1.

Eligible Bidders and Auction Capacity

The Announcement covers public-led offshore wind power projects (fixed-bottom type only) and general offshore wind power projects (both fixed-bottom and floating types); bids for onshore wind power projects are not included in this auction. A single power generation business license (“EBL”) may not be used to bid in both the public-led and general auctions. Bidding eligibility requirements (including (i) obtaining an EBL (including any required EBL amendments) and (ii) completing an environmental impact assessment) must be satisfied by the date of the Announcement.
 
Participation in the public-led auction generally requires 50% project ownership by state-owned enterprises or local government-owned in the case of joint investments (or 34% in the case of sole public entity investments). These general ownership requirements are, however, relaxed to 20% and 10%, respectively, if the public-led project plans to deploy turbines developed through a government-led demonstration project (e.g., the Korea Institute of Energy Technology Evaluation and Planning’s “10MW OSW WTG Development and Demonstration” pilot).
 
Following the completion of a demand survey and review of expected market interest in auction participation, the NREC’s Renewable Portfolio Standard (“RPS”) Committee determined to allocate auction capacity as follows:
 

(1)

Public-led auction capacity:
 

i

Fixed-bottom projects: 400MW

ii

Floating projects: N/A
 

(2)

General auction capacity:
 

i

Fixed-bottom projects: 1,000MW

ii

Floating projects: 400MW
 

2.

Price Ceiling and Evaluation Methodology
 
The Announcement stipulates that the auction ceiling price (i.e., the system marginal price (“SMP”) + the price of 1 REC) for fixed-bottom projects will be KRW 171,229/MWh (down from KRW 176,565/MWh in the last applicable auction) and that the auction ceiling price for floating projects will be KRW 175,100/MWh (down from KRW 176,565/MWh in the last applicable auction). The Announcement also set the applicable SMP at KRW 86,350/MWh, mirroring the SMP that applied to the most recent offshore wind power auctions.
 
These auction ceiling prices were determined based on a comprehensive review of factors including:
 

(1)

Forecasts and fluctuation rates of levelized cost of electricity (“LCOE”) for domestic and global renewable energy projects;
 

(2)

Project scale and auction group-specific factors affecting LCOE;
 

(3)

Investment costs (based on capital contribution plans submitted by KEPCO’s GenCo subsidiaries and district heating companies); and
 

(4)

Recent spot market price levels.
 

3.

Auction-related Amendments to REC Issuance Rules
 
As foreshadowed at the NREC Briefing, certain provisions of the Rules on the Issuance and Trading of Supply Certificates (the “REC Issuance Rules”) have been revised for the 2026 wind power auctions, including:
 

(1)

REC Issuance Rules Art. 31-2: Removing the provision previously restricting bidders from participating in offshore wind power auctions for both the first and second half of a calendar year;
 

(2)

REC Issuance Rules Art. 31-4: Granting priority allocation to projects with the highest pricing component scores in instances where multiple projects with identical target generation capacities submit bids;
 

(3)

REC Issuance Rules Art. 44-2: Enabling officials from Korea’s Ministry of Climate, Energy and Environment (“MCEE”) to participate in the Auction Committee deliberations; and
 

(4)

Miscellaneous: Additional regulatory changes allowing replacement of initially-envisaged project components with alternative components of equivalent or higher quality in consideration of global supply chain instabilities (subject to Auction Committee confirmation).
 

4.

Implications
 
New revisions to the REC Issuance Rules stipulate that the Auction Committee will evaluate both pricing and non-pricing components for all eligible bids. This means that even if a project proposal fails to achieve full marks on non-pricing evaluation criteria, it may possibly still be selected as a winning bidder based on quantitative (pricing) evaluation criteria. We expect this will play a major role in bidder strategies in attempts to enhance price competitiveness (which is, post-Announcement, even more critical).
 
The revised REC Issuance Rules also provide more flexibility regarding post-bid project equipment changes. Previously, it was difficult to alter project component specifications from those listed in a project proposal included in a winning bid. Now, however, changes to project equipment (of equivalent or higher quality) are permitted (with Auction Committee confirmation).
 
We note that within the non-pricing components to be evaluated by the Auction Committee, the “maritime security” category includes an information protection plan in relation to maritime vessels (e.g., WTIVs) and crew to be engaged for project construction. Bidders considering the use of foreign vessels will need to carefully review the potential impact on their chances of success at auction.
 
Finally, the MCEE is sponsoring draft legislation that would partially amend Korea’s key renewable energy statute (currently pending in the National Assembly (Link)) within the first half of 2026 to replace the RPS system with a government-led bidding system. Key details (e.g., what will replace the current REC multiplier incentives and how excess RECs will be handled) remain unconfirmed and should be closely monitored, but expected changes underscore the importance of current auctions for bidders hoping to develop projects under the existing RPS system.