Biomass Developments: South Korea

Son-U Michael Paik General Counsel

Senior Vice President EnerOne, Inc.

www.enerone.co.kr sonupaik@gmail.com

Ⅰ. Introduction Ⅱ. The Renewable Portfolio Standard Ⅲ. South Korea’ “Green Growth” Vision Ⅳ. Power Producers & Biomass Usage Ⅴ. Policy to Regulation to Adoption Ⅵ. Import Expectations

Renewable Portfolio Standard in Korea

Targeting 10% of electricity from renewables by 2022

2 million tons 5 million tons 10 million tons

2015 2020 2022

South Korea’s consumption of biomass pellets

Burned pellet for residential heating in the past

Co-generation for the future use

The RPS Mandatory Volumes are calculated as follows: RPS = mandatory supplier fossil fuel power generation volume x yearly RPS mandatory ratio

Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

RPS Ratio(%) 2.0 2.5 3.0 3.5 4.5 5.0 6.0 7.0 8.0 9.0 10.0

Obligation of RPS in Korea

Source: UN Comtrade, HS code 440130

2006

2011

2050

2.24%

5% 20%

Low Carbon Green Growth

Ratio of new & renewable energies

Source : Korean Ministry of Environment

Manufacturing Cost of Renewable Energy

100% Solar Energy 100% Wind Energy

2% 10%

2012 2022

Renewable portfolio standard (RPS) quota in Korea

The demand for renewable energy

Korean government’s vision for 2022

5%

95% Korea East West (EWP) Korea Southeast (KOSEP) Korea Midland (KOMIPO) Korea Southern (KOSPO) Korea Western (KOWEPO) Korea Hydro & Nuclear (KHNP)

7 private companies

6 Thermals Supply of the nation’s electricity

Market share figures in Korea

EWP, KOSEP, KOSPO all focusing on biomass

Pellets

Bed boilers

Wood chips

Co-firing

Biomass, a viable means of achieving the RPS target

Co-firing 10% wood chips and pellets 200MWx2 + 30MWx2 full biomass plants

5% co-firing (with pellets) → 500MWx2 5-10% co-firing (with pellets) → 340MWx1

150,000 tons/ year of wood chips and/or pellets 180,000 tons/year of wood chips 400,000 tons/year of pellets 300,000 tons/year of pellets

Thermals used 80 million tons of coal in 2010.

Solution?

3%

3.2 million tons/year

4.2 million tons/year

10.7 million tons/year

4% 10%

Paper mills

Dye houses

Chemical Plants

Combined Heat & Power plant

(CHP)

600,000 tons/year

Weightings for adherence to policy

For Integrated Gasification Combined Cycle (IGCC), and by-product gas

Wastes & Landfill gas

For Hydraulic, onshore wind, bio-energy, refuse-derived fuel (RDF) full firing and tidal (including dams, tide embankments)

For Wood biomass full firing and offshore wind (under 5km)

For offshore wind (over 5km), Tidal (not including dams or tide embankments) and fuel cells

0.25 0.5

1 1.5

2

RPS Power Generation

Volume

New renewable energy source power generation volumes

the applicable REC

RPS Penalty

RPS Mandatory Volume

– RPS Power

Generation Volume

40KRW/ kWh 150%

*RPS=mandatory supplier fuel power generation volume x yearly RPS mandatory ratio

Calculating RPS Mandatory Volumes

Fuels: Current Expectations PLACE COST (per ton) HEAT VALUE

(kcal/kg) STORAGE

WOOD CHIPS Domestic sources $110- $165 2,500 – 3,500 Indoors

& Outdoors

WOOD PELLETS

U.S.A., Canada, Germany, Sweden $210 - $270 4,000 – 4,500 Indoors

PKS Indonesia, Malaysia $100 - $150 4,000 – 4,500 Indoors

& Outdoors

EFB Indonesia, Malaysia $130 - $180 4,000 – 4,500 Indoors

CORN PELLETS Indonesia, Malaysia $100 - $150 4,000 – 4,500 Indoors

RISK HUSK PELLETS Vietnam $100 - $150 4,000 – 4,500 Indoors

BIO-COALS Canada, Indonesia, Malaysia $150 - $200 5,000 - 6000

Indoors &

Outdoors