Korea's RPS system nears end, final bids crucial for transition
The Renewable Portfolio Standard (RPS) system, which has supported Korea's renewable energy market for 15 years, is phasing out, transitioning to a new competitive bidding contract market where the government directly sets long-term contract volumes.
Our take
What are the critical challenges for Korea's renewable energy market as the RPS system phases out?
The phasing out of Korea's 15-year-old RPS system marks a critical juncture for renewable energy development, as the transition to a new competitive bidding market risks repeating past failures of unmet targets and project delays if the government's pricing and conditions do not adequately support long-term project viability.
For 15 years, Korea's Renewable Portfolio Standard (RPS) system has been the primary mechanism supporting the domestic renewable energy market, requiring large power generators to source a portion of their electricity from renewable sources. Despite its role in expanding the industry, the system has faced numerous trials and controversies. The government is now moving towards a new contract market model.
- Duration of RPS system: 15 years
- Government target for renewable energy capacity: 100 GW (2030)
- Timeframe to achieve 2030 renewable energy target: over 4 years (2026)
The shift to a competitive bidding market aims to reduce costs through competition, but the author warns that excessively low prices, combined with rising construction and financing costs, could deter developers, leading to unmet bidding volumes and stalled projects, as observed in recent solar fixed-price contract bids. This tension between cost reduction and developer viability is central to the success of the new system. For wind power, the challenges extend beyond bidding to complex post-award hurdles like financing, permitting, and grid connection, emphasizing the need for a system that supports project completion rather than just initial awards.
What the source says
- The government is transitioning from the RPS system to a competitive bidding contract market where it directly determines long-term contract volumes.
- The fixed-price contract bidding for solar power conducted in the first half of 2026 is likely the last solar bidding under the RPS system.
- The wind power bidding, anticipated for the second half of 2026, will be the final test for the RPS system.
- For wind projects, challenges after successful bidding include securing large-scale funding, obtaining permits, ensuring community acceptance, and resolving grid connection issues before construction can begin.
- The author argues that a critical lesson from RPS is that 'a system is meaningful only when it moves the actual market, not just when it achieves successful bid prices.'
- The author proposes that the new system must first establish a foundation for developers to predict investment timing and profits, and pursue projects long-term.
- The author states that the prices and conditions offered by the government in the final RPS bidding will indicate its commitment to prioritizing supply in the new system.
For investors — Investors and developers in Korea's DER market face increased uncertainty regarding project viability under the new competitive bidding system, necessitating close monitoring of the government's pricing and contract conditions in upcoming bids to gauge its commitment to achieving the 2030 renewable energy target.
Watch: The prices and conditions announced by the Korean government for the upcoming final wind power bidding under the RPS system.
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