K-RE100's Five Compliance Routes Compared: Which Mix Fits Your Plant

"So what exactly are we supposed to do?" — this is the question we hear most from people who have just finished the self-check. They accept that RE100 compliance is needed, but a search throws up terms like green premium, REC, PPA, self-generation and equity investment all at once. Working out how they differ, and which one suits your company, is not easy.

The five RE100 compliance routes the Korean government recognises

In 2021 the Ministry of Trade, Industry and Energy recognised the following five as official compliance routes under the K-RE100 scheme.

• The green premium scheme
• Buying renewable energy certificates (RECs)
• Third-party power purchase agreements (PPAs)
• Equity investment
• Self-generation

We will go through the characteristics and the pros and cons of each.

Route 1. Green premium

In one line — you buy electricity KEPCO has generated from renewables by adding a "premium" on top of the ordinary electricity tariff.

How it works — a company takes part in the Korea Power Exchange's green premium auction each year and wins the volume it wants. The volume it wins is recognised as renewable, and the Korea Energy Agency issues a renewable energy use certificate.

• Advantages — the cheapest and simplest route. No up-front investment, one or two auctions a year, and it can be done while keeping your existing electricity contract as it is.
• Disadvantages — it is the route rated lowest under global RE100. Because it amounts to buying and using renewable electricity that has already been generated, there is no "additionality", and some top-tier global buyers do not recognise green premium as a compliance route.

When it fits — companies that want to secure a minimum RE100 compliance record quickly, and suppliers to Korean corporations that need only a Korean K-RE100 record. If supplying global buyers is your main business, though, it has to be run alongside another route.

Route 2. Buying renewable energy certificates (RECs)

In one line — you buy the "certificate" issued for each 1 MWh generated by a renewable generator, and that counts as renewable electricity use.

How it works — you buy certificates on the Korea Power Exchange (KPX) REC trading market. Secure RECs equal to the electricity you used and that amount is recognised as renewable electricity used.

• Advantages — widely recognised under global RE100. You can buy flexibly, as much volume as you want, and access is relatively easy through broker platforms.
• Disadvantages — prices are volatile. Unit prices are on a rising trend as renewable deployment expands, and relying only on the spot market without a long-term procurement plan makes annual costs unstable. With concerns about supply shortages after 2030, competition to lock volumes in early is intensifying.

When it fits — mid-sized manufacturers that want to avoid up-front investment but still need global recognition, and companies whose power use pattern is too irregular for a long-term PPA.

Route 3. Third-party power purchase agreement (PPA)

In one line — a contract to buy electricity directly from a renewable generator at a long-term fixed price.

How it works — the company, the generator and KEPCO sign a three-party contract. KEPCO delivers the renewable electricity the generator produces to the company over the transmission network, and the company pays at the contracted long-term fixed price (usually 10 to 20 years).

• Advantages — you can predict your energy cost at a fixed price for 10 to 20 years. It is among the routes rated most highly under global RE100, and it demonstrates a commitment to the renewable transition strongly to the outside world.
• Disadvantages — it carries the burden of a contract of at least 10 years, and because the generator wants its long-term revenue secured, the company has to pass a credit assessment. The size of the plant has to match the company's demand, and the contract structure is complex enough that specialist advice is effectively essential.

When it fits — mid-sized manufacturers using 10,000 MWh a year or more, companies expected to continue operating stably for more than 10 years, and companies that urgently need to answer some top-tier global buyers.

Route 4. Equity investment

In one line — you take an equity stake in a renewable generation project and have generation equal to your shareholding recognised as renewable electricity used.

How it works — you invest in a solar or wind plant and acquire a stake, then report to the Korea Energy Agency the plant's annual generation × your shareholding as renewable electricity used.

• Advantages — you achieve an investment return and RE100 compliance at the same time. You secure the record stably for as long as the plant runs normally, and over the long run it can work out better than buying RECs.
• Disadvantages — it needs large up-front capital (on the order of several billion to tens of billions of won). There is risk from plant operation and policy change, and because it takes two to three years from the investment decision to the plant running, it is hard to respond quickly.

When it fits — large companies and larger mid-sized companies with ample financial capacity, companies with a long-term renewable portfolio strategy, and companies that want to use their ESG record as a marketing asset. For small manufacturers the barrier to entry is high.

Route 5. Self-generation

In one line — the company installs renewable equipment such as solar itself and consumes the output.

How it works — you install solar panels on factory roofs or idle land and use the electricity generated directly in your processes. Surplus power can be sold to KEPCO, and the Korea Energy Agency recognises the self-generation record.

• Advantages — because generation and consumption genuinely take place, it is recognised at the highest level under global RE100. After the up-front investment your electricity bill falls substantially, and you can make use of support such as government subsidies and tax credits.
• Disadvantages — there is the burden of up-front investment, and large installations are difficult if you lack roof or land area. Generally only 10–30% of total demand is covered in-house, so there is a limit to reaching 100% compliance, and recovering the investment usually takes seven to ten years.

When it fits — manufacturers with enough factory land or roof area, companies aiming at long-term energy cost reduction, and small and mid-sized companies able to use government subsidies. In most cases a structure that runs it alongside RECs or a PPA is the realistic one.

The five routes compared at a glance

Recommended mixes by company situation

The mixes and percentages below are illustrative assumptions offered for reference, based on the original author's practical experience. The genuinely best mix differs with company size, sector, customer structure, financial capacity and plant location.

Three points that are easy to miss

1. "Designing the portfolio" matters more than "reaching 100%" — rather than filling 100% in one go, what matters is designing your compliance percentage year by year and spreading across routes. RE100 recommends the gradual targets of 60% by 2030, 90% by 2040 and 100% by 2050. Forcing a 100% target now produces excessive cost.

2. Start by checking what your customers recognise — if you secure a lot of green premium and your key customer does not recognise it, the record is meaningless. Before acting, check your customers' RE100 recognition criteria first, especially those of top-tier global buyers.

3. REC and PPA prices are on a rising trend — with a supply shortage expected after 2030, contracting early can be to your advantage. "Let's do it next year" can turn straight into "we'll buy it more expensively next year".

In summary — approach it in this order