Green Pricing is a system in which companies or individuals pay an additional premium (approximately KRW 10/kWh) on top of their existing electricity rates to use power generated from renewable energy sources. It operates in a way that when consumers who wish to use renewable energy pay an additional amount on top of their standard electricity rates, KEPCO supplies a corresponding amount of renewable energy. As one of the means of implementing RE100 (Renewable Energy 100%), it provides an institutional pathway for companies to be recognized for their renewable energy usage without needing to enter into renewable energy Power Purchase Agreements (PPA) or generate their own power.
In 2021, Green Pricing launched targeting large-scale power consumers with contract power of 1,000 kW or more. When the Ministry of Trade, Industry and Energy introduced it, it was applied to industrial and general-use electricity; it was expanded to educational use in 2022 and to agricultural use in 2023. After signing a contract with KEPCO, applicant companies can pay monthly or settle in a lump sum, and renewable energy usage certificates are issued on an annual or quarterly basis.
The rate is billed with the premium charge added to the basic electricity rate, and the premium varies depending on market conditions and the type of renewable energy source. KEPCO issues Renewable Energy Certificates (RECs) to applicant companies, through which companies are recognized as having achieved RE100 performance.
[Green Pricing (Green Premium) Ⓟ ESG.ONL/ESG Today]
The advantage of Green Pricing is that companies can quickly secure renewable energy usage records without bearing additional facility costs. It is regarded as a highly accessible means for SMEs or companies for which self-generation is difficult. On the other hand, limitations include the increase in electricity bill burdens due to the added premium charge, and the possibility that the additional costs companies must bear may fluctuate over the contract period. It has also been pointed out that Green Pricing is operated primarily around large enterprises consuming massive amounts of power, making it difficult for small-scale businesses or ordinary households to benefit from the system.
As the number of RE100 participating companies grows and ESG management spreads, Green Pricing is establishing itself as a major policy instrument to accelerate the domestic renewable energy transition. KEPCO is reviewing the expansion of the target scope and the strengthening of transparency in the rate structure through system improvements. In addition, institutional supplementation to broaden companies’ renewable energy procurement options is expected to continue.
by Editor O