Since the announcement of the Renewable Energy 3020 Implementation Plan in December 2017 by the Ministry of Trade, Infrastructure and Energy (the “MOTIE”), Korean renewable energy market has substantially grown: the capacities of the new facilities installed for the past two years (7.1GW) amount to approximately 47% of the accumulated capacities of all facilities installed until 2017 (15.1GW). Moreover, the percentage of electricity generation through renewable energy has been continuously growing.
To further support this trend, on December 20, 2019, the MOTIE announced its plan to continuously develop policies for promotion of the renewable energy market and preparation of measures to address environmental issues and local residents concerns, which may arise during development of renewable energy projects.
In light of the foregoing, a number of the legislations relevant to the implementation and development of renewable energy projects were recently amended. The key amendments can be summarized as follows.
1. Amendment to the Electric Utility Act (to be effective on October 1, 2020)
- For renewable energy projects utilizing photovoltaics, wind and ESS, the project details must be notified to local residents in advance so that they can provide their opinions on the project.
- Transfer of the business of, or change of control of, photovoltaic project will be permitted only after commencement of such photovoltaic project.
- In granting an electrical business license for photovoltaic projects with capacity of 3MW or less, certain permits would be deemed to have been issued in connection with the matters already agreed by the head of the relevant government authority.
- For photovoltaic or wind projects to be located in a mountainous area, if the project developer is issued with a restoration order pursuant to the Mountainous Districts Management Act, the project developer must complete the restoration prior to commencement of electricity trading. If this requirement is violated, the project developer’s electrical business license may be revoked or suspended.
2. Amendment to the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy (to be effective on October 1, 2020)
- Currently, the regulations on extension of lease term are established differently for national and public properties. However, via this amendment, the maximum term of initial lease will be set as ten years for both national and public properties, which can be extended twice for additional ten year each time. As such, a lease of national or public property may last for 30 years at maximum under the amendment.
3. Amendment to the Marine Environment Management Act (to be effective on September 25, 2020)
- Currently, offshore wind projects with capacities of 100MW or less are not subject to the Sea Area Utilization Impact Assessment except in certain situations (e.g., dredging in public waters, etc.). However, under this amendment, even those offshore wind projects with capacities of 100MW or less will be subject to the Sea Area Utilization Impact Assessment if their capacity exceeds a certain threshold. The aforementioned threshold will be established in the forthcoming amendment to the Enforcement Decree of the Marine Environment Management Act.
4. Amendment to the Notification of Detailed Permitting Standards for Electrical Business (effective as of March 26, 2020)
- This amendment heightened the level of review on project sites and arrangement plan. In particular, (i) the government authority will review whether it is feasible to secure the proposed project site from the environmental perspective, and (ii) if the project site contains a forest owned by the government, the results of consultation with relevant authorities (including the Minister of Korea Forest Service) must be submitted and evaluated.
We expect these amendments to have positive impacts on continuous growth of Korean renewable energy market. Further, as the MOTIE is expected to extend its efforts to increase the supply of renewable energy (e.g., establishment of the standards on reasonable benefit share with local residents who participate in renewable energy projects, introduction of the planned siting system to increase the acceptability of local residents, etc.), we advise closely monitoring the MOTIE’s efforts and keeping updated on additional regulations or policies on this topic.
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