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Amorepacific signs Korea's first Virtual Power Purchase Agreement (VPPA) with a local wind power company in Jeju

Sustainability 2022-11-16
  • First achievement following the agreement on public-private cooperation for the establishment of RE100 trading market system
  • Promotion of regional coexistence and cooperation through a wind power purchase agreement in Bukchon-ri village in Jeju

Amorepacific has signed Korea's first Virtual Power Purchase Agreement (VPPA) with Bukchon Seomo Wind Power, a wind power plant in Bukchon-ri, Jeju. It is the first achievement following the 'Agreement on the Private-Public Cooperation for the Establishment of Jeju-style RE100 Trading Market System’ signed at the Jeju Provincial Office on the 14th.

▲ (From left) CEO Yun In-cheol of Bukchon Seomo Wind Power, President Lee Dong-soon of Amorepacific, Governor Oh Young-hun of Jeju Province, CEO Choo Hyeong-wook of SK E&S

Virtual Power Purchase Agreement (VPPA)1 is a way of supplying renewable energy, which is commonly used in the US or European market but first time to be signed in Korea. With the agreement, Amorepacific will be able to secure 3MW of renewable energy per year generated from wind power for approximately 17 years until 2040. Furthermore, considering the domestic wind power trading market and price uncertainty, Amorepacific plans to preserve fixed income for the village by settling the difference between the wholesale price of electricity and the monthly fixed price.

With the renewable energy certificate obtained through the agreement, Amorepacific can convert to renewable energy for its buildings and business sites, such as headquarters and sales offices across the nation. Furthermore, since the trading structure is unprecedented and complicated in Korea, SK E&S structured the agreement will participate in trading as a trading broker to secure trading stability during the agreement period.

Amorepacific is focusing on securing clean energy sources to convert 100% of its electricity demand at all business sites to renewable energy by 2025. This year, the construction of an additional 1.5GW of solar power facilities began for the parking lot of Osan Beauty Park, and the first solar power direct PPA contract in Korea and a third-party PPA contract with KEPCO were signed in March and June, respectively. Amorepacific has also participated in green premium power purchases three times in total since 2021 to expand its use of renewable energy, becoming the only company that has applied most of the methodologies available in Korea to secure renewable energy.

Amorepacific’s President Lee Dong-soon said, “The VPPA is a challenge and effort to keep Amorepacific’s promise to produce and sell products using 100% renewable energy. We hope that our efforts to convert to renewable energy amid climate crisis will be conveyed sincerely to consumers. We also hope that through continued coexistence and cooperation with Jeju, we can contribute to achieving 2030 Carbon Free Island for Jeju.”

1 Virtual Power Purchase Agreement, also called Financial PPA, is a type of trading where a company bears the market risk associated with electricity sales from a power plant and receives an energy certificate.