In one line
A bill replacing the Renewable Portfolio Standard (RPS) with a renewable energy contract market passed the National Assembly plenary on 20 August 2026, and according to the government's own materials, REC issuance for new installations stops from 2027, leaving revenue to come from either a competitive-bid contract market or a direct PPA.
What is changing
On 20 August 2026 the National Assembly plenary passed the committee-substitute amendment to the Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy (신에너지 및 재생에너지 개발·이용·보급 촉진법). At its core it is a full conversion: the Renewable Portfolio Standard (RPS), the obligation on large generators to supply a set share of renewable power, becomes a government-run renewable energy contract market. Related bills, including amendments to the Electricity Business Act and the Distributed Energy Act, passed the same day.
Until now a solar operator was paid the System Marginal Price (SMP) for the electricity it sold, then earned a second income on top by selling Renewable Energy Certificates (RECs). The certificates had a buyer because obligated suppliers had to cover a set share of their output with renewables. Under the new regime that structure becomes a long-term purchase contract awarded by competitive bidding.
Key dates (as proposed by the government)
- Through 2026: the current regime stays in place.
- Second half of 2026: the detailed design of the reform, and the systems to run it, are due to be built out.
- From 2027: no REC issuance for new installations; the contract market takes effect.
- Through 2029: existing spot-market installations keep issuing and trading RECs under a grace period.
What happens to existing projects
| Project type | Treatment under the government proposal |
|---|---|
| Already holds a 20-year long-term fixed-price contract | Terms unchanged for the life of the contract. RECs continue to be issued. |
| Commissioned by 2026, with a record of REC issuance | May trade on the spot market through the grace period (to 2029). After that, priority support to move to a direct PPA, or conversion to a long-term fixed-price contract in the transition contract market. |
| New installations commissioned from 2027 | No RECs. Revenue only through a contract-market award or a direct PPA. |
| Installations whose long-term contract has expired | Whether they are absorbed into the transition contract market is still under review. |
Swipe the table sideways to see the rest
Are small operators protected?
The government proposal sets out a separate bidding track inside the contract market, so that small operators do not bid head-to-head against large ones. Raising the small-scale threshold from the current 100 kW to somewhere below 1 MW has been discussed, and the amended act adds a provision creating a separate route for small installations. The threshold itself is left to subordinate legislation and is not yet fixed.
The Electricity Business Act and Distributed Energy Act amendments that passed alongside it give community-participation renewable projects of 1 MW or less serving a public purpose priority access to the grid. With the grid connection queue the single largest cause of project delay, that is a change worth having.
The last long-term fixed-price auction of 2026
The first solar long-term fixed-price contract auction of 2026 was announced on 16 July 2026, with submissions closing at 18:00 on 28 August. Around 1,000 MW was tendered, on 20-year contracts. The price ceiling was KRW 147,686/MWh on the mainland and KRW 152,092/MWh on Jeju. This is the first time the mainland ceiling has come down into the KRW 140s per kWh, about 5% below the previous year. Modules carrying a grade 1 carbon verification rating receive an adder of KRW 16,000/MWh; grade 2 receives KRW 7,000/MWh.
Government and press alike expect this to be the last auction run under the current RPS-based fixed-price scheme. Whether a second auction follows in the second half of 2026 has not been confirmed.
So what should you do now
- 1Fix your target commissioning date first. Whether you can commission within 2026 and build a record of REC issuance is the first fork in the road.
- 2Check whether grid connection is available. A delayed connection pushes back commissioning, and a later commissioning date changes which regime applies to you.
- 3Work out which track your capacity puts you in. The separate small-scale track, the general auction, and participation as an aggregated resource in a virtual power plant (VPP) each suit different projects.
- 4Assess a direct PPA in parallel. If the contract-market award does not come, the project only stands up if the PPA route is still open.
- 5Until the subordinate legislation is final, do not build a business plan as though the terms were settled. Work in scenarios instead — it is the safer footing.
Sources
- · Energy Daily 2026-08-20, Newsis 2026-08-20, Korea Policy Briefing 2026-08-21 (reporting on the bill's passage)
- · Korea Energy Agency, Renewable Energy Policy Department, 'Direction of Renewable Energy Deployment Reform and Legislative Amendment' briefing materials (2026-05-26)
- · Korea Energy Agency, New and Renewable Energy Center, 2026 first solar long-term fixed-price contract competitive auction notice no. 2026-23 (2026-07-16)
This article is drawn from public sources available at the time of writing and is for reference only. Rules and market prices change. It cannot be used as the basis for an investment or contract decision.