A critical review of Korea's long-term contract for renewable energy auctions: The relationship between the import price of liquefied natural gas and system marginal price

Jongwoo Moon, Tae Yong Jung

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

Abstract

The aim of Korea's Renewable Portfolio Standard (RPS) and newly adopted auction system with a long-term fixed-price renewable contract was to support renewable energy providers in hedging electricity and Renewable Energy Certificate (REC) price risks. This study found a long-run positive relationship between the import price of Liquefied Natural Gas (LNG) and System Marginal Price (SMP) in Korea, demonstrating that the fluctuations in global fuel prices are likely to increase uncertainties in renewable investments. The fixed-price contract, which cannot be revised once determined, encourages renewable energy providers' speculative decision-making, and the uncertainty caused by the contract system may discourage investment decision-making.

Original languageEnglish
Article number101132
JournalUtilities Policy
Volume67
DOIs
Publication statusPublished - 2020 Dec

Bibliographical note

Publisher Copyright:
© 2020 Elsevier Ltd

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Development
  • Sociology and Political Science
  • Management, Monitoring, Policy and Law

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