Environment ministry introduces renewable energy contract market system

The Ministry of Climate, Energy and Environment announced the enactment of amendments to the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy, introducing a government-led contract market system for renewable energy facilities. The revision aims to expand efficient and systematic renewable energy distribution to contribute to carbon neutrality goals.

Under the new framework, the ministry will operate a contract market system that includes stable contracting methods such as long-term fixed-price agreements. The ministry will announce total and specific energy source capacities in five-year units.

Power generators and public institutions with generation facilities above a certain scale must set and achieve renewable energy distribution goals. Those who fail to meet these targets may face improvement orders within one year, while persistent non-compliance will result in public disclosure of their names and violation details by the minister.

Required amounts are calculated every five years based on supply levels, contract market capacity, and resource security status. Entities exceeding targets can carry over surplus portions, while those falling short may defer part of the obligation or pay a substitute performance fee. These fees, along with surcharges on violators, will be allocated to the Electric Power Industry Base Fund.

The ministry may levy surcharges of up to 150 percent of the calculated shortfall amount for those failing to meet obligations without completing substitute performances. Collection follows national tax compulsory execution procedures, though reductions are permitted for unavoidable reasons such as natural disasters.

Existing renewable energy supply certificates remain valid for trading until December 31, 2029, though the deadline for issuing new certificates under the old system is December 31, 2026. Certificates purchased in excess of mandatory obligations during this transition will count toward new distribution targets.

Most provisions take effect January 1, 2027. Clauses regarding rent reductions for state property apply immediately upon promulgation on September 15, 2026, while rules concerning renewable energy installation projects in industrial complexes begin six months after the announcement.