Investment and other subsidies
In 2004, the South Korean government passed the Act on the Promotion of the Development, Use And Diffusion of New And Renewable Energy (the Act). With the goal of becoming one of the five largest producers of new and renewable energy, the government has announced that a total of South Korean won (KRW)40 trillion (EUR25.8 billion, USD34.2 billion) will be invested in renewable energy by 2015.
This investment includes KRW22.4 trillion invested by the nation’s 30 largest industrial groups by 2013, KRW7 trillion of government contribution, and KRW10.6 trillion from other private sectors. South Korea has already seen substantial financial investment in renewable energy in recent years, including KRW2 trillion (EUR1.3 billion, USD1.7 billion) from the government in the last two years.
The revision of the Act on the Promotion of the Development, Use And Diffusion of New And Renewable Energy (the 4th) will be issued by the first half year of 2013 and the target is expected to be revised upward from existing target ‘renewable energy supply rate 11 percent in 2030.
To reach this goal, the government is implementing initiatives in four major areas:
- strategic R&D and commercialization
- promotion of industrialization and market creation
- promotion of exports of new and renewable energy products
- infrastructure development.
- The feed-in tariff was abrogated at the end of 2011 due to introduction of a renewable portfolio standard (RPS) in 2012. (The government maintains a feed-in tariff only for existing recipients).
- To accommodate small renewable energy facilities that could not receive support by RPS, the Seoul Solar Power Plant Support Plan was announced in May 2013. The plan supports operations from the installation of solar power plants to sales for small entities under 50kW capacity in Seoul. According to the plan, the small entities can receive KRW50/kWh (approximately 10 percent of installation cost) for five years from 2013.
The R&D tax credit program is applied for renewable energy technologies. Import duties are reduced by 50 percent for all components and/or equipment used in renewable energy power plants.
The Financial Support Program for Renewable Energy in South Korea is comprised of two main categories: the Electricity Fund and the Special Account for Energy and Resource Projects.
The total budget in 2013 is KRW79.2 million, KRW64.2 million from the Special Account, and KRW15 million from the Electricity Fund. The government provides subsidies up to 90 percent (in the case of conglomerate, 50 percent) to the approved applicants. Subsidies were set at a variable interest rate (from 1.75 percent to 2.25 percent in 2012), including a five-year grace period followed by a 10-year payment period.
- In 2012, the existing feed-in tariff was replaced by an RPS that was approved by the government assembly in March 2010.
- The RPS requires 13 state-run and private power utilities with a capacity in excess of 500 MW to generate two percent of the energy production from renewable sources by 2015. This percentage will be increased in stages to 10 percent by 2022.
- In terms of the standard price per certificate, REC for solar power was KRW184,200 averagely in 2012, while REC for non-solar power was determined to be KRW 32,331 regardless of its implementing method.
- The total RPS target for 2013 was confirmed as being 9,210,381 MWh; increasing 41 percent from last year’s target (6,420,279 MWh), while the RPS target for solar power rose 270 percent from 276,000 MWh to 723,000 MWh in the same period.
One Million Green Homes Project: As a part of the 2009 budget, the government appropriated KRW94.3 billion (USD72 million) for the One Million Green Homes Project. The intent is to build one million homes by 2020 that use one of the following renewable energy technologies: solar thermal, solar photovoltaic, geothermal, biomass and wind energy. Each year, the government will set a new budget for the coming year.
The green homes being built are environment-friendly and use new and renewable energy resources. In addition, green homes create no carbon emissions and use less energy, water and natural resources.
Other support programs: The government will support 10 major green projects that have impressive promotional and installation effects.