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.
Bibliographical noteFunding Information:
We would like to thank Professor Donghun Kim from the Graduate School of International Studies at Yonsei University and Dr. Yonggun Kim from the Korea Environment Institute for their valuable comments that improved our research and analysis.
© 2020 Elsevier Ltd
All Science Journal Classification (ASJC) codes
- Business and International Management
- Sociology and Political Science
- Management, Monitoring, Policy and Law