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Advice on Direct PPA

Companies are becoming more interested in RE100 to fulfill social responsibility and to guide their ESG (Environment, Social, Governance) activities.  RE100 is a global initiative of large businesses being committed to procuring 100% renewable electricity.  To encourage companies’ participation in RE100, the South Korean government is preparing incentives and financial support, such as special interest rates and guarantees to the companies that participate in such scheme. 

As implementing measures of RE100 in South Korea (“K-RE100”), the (i) payment of green premium, (ii) execution of third-party PPA, (iii) purchase of REC, (iv) execution of power and REC purchase agreement through acquiring equity interest, and (v) installation of renewable energy equipment for personal consumption are already recognized, and (vi) the direct PPA, introduced by the amendment to the Electricity Utility Act on October 21, 2021, will become recognized as well (Article 63 of the “Regulations on Renewable Energy Facilities Support, Etc.”).

In addition to being a K-RE100 implementing measure, direct PPA is expected to serve as a starting point for restructuring the electric power industry to actively utilize distributed energy resources.

Shin & Kim has recently provided legal advice to our client ‘S’ company on the execution of a direct PPA with ‘A’ company.  For your reference, the official decree on direct PPA is undergoing a review of comments received regarding the draft decree, and the details will be finalized soon. Upon its finalization, we will provide further details through our newsletter. 

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