Samsung Elec’s RE100 participation could boost renewable energy costs

[Provided by Maekyung Media Group]

Samsung Electronics Co.’s plan to participate in the RE100 initiatives has put other RE100 member companies in South Korea in a dilemma because its joining is expected to elevate the cost of renewable energy whose supply falls short of the increasing demand.

Because higher renewable energy costs will push companies’ production expenses, Korean companies participating the RE100 are calling on the Korean government to come up with a plan to expand renewable energy production in the country.

RE100 is an initiative that calls on companies to use 100 percent renewable energy by 2050, and companies generally buy a renewable energy certificate (REC) that shows how much a company generates electricity through renewable energy to meet the goal. REC price is determined by the supply and demand at the exchange.

Samsung Electronics, which declared it would join RE100 in September, plans to purchase the REC this year to increase usage of renewable energy at home. It already achieved 100-percent usage of renewable energy at its operations in the U.S., China and Europe after purchasing RECs. Renewable energy accounted for 20.5 percent of its total power usage last year across all of its operations globally, an increase from 15.2 percent in 2019 and 17.6 percent in 2020.

However, it hasn’t been easy for companies in Korea to purchase RECs because of the country’s lack of renewable energy supply.

Samsung Electronics has been paying ''green premium rate plan’’ on top of the existing electric fees instead of purchasing RECs to increase its green energy usage. But because green premium rate plan is not recognized as green gas reduction efforts, Samsung Electronics has decided to join the RE100 and purchase RECs.

Samsung Electronics’ REC purchases are however expected to lift the country’s renewable energy prices due to a shortage of renewable energy generating infrastructure in Korea. About 22 other local companies, such as SK Hynix, LG Solution, Hyundai Motor also participate in the RE100, and most have purchased renewable energy via the RECs.

REC prices have been steadily rising this year. The average REC monthly price increased from 46,211 won ($33.29) per unit in January to 52,970 won in May and 63,614 won in October. In contract, REC supply can’t be expanded in a short time because the geologically restrictions limit the production of renewable energy through solar and wind power in South Korea.

Last year, the country’s five biggest power consuming companies used 48 terawatt hour last year. This compares with 43 TWh of renewable energy generated last year.

By Choi Seung-jin and Kyunghee Park