Seoul , South Korea
The Songpa Solar Nanum Power Plants aim to create a sustainable environment with community support, by implementing energy efficient projects with a focus on citizen welfare.
The Songpa Nanum Power Plants were developed using a creative business and technology model to promote renewable energy by integrating environmental sustainability and energy welfare issues. The methodology is particularly relevant for energy-poor countries and offers an alternative to the standard practice of energy subsidies.
Utilizing sunlight, the power plants help to reduce greenhouse gas emissions, support energy-poor households and build infrastructure: 25% of profits earned are allocated as cash grants to low-income house-holds' for utility fees, another 25% is donated to developing countries for sustainable energy projects and the remaining 50% is invested in the maintenance of existing plants and the construction and operation of additional plants.
This project was awarded the 'Guangzhou Award' in 2016. Learn more about the award.
- East Asia
- Climate mitigation
- Urban development and infrastructures
- Inclusion and equity
- Smart city and technology
- Monitoring and evaluation (cross-cutting)
- New financing arrangements
- Public-social-private partnership
- New regulations and political arrangements
- Promotion and incentive systems
Background and objectives
Songpa is the largest district of Seoul, the capital of South Korea, with a population of 647,000 residents. An estimated number of 1.2 million households lack access to energy, including elderly and disabled people. Among them, only 100,000 households (8.3%) benefit from the current energy welfare initiatives provided by the state government. These include support for lighting costs and discounts on electricity and gas bills as part of the National Basic Livelihood Security System administered by the Ministry of Health and Welfare. Beneficiaries of this Basic Livelihood support receive a monthly reduction of 8,000 won (US$7) on electricity bills and discounts between 10 to 20% on gas bills, however, no support is provided to people who use kerosene or oil boilers as heating systems. These subsidies are currently financed by energy providers such as the Korean Electric Power Corporation, Korea City Gas Association and Korea District Heating Corporation and their long-term financial viability is uncertain. Combined with rising oil prices, ageing electrical appliances and sub-standard insulation systems, low-income households are required to spend a growing part of their income on energy consumption.
The Songpa Nanum Power Plants project commenced in 2009 as a long-term energy initiative supported by government, NGOs, the community and business sector representing a unique example of integrated urban governance. The project aims to achieve two objectives simultaneously; welfare policy and environmental protection. With the operation of the first four power plants, the program forecasts a reduction of 22,000 tons of CO² in the next 25 years, which is equivalent to planting 5.24 million pine trees. The estimated 3.5 billion won (US$ 3million) profit from the program over the same time frame will be used to support low-income households, provide international aid and build additional solar power plants in the future.
In February 2009, Songpa District announced a partnership with the NGO, Energy&Peace, to operate the first solar power plant. By establishing ‘the ordinance on climate change response’, Songpa was the first district of Seoul to carry out a policy that would lead a district wide conversion to a renewable energy system. The viability of the project was assessed and agreed upon by the local-residents’ association, Songpa’s Green Governance.
In 2010, the construction of the second Songpa Solar Nanum Power Plant (2010 ~ 2029) was confirmed. The operational profits from the plant are used to improve energy efficiency through the replacement of old electrical appliances with new products and provide new energy-efficient refrigerators and washing machines to low-income house-holds.
Costs for setting up the third Songpa Solar Nanum Power Plant (2012~2032) were shared by Songpa District, a private company and local-residents. With the construction of this plant, Songpa District implemented an initiative to pay for energy costs for electricity and gas defaulters.
In 2013, the fourth solar power plant (2013~2033) was established through an agreement between Songpa District, Energy&Peace and an environmental group. Simultaneously, a new initiative to improve insulation and replace gas pipes and timers in old houses commenced. Furthermore, as part of the financial donations to developing countries. a solar wind integrated generator (4kW in total) was installed in the desert in Mongolia.
In 2014, a program subsidized by the National Basic Livelihood Scheme, replaced 3,000 light bulbs with LED bulbs in 3,300 households. There are plans to further expand this program so that more low-income households can enjoy energy-saving benefits.
The project is a partnership between local government, residents, private companies and environmental groups. The NGO Energy&Peace and a private company are responsible for installing, operating and managing the four plants. They report monthly to Songpa District on the electricity output, the reduction of CO² emissions and profits made at each plant. Based on a long-term supply agreement, the electricity generated from the power plants is purchased by the Korea Power Exchange company. For each plant, the sale price of electricity is guaranteed by the government for a designated period of time. Accordingly, the price of electricity generated from the first plant is guaranteed for 15 years and the price from the second plant is guaranteed for 20 years. After 20 years, Songpa District will be treated as a common producer of solar energy.
The funds from profits were distributed to low-income households through a social welfare funding system until the first half of 2010. The distribution program is managed by Songpa District. Social workers conduct research among residents with eligible households selected as beneficiaries. While new households are chosen each year in order to increase the overall number of beneficiaries; households requiring ongoing support continue to receive financial assistance.
Financing and resources
8 billion won (US$ 7 million) in total was invested in the construction of four Songpa Solar Nanum Power Plants, including 2 billion (US$1million) from Songpa District’s budget. The remaining funds were raised through a PF loan (Project Financing loan) and investment from private enterprises. Environmental organizations and financial investment companies provided the location at no cost for the third and fourth plants and supported the solar facility installation works. Local residents and community groups including resident committees, women’s societies, head officer’s boards and housewives’ environmental boards also contributed to the project financially.
The operational profits from the first and second solar power plants were guaranteed by applying for Feed-in-tariffs (FIT) of the central government’s renewable energy support policy. In that financial framework, the difference between the market price of electricity and the power production cost is covered by the government. This system guarantees a certain minimum profit in order to encourage the development of renewable energy businesses. However, the government policy changed by the time the third plant was established so the overall profit decreased in comparison to the first and second plants. New RPS (Renewable Portfolio Standards) have been introduced to encourage major power generators to include renewable energy in their supply. As more companies entered the market, a minimum profit was no longer guaranteed for the Songpa Solar Nanum Power Plants.
Results and impacts
Recognized as Korea's first energy profit redistribution policy formed by a government agency, Songpa Nanum Power Plant is designed to protect the environment and create public added value through energy-efficiency measures for low-income households.
A significant outcome has been the creation of the energy welfare fund. Commencing in 2009, four plants have been operating for a total profit of 450 million won (US$ 390,000) over six years. 35.37 million won (US$ 30,000) has been allocated for energy efficiency measures. 24 million won (US$ 20,000) has been allocated as cash grants to 120 low-income households. Net profits of at least 7 billion won (US$ 6 million) are expected over 20 years of operation. It is estimated that an energy welfare fund of approximately 3.55 billion won (US$ 3 million) will be achieved through electricity sales over the next 25 years.
From 2011, the focus of the redistribution of funds shifted from support for energy costs to energy efficiency initiatives. Electricity and gas bills for 385 households were paid to the amount of 81 million won ($ 70,000).
Partnerships with private companies have been established. The energy welfare fund is currently managed the Songpa District with support from an NGO, a private company and local residents. Private companies involved in the scheme incorporate social responsibility into their activities, while communities and local residents conduct awareness campaigns.
The project contributes to the reduction of greenhouse gas emissions. The Songpa Solar Nanum Power Plants are expected to reduce CO² emissions by 22,000 tons over 25 years. Songpa has already achieved a reduction of 4,429 tons of CO² emissions through its Solar Nanum Power Plants. A real-time monitoring system allows Energy&Peace and the private company operating the plants to report monthly to Songpa District about profits generated and reductions achieved in CO² emissions.
The project has received favourable reviews in Korea and abroad. Internationally, it received the bronze prize from LivCom Awards (International Awards for Liveable Communities) and won the Globe Award in 2011. The project was also the recipient of the UN Public Service Award grand prize in 2015, after receiving the silver prize in the 2013 International Green Apple Awards. It was also a winner of the Guangzhou Awards for Urban Innovation in 2016.
In addition, the project was presented as a good example at the 2009 C40 world cities’ climate meeting hosted in Seoul. From 2013, the city of Seoul has been promoting the Solar Nanum Power Plant project as a part of its ‘reducing one more nuclear power plant’ campaign. The project has been benchmarked by other local governments including Seongbuk-gu, Dongdaemoon-gu, Suwon-si and Pyeongtaek-si.
Barriers and challenges
Securing an adequate budget for this long-term project was difficult due to the high cost of the initial investment for relatively low returns.
Lessons learned and transferability
While most conventional environmental programs are led by government, this program is a citizen-government-private company-environmental organization collaboration (public-social-private partnership) which establishes a strong relationship between the city government, a private company and an NGO in the operation of the project. In particular, the construction of the third plant was financially supported by the Songpa District, citizens of Songpa and Korea Southern Power Co. Ltd. The Energy&Peace NGO was responsible for promoting and managing the solar power plant.
This project is innovative as it attempts to improve energy efficiency instead of just supporting energy costs for low-income households. Songpa Solar Nanum Power Plants are relatively small but they have drawn people’s attention to renewable energies and the environment. Additionally, Songpa District will continue to support countries that lack access to energy and are vulnerable to climate change as part of its global energy welfare policy.
- Songpa Solar Nanum (Sharing) Power Plant, Guangzhou Award for Urban Innovation, http://www.guangzhouaward.org/en/2016-12/29/c_66331.htm (accessed 14 March 2017).
- Songpa Solar Nanum (Sharing) Power Plant, Urban Innovation Database, http://www.urban-innovations.org/index.php/Songpa_Solar_Nanum_(Sharing)_Power_Plant (accessed 14 March 2017).