Power Purchase Agreements (PPA) for renewable energy are an essential tool to secure investment to build new generation and advance the energy transition. However, in South Korea PPAs are impeded by a system of rigid regulations and a blackbox of opaque power grid fee rate setting standards set by the fossil-fuel oriented utility Korea Electric Power Corporation (KEPCO). Companies in South Korea that want to support the expansion of renewable energy through PPAs have stated that this opaque grid fee setting system needs to be addressed to revitalize the PPA adoption. Combined with the lack of competition in the power sector, this highlights the importance of having transparent grid fee setting systems, as power grid fees are a significant factor in a PPAs long-term price.

The Federal Energy Regulatory Commission (FERC) and PJM Interconnection (PJM) in the United States, and the Office of Gas and Electricity Markets (Ofgem) and the National Energy System Operator (NESO) in Great Britain, are two regulatory systems well known for their transparent and pragmatic grid fee setting procedures. Ofgem also goes a step further in incorporating actions for net-zero as factors in their approval process, stimulating investments for a renewable-friendly and sustainable power grid. These systems offer effective examples to improve South Korea’s grid fee setting systems to be more accountable, transparent, and sustainable.