The first Renewable Energy Credits (REC) spot market held over two days for solar PV on February 28th and non-PV on February 29th got off to a smooth start. Total 26 power plants (19 solar PV units) tendered for and 1,049 REC’s contracts were concluded. 1 REC means the wattage of 1 MWh. For 1 REC, solar PV was traded for an average of KRW229,400 (US$200) and non-PV was traded for KRW42,400 (US$40).
The Ministry of Knowledge Economy of korea began transaction of REC by opening the spot market of Renewable Energy Certificate (REC) for 2 days on February 28~29. The market is expected to serve as a method to implement the Renewable Portfolio Standard (RPS) enforced from this year through Korea Energy Management Corporation New Regeneration Energy Center.
REC trade market is classified into contract market and spot market and this transaction was the first spot market of the first year of the enforcement of RPS.
The spot market was divided into solar PV parts and non-PV and in the solar PV, total 18 RECs were traded for the average trade price of KRW229,400 (US$200) and in the non-PV part total 1,031 RECs were traded for the average trade price of KRW42,400 (US$40).
The Solar PV part was registered for sale on the February 27th and the auction was progressed on the 28th and 18 RECs, 19.8% of 91 RECs of sale quantity, were traded.
In the solar PV part, the sales prices were formed a little higher than the expected price of RPS supply obligators, so transaction failure happened. Non-PV part was registered for sale on the 28th and auction was progressed on the 29th. Sales quantity of 1,031 RECs were all traded and in non-PV part fierce purchase competition among supply obligators was shown and trade price was higher than registered sales price.
In the spot market, trade is done by the method of auction. When the business which is to sell supply certificate submits sales order which includes sales quantity and auction-initiating price to the market by the day before the day of trade, supply certification institution makes announcement after classifying sales order for sales price category. Purchasers submit purchase order within the determined time on the trade day and in the order of highest purchase price suggested, purchaser is finalized.
For your information, supply obligators implement obligatory supply quantity by purchasing supply certificates in the spot market for quantity excluding self-construction portion and self-contract portion out of total obligatory supply quantity of 6,337 GWh (separate obligatory supply quantity of solar PV is 276 GWh). Initially in the spot market in February, the issuance quantity of supply certificate was not much and in consideration of the fact that we are in the early part of the enforcement of the system, supply obligators are expected to show the tendency of wait-and-see of market so it is predicted that trade in the spot market will not be active.
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