Quantitatively exploring the future of renewable portfolio standard in the Korean electricity sector via a bottom-up energy model

The Republic of Korea started to apply a new renewable energy policy, renewable portfolio standard (RPS) in 2012, but the policy has failed to obtain positive evaluation and some problems have arisen during the first two years. In this study, we have tried to investigate the current design (operational mechanism) of the policy, to examine the reasons for its problems, and to quantitatively predict future outlook. For the examination and prediction, we use the bottom-up model approach, which has not been commonly used for the RPS policy but is usually utilized for evaluating specific policy options in an energy system. Therefore, the main purpose of this study is not only to introduce a new approach for the exploration of the RPS policy, a scenario-based quantitative analysis based on a bottom-up energy system model, but also to apply the approach into the policy in Korea. We develop a multi-regional bottom-up energy model and explicitly implement the mechanism of the policy in the model, such as the transfer of tradable attribute - Renewable Energy Certificates (RECs). The results of the model predict a serious disharmony of the current design of the policy under the national basic plan; the optimistic fulfillment rate of RECs in the entire mechanism will be around 66% in 2022, so the most regulated generators will suffer from the large shortfalls of RECs and the total penalty for all regulated generators will be expected up to 1350 billion KRW in 2022. We also diagnose the reasons of the disharmony as well as address some suggestions for its continued application. As the Korean case study, we believe that the approach in this study can be utilized when policy makers design or amend the mechanism of RPS with RECs to help the policy operate efficiently and to prevent potential undesirable consequences.