Access to K-RECs: Navigating South Korea’s Renewable Energy Market

In recent years, the global demand for renewable energy has surged, driven by corporate commitments to sustainability frameworks like RE100 and Net Zero pledges. For global companies operating in or sourcing from South Korea, meeting these commitments has proven particularly challenging. Despite its advanced industrial sector, South Korea generated only 7.4% of its electricity from renewable sources in 2022, lagging behind regional peers. Additionally, South Korea’s electricity market has long been dominated by a few key players, making it inflexible and inaccessible for voluntary corporate action. Amid these challenges, K-RECs (Korean Renewable Energy Certificates), introduced in 2021, have emerged as a transformative solution, bridging the gap between South Korea’s energy landscape and the sustainability goals of global corporations. K-RECs offer businesses a structured, transparent way to access renewable energy in South Korea, helping them overcome market barriers while meeting voluntary compliance targets.

South Korea’s Renewable Energy Policy: The Foundation of K-RECs

K-RECs originated from South Korea’s Renewable Portfolio Standard (RPS), a government policy that requires large power companies to include renewable energy in their electricity supply. Introduced in 2012, the RPS applies to power-generating companies with a capacity of 500 MW or more, mandating them to generate a specific portion of their electricity from renewable sources. In 2022, this requirement stood at 12.5%, with the ratio set to increase to 25% by 2026.

To meet these requirements and comply with the RPS, power companies have two options. They can either generate renewable energy themselves through solar, wind, or other renewable energy projects or purchase RECs to track renewable electricity generation.

Barriers for Businesses Before K-RECs

While the RPS has been effective in driving renewable energy adoption among power companies, it excluded businesses outside the energy generation sector. This meant companies operating in South Korea, whether local or global, were unable to access RECs to meet their sustainability goals.

Multinational companies faced growing pressure to align with global standards like RE100, yet found South Korea’s regulatory framework offered no viable pathways to procure renewable energy.

For local businesses, the situation was equally challenging. Without access to RECs they struggled to adopt green practices, putting them at a disadvantage in a global market that increasingly prioritizes sustainability. These limitations created a significant barrier for South Korea’s transition to a more inclusive renewable energy ecosystem.

How Global Advocacy Paved the Way for K-RECs

The shift began in 2016 when global corporations like BMW and Apple urged their South Korean suppliers to adopt renewable energy. These demands, driven by the companies’ own RE100 commitments, were aimed at reducing Scope 3 emissions, which account for indirect emissions throughout a company’s supply chain. As multinational corporations worked to meet their sustainability goals, it became clear that South Korea’s restrictive energy market posed a significant barrier to achieving global standards.

Advocacy groups like Greenpeace and WWF-Korea amplified these calls, urging policymakers to reform South Korea’s energy market to make renewable energy more accessible. This growing pressure highlighted the urgent need for a more inclusive and flexible renewable energy framework.

By 2021, the government responded with the launch of the K-RE100 scheme, which introduced voluntary mechanisms for renewable energy procurement. Among these mechanisms, unbundled K-RECs emerged as a critical tool, offering businesses flexibility and alignment with global standards.

How K-RECs Work

While often referred to as K-RECs, this is not their official name. It’s a term used to describe renewable energy certificates issued for every megawatt-hour (MWh) of renewable electricity generated in South Korea. The renewable energy use recognition scheme aligns with the global RE100 standard, recognizing energy sources such as solar, wind, hydro, marine, geothermal, and biomass.

Unlike RECs under the RPS that are tied to mandatory compliance, these certificates are designed for voluntary use. They enable businesses to claim the environmental benefits of renewable energy without the need to purchase the associated electricity. Transactions are managed through the Korean RE100 management system, operated by the Korea Energy Agency (KEA). Spot purchases allow companies to quickly secure the renewable energy certificates they need without the long-term commitments.

Current Challenges in the K-REC Market

South Korea’s renewable energy market is still maturing, presenting several challenges for businesses looking to procure K-RECs. While these certificates provide a clear path to voluntary compliance, companies must navigate a range of obstacles:

Key Benefits of K-RECs for Businesses

Navigating South Korea’s renewable energy market may be challenging, but K-RECs provide a necessary solution for companies striving to meet international sustainability commitments. By purchasing Korean RECs, businesses can demonstrate renewable energy use, report emissions reductions, and enhance their sustainability credentials—all while aligning with global standards.

Here are the key benefits that K-RECs offer:

How to Buy Korean RECs

The process of buying K-RECs is structured yet requires strategic planning. Transactions are held twice a month during fixed hours, which requires precise timing to align procurement needs with availability. Once agreements are finalized and costs settled, REC ownership is transferred, and companies can request certificates to confirm their renewable energy usage. However, the layered steps involved often require specialized expertise to ensure accuracy.

At Cnerg, we simplify this journey for global companies by providing:

1. Access to Verified Unbundled K-RECs: Through our marketplace companies can explore a range of K-RECs, compare prices, and receive platform recommendations based on their specific sustainability goals and needs.
2. End-to-End Support in Acquiring K-RECs: From registration to settlement, we handle the entire process for you. We help manage key steps such as order registration, cost settlement, REC ownership transfer, and redemption, providing a seamless experience.
3. Guidance on Procurement and Compliance: Our team of experts ensures you navigate the complexities of market dynamics and regulatory standards effortlessly.
4. Reliable Tracking Systems: Our solutions guarantee full traceability, allowing you to confidently demonstrate your renewable energy contributions.

Acquiring K-RECs remains a complex process due to the evolving nature of South Korea’s renewable energy market. However, it is steadily improving as the infrastructure grows and market mechanisms become more refined. Despite the obstacles, these certificates represent a promising step toward a greener future for companies committed to sustainability.