core basic technologies
and industrial technologies (refer to programming core technology for industry) 10

Development of

Smart Energy System & Zero-Energy House to be applied to Million Green Home 2020 System development and performance test for NRE complexes Solar PVs + Solar thermal + Geothermal with energy efficiency technologies and electricity IT optimal system for a local community

Integration of Industrialization and Deployment

Package deal with and Technology transfer of and cooperative R&D with foreign companies
IEA (IA, RETD), APP-REDG T/F, IRENA etc.

Development of Resource Map and Harnessing System of NREs based on GIS/RS

Identification of detailed resource-base, exploring how to harness them by NRE type Development of systems for economic feasibility assessment
11

Govnt-driven Encouraging the private sectors initiative Mandatory use of NREs in the public sector A wide uptake of a variety of NREs

2004-7 Goal (unit) Budget (109) 17,400 228

2008-12 94,150 1,330

2012-20 913,000 13,753

Total 1,024,550 15,308

Village-based, local autonomy, Green Village Award (2010) Unit: village, site: NRE mix to be decided based on village & sites
12

 Million green homes to be deployed by 2020 (including multi-family home) Reinforced insulation(passive), NRE installation(active) energy savings vs existing residential house: 93% less of maximum heating cost and 50% of cooling cost Gov. & local autonomies encourage deployment through subsidies & tax reduction
Solar hot water system Solar PV system Waste heat recovery Ventilation system LED lighting BIPV PowerGen Geothermal Heating Fuel Cell System

Exterior Electric Shade Ultra energy saving window Enhanced Insulation

Insulated door

* GreenHome Model House(Kwacheon Gov. Complex)

13

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
100,000 Solar PVs

Green Villages

Million Green Homes Program

<Smart Energy System, Zero Energy House, Wind 2000(small turbine)>
Gradual Reduction in Subsidy

Subsidy to NRE Facilities Loan for NRE Facilities Installation & Investment Local Autonomys Subsidy Program Obligation of Public Building (Construction cost) Feed-In-Tariff

Obligation of Public Building (Energy Load) Sunsetting of FIT

R PA
Biofuel Deployment

RPS
RFS: BD20, BD85
FFVs Deployment Wind 2000 (Deployment of 2,000MW by 2020) Strengthening of NRE Standardization/Certification 14

Fostering Domestic NRE industry via indigenization of core technologies

Cooperation b/w large enterprizes and SMEs industry cluster of systems, components, and materials

Domestic NRE industry export industry global business entities

Solar PVs: semi-conductor, display industry Wind: construction and heavy industry H2/Fuel Cells: leading companies, components large scale technical validation and demonstration projects

Today
PV
Wind IGCC H2/FC Rooftop PV cell mass production MW class turbine Development Project center established Technological validation & Demo

2012
Development of Next generation PV Cells 5-6MW turbine commercialized Commercial proto-type of 300MW Indigenization of core components

2030
Increased market share by exporting NREs Export industry of NRE technologies & system Fostering new growth engine via NREs Pioneering in overseas market

15

Feed-In Tariff: FIT

Since Jan. 10

Renewable Portfolio Agreement: RPA

First MOU in Jul 2005 Second MOU in Jul 2009

The bill is under consideration in National Assembly

Renewable Portfolio Standards: RPS

Pricing mechanism to purchase

the power generated by NRDs

Voluntary agreement b/w government & energy public corporation for NRE use

Target setting and pricing based on market mechanism

Paying premium prices based on production costs by energy type

Setting a target by levying madatory volume or share on power generator

Necessities
Encouragement of technological advance based on market mechanism Larger uptake of NREs in response to the UNFCCC Fostering NRE industry via market expansion for NREs

17

Feed-In Tariff (FIT)

Subsidize cost difference between NRE powered generation and power pool price Feed-In Tariff differentiated by NRE type has been in place since 2002 Duration: either 15 or 20 years starting from the date of FIT subsidization Total of 345MW (248 sites) has been subsidized as of Dec., 2008

Renewable Portfolio Standards (RPS)

A portion of power production or sales to be generated by NREs
A PowerGen meets the obligation by choosing one of options, either 1) generation by itself, 2) purchase contract with NRE generators, or 3) purchasing RECs in the secondary market

Renewable Portfolio Agreement (RPA)has been implemented for public energy organizations in expectation of RPS implementation in 2012
Initial RPS is anticipated to be 1.7-2% 18

Power Source Wind

Eligible Facilities 10or larger

Category Commerce 1 or larger 1 or smaller 1or larger Others 1 or smaller 20 or larger Less than 20 150 or larger Less than150 Ligneous biomass With dike tidal range: 8.5m or higher No dike With dike tidal range: 8.5m or lower No dike Biogas-based Other fuel-based

FIT(/h) Fixed Variable 107.29 86.04 94.64 66.18 72.80 68.07 74.99 72.73 85.71 68.99 62.81 76.63 75.59 90.50 227.49 274.06 SMP+15 SMP+20 SMP+ 5 SMP+10 SMP+ 5 SMP+ 5 SMP+10 SMP+10 SMP+15 SMP+ 5 -

Note Reduction Rate: 2%

Hydro

5or smaller

CMW (incl. RDF) LFG BioEnergy Biogas Biomass Marine Energy Tidal Power

20 or smaller 50 or smaller 50 or smaller 50 or smaller

Fossil Fuel content: Less than30%

50 or larger

Fuel Cells

200 or larger

Reduction Rate: 3%

19

(Unit: \/kWh)

Period ~ 2008. 9.30 2008. 10.1~ 2009. 12.31 Open 2011.1.1 Area ~12.31 Using Structure Open 2011.1.1~ Area 12.31 Using

Duration 15 years 15 years 20 years 15 years 20 years 15 years 20 years 15 years 20 years 15 years 20 years

30kW or smaller 711.25 646.96 589.64 566.95 514.34 606.64 550.34 484.52 439.56 532.97 483.52

30kW~ 200kW 620.41 562.84 541.42 491.17 579.32 525.55 462.69 419.76 508.96 461.74

200kW ~ 1MW 590.87 536.04 510.77 463.37 546.52 495.81 436.50 396.00 480.15 435.60

1MW ~ 3MW 561.33 509.24 485.23 440.20 414.68 376.20 -

3MW or larger 472.70 428.83 408.62 370.70 349.20 316.80 20

677.38

Structure

262.3 billion W of subsidies for sites of 1,308 with capacity of 621MW (2009)
2002 Sites capacity(kW) subsidies(109 W) 28 2003 8 2004 5 2005 23 2006 57 2007 142 2008 754 2009 291 229,619 262.7 Total 1,308 852,822 440.2

50,703 18,618 47,140 107,618 20,007 102,178 276,934 3.3 5.6 5.1 7.5 10 26.8 119.5

generation(MWh) 159,942 269,771 309,856 390,171 489,936 854,786 1,185,370 1,502,991 5,162,825

Solar PVs take the largest share (91.5% in 2009)

Mini-hydro Capa.(kW, accum) generation(MWh) subsidies(106 W) 78,223 192,284 2,213 LFG 82,338 374,740 2,099 Wind 314,600 446,158 6,834 Solar PVs Fuel Cells 347,153 420,164 240,401 20,050 61,698 11,036 Biogas 2,711 5,860 59 Total 852,822 1,502,991 262,652

Source: KEMCO, 2010

21

RPS was a policy option to be introduced in 2nd Basic Plan for NRE Development & Deployment (Dec. 2003) Two national projects were conducted respectively by KEEI and KERI (2005, 2007) RPS introduction was publicly announced in Green Energy Industry Development Strategy (Sep. 2008) and the 3rd Basic Plan for NRE Development and Deployment (Dec. 2008) Revised bill of NRE promotional law was submitted (Dec. 2009) and passed in National Assembly (2010) Workshop was held for eligible entities and RPS mandated organizations (Jun, 2009) Public Hearing was held with stakeholders (Mar, 2010)
22

Relevance and integration to Energy-related national plans

National Energy Basic Plan, NRE Basic Plan, Elec Power Basic Plan

Mandatory volume and Targets

Strengthened role of Power sector in promoting NREs

Increasing NRE share and early reaching Grid Parity

NRE market development for Green Growth, green tech.

Promotion of NRE transactions through RECs trading, etc.

Maximum utilization of domestic energy resources

Development of NREs of good potential, ie, offshore wind etc. biomass

Institutionalization and system design

General principles and standards of RPS mechanism

Eligible power source, RECs, cost-transfer, etc.

Staus of domestic power industry and technological level Contribution to domestic NRE industry and technology

Mandated entities and independent and separate market for solar PVs
Promoting strategic tehcnologies such as solar PVs, wind, fuel cells

23

GenCos whose power generation capacity: larger than 500MW

6 major GenCos + PoscoPower, GS EPS, K-Power, GS Power, Mayar Yulchon, Hyudai Daisan

Korea Water Resources Corp. and Korea District Heat Corp.

GenCos
Independent GenCos Public Corp.

GenCos
Eligible Entities Independent GenCos Public Corp.

Law

Presidential decree/rules

Applied to business entities whose capacities are larger than a specific level (500MW) and/or have specific business type (public utilities: CHP, etc)
25

Total mandatory volume

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 RPS(%) 2.0 2.5 3.0 3.5 4.0 5.0 6.0 7.0 8.0 9.0 10.0

Solar PVs
200MW a year to be allocated up until 2017 From 2017 on to compete with other NREs
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 New(MW) Accum(MW) 200 200 220 420 240 660 260 280 -

920 1,200 1,200 1,200 1,200 1,200 1,200 1,200

26

Eligible Power Sources and Technologies

Solar PVs, Wind, Hydro, Fuel Cell, Marine Energy, Geothermal, Waste Incineration Conversion Energy, Municipal waste solid fuel combusted or converted energy IGCC : not decided (Up to 10% of mandatory volume to be accepted??)
Weighted RECs : 0.25 non-tradable RECs to be issued

By-product Gas: excluded

Flexible Mechanism: borrowing and lending

Up to 20% of mandatory volume is eligible for borrowing
30% to be permitted within 3 year after RPS launching

Penalties for failing to meet the obligation

Payment of 1.5 times as high as RECs for corresponding eligible power source or technology
27

Weight

Eligible Power Sources or Tech. Reference Alternative WTE, LFG WTE, LFG, IGCC Hydro, Wind(onshore), Hydro, Wind(onshore), Bio-E, Geothermal, Bio-E, Geothermal Tidal power I Wind(offshore) Tidal power II Tidal power I Other marine energy Wind(offshore) Fuel Cell Tidal power II, other marine E, Fuel Cell Open site (30kW or larger) Open site Open site (30kW or smaller) Building Building

Group I Group II

0.5 1.0 1.5 2.0

NREs In General

Group III Group IV

Group I
Solar PVs Group II Group III

1.0
1.2 1.5

Note: tidal power I(sea dike length up to 10km), tidal power II (sea dike of 10km or longer)

28

Jun 2010: presidential decree and rules to be completed

March 30 : Public Hearing June 30: presidential decree and rules August 31: public notices or bulletins to be written

October 31, 2010: RPS RECs trading system to be established

RPS operation rules and RPS integrated operating system to be established

2011: RPS simulation exercise and RPS trading system modified and adjusted
Issuing mock RECs and trading among eligible public as well as private entities

Jan 1, 2012: Launching RPS

29

30

Increasing role of NREs in response to climate change, energy security, equity problems
NRE as a green growth engine leads to domestic & export industry with indigenous technologies

Survival strategy to beat energy security issue and accelerating climate change caused by overuse of fossil-fuels
Energy paradigm shift into a sustainable energy system based on renewable energies as clean and local energy source

Governments undivided commitment and implementation of New & Renewable Energy Basic Plan
Consumers: Million Green Homes, mandatory use in government, public buildings, green marketing Suppliers: FIT, RPA. RPS, RFS and other effective policy tools (RHI)
31

Kyung-Jin Boo, PhD. Senior Fellow Korea Energy Economics Institute (KEEI) Phone: 82-31-420-2139 (Office) 82-11-9739-5410 (Cellular) E-Mail: kjboo@keei.re.kr