Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 217
Offshore Wind Worldwide 2023
(d) Development Permit
The development permit (under the
NLPU Act) for construction of any
onshore facilities should be obtained
from the local government before the
commencement of such construction.
The documents required for application
include, among other things, documents
evidencing ownership of, or rights to
use, the land included in the site, design
drawing and documents necessary for
application of permits which are deemed
to be issued with the development
permit (as described above). In addition
to the requirements set out in the NLPU
Act, there may be certain requirements
set forth by local legislation governing or
restricting the issuance of development
permits, enacted by local governments.
(e) Grid Connection
Negotiation of grid connection agreements with KEPCO generally takes
several months to complete, and such
agreements are valid for one year from
the date of actual use of transmission or
distribution facilities. Unless either party
terminates or amends such agreements,
they are automatically renewed for additional one-year periods for the duration
of the project.
(f) Safety Inspection
KESCO‘s inspection of foundations and
the completion of the construction
requires application to KESCO at least
seven days prior to a proposed inspection date.
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3. OFFTAKE ISSUES
3.1 Offtake, Remuneration and
Tariff Scheme
As noted above, an IPP‘s revenues are
derived from a combination of the sale of
electricity (at the SMP) and the sale of RECs.
The SMP is determined by the KPX. The KPX
as the market operator forecasts electricity
demand for the next day and receives bids
for generation from generators on the previous day. In other words, the market runs on
a "one day ahead" system where the bidding
for tomorrow‘s dispatch occurs today. The
KPX then determines the SMP as the hourly
settlement price based on the projected
demand and bids for generation for each
hour of the day. That said, the marginal cost
of the generation unit that is last to receive
the dispatch order for such hour is determined to be the SMP, which represents the
most expensive price at which electricity can
be supplied at any given hour based on the
demand and supply at that hour.
RECs can be sold either on the spot market
operated by the KPX or via long-term contracts. Most utility-scale offshore wind projects opt for long-term fixed-price contracts,
which enable an RPS Participant to purchase
RECs for a term of 20 years based on an aggregate fixed price of the SMP and the REC
price. As SMP is determined by the market
and fluctuates by the hour, the REC price is
automatically determined by subtracting
SMP from the agreed fixed price.
The implementation of the "long-term
fixed-price contract" system enables IPPs
