RE-Talk South Korea:

Solar Webinar - Policy & Trend


Jungmin Pak


Lee & Ko

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Lachlan Barth


Lee & Ko

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Eung Suk Lee

General Manager

Vena Energy

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Miho Kurosaki

Head of Japan and Korea Research


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Challenges during solar development:




  • Land aggregation & permitting

    • Risk of leasing or purchasing large tracts of land and investing large sums of Initial Down Payment before knowing the expected development cost or revenue (REC price).

    • Land Lease or Purchase Agreement with Initial Down Payment (typically 10%) required to initiate solar development and obtain Business License.

    • Price of land required to develop utility scale solar farm in promising areas expensive - Price of land needed to develop 1MW (typically 1ha) ranging from KRW 240 mil. – 300 mil. (USD 200k – 250k)

    • Restrictions on certain categories of land: Agricultural land may be only owned by entities related to agriculture.


  • REC price & Long-Term REC Contracts

    • Risk of uncertainty around project revenue remaining until the final stage of development.

    • Participation in Long-term Fixed-price REC Purchase Agreements allowed after Development Permit - Bilateral Private Long-term Fixed-price REC Purchase Agreements were also allowed only after Development Permit, but no longer available due to government policy changes.

    • REC prices in the Spot Market and Tender Market falling.


  • Grid Availability

    • Low grid availability in popular areas such as Cheollanamdo

      • Only 47% of grid connection requests (below 1MW) to KEPCO completed

      • KEPCO reinforcement and upgrade plans in place but needs time to be realized 


  • Local Land Development Bylaws

    • Local Land Development Bylaws vary by local government

      • Mandatory distancing from local residents and restrictions on the development of certain categories of land critical in project development.


  • Community Consent

    • Risk of uncertainty around community consent

    • Community consent may be categorized into three distinct categories.

      • Community consent during Development

      • Community consent during Construction

      • Community consent during Operation

    • Only the scope of the Community consent during Operation is clarified by law (Act on Assistance to Electric Power Plants-Neighboring Areas) and Community consent during Development is left to the discretion of the permitting authorities.

Recent government policy:


  • Acquisition Restrictions: Acquisition of Solar Projects before Construction Completion limited to cases of extreme necessity. (Will require careful approach on brownfield opportunities)

  • Tightened Business License Requirements: Community and environmental considerations added as requirements for obtaining Business License. (Community and environment strategies to be prepared at the infant stage of development)

  • Permitting Process for Small Scale Solar Projects Simplified: Development Permit process integrated with the Business License process to expedite permitting procedures for Small Scale Solar Projects. (Small Scale Solar Projects to gain more popularity and weight in the market)

  • Clarification on ESS regulations: Regulations on ESS O&M to mitigate fire incidents enacted. (Uncertainty around ESS O&M reduced)

  • REC Purchase Agreement scheme change: Bilateral private REC purchase agreements no longer available for solar farms, all subject to tender. (Uncertainty around REC agreement availability and REC price increased; No need to invite offtakers as shareholders)

Rooftop solar:


  • Issues related to Usage Rights over buildings

    • In the event of foreclosure, Usage Rights not enforceable as against new owner of buildings

    • Not suitable for project financing

    • Potentially attractive to financially strong companies with own buildings

    • In the case of financing both a building and rooftop solar facilities by common lenders, it may potentially work

REC SPA Mandatory Tender process:


  • Applicable to fixed price REC contracts with GenCos – not applicable to IPPs

  • ​​GenCo’s who take equity in a DevCo treated as exempt from tender process

ESS Connected Solar Projects:


  • Spate of recent ESS fires – growing concern in respect to ESS safety

  • ​​Recent changes to REC-related regulations as regards ESS

Strategies to overcome such challenges:


  • Manage CAPEX with EPC partner and actively consider adding ESS

    • Low REC price needs to be compensated with lower CAPEX or higher revenue generated by ESS - High REC multipliers (4.0) granted to ESS stored electricity

  • Identify and cooperate with knowledgeable and trustworthy local partners

    • Land aggregation, community consent and permitting work requires speed, local expertise and presence and local partners are better suited to handle the task and associated risks

    • Thorough check and assessment on the partner’s trustworthiness necessary to mitigate partner risk

  • Actively communicate and engage with local communities

    • Developers should consider involving local residents as project participants - Additional REC multiplier granted to projects having a certain portion of the equity invested by local residents