Songpa Solar Nanum (Sharing) Power Plant
Continent：AsiaCountry：South KoreaCity：Songpa-guYear Submitted：2016
- The Songpa Solar Nanum Power Plant project is the 21st innovative administration model integrating welfare and environmental policies. This is Songpa’s first presentation of the Songpa Solar Nanum Power Plant project to the world community.
- The Songpa Solar Nanum Power Plant is a public power plant generating energy from sunlight. Songpa donates 100% of profits from the sales of electricity to people that lack access to energy as well as to underdeveloped countries.
- It is being assessed as a new business and technology model integrating both environmental and welfare aspects. The plant reduces greenhouse gas emissions by solar power generation technologies. Further, the profits are dedicated to welfare work.
- Songpa-gu was proclaimed the ’Leading city for climate change response’ in 2008, one step ahead, and constructed the ‘Songpa Solar Nanum Power Plant’, a public solar generation plant recognized the world over, while carrying out the policy that will lead the conversion into a renewable energy system by establishing ‘the ordinance on climate change response’ in 2009, for the first time among the autonomous districts of Seoul.
- Energy prices worldwide have dramatically increased since early 2000 due to the rise in oil prices of oil and governmental policies for reducing greenhousegases. It has become a huge burden to people in low-income groups. Households with low incomes spend a significant amount of their income on energy. They also tend to use more energy, as they have old electrical appliances with low energy efficiency and weak insulation systems.
- It is estimated that there are approx. 1.2 million won households lacking access to energy and many of the individuals included in this category are the aged the disabled. It is also assumed that there are approx. 1.5 million households that lack access to energy in Korea, if the figures are arrived at considering a household which has income less than 200% of the minimum cost of living and has one or more chronically ill family members. Amongst them, only 100,000 households (8.3%) are benefited from the currently operating energy welfare projects.
- The government’s current energy support policy includes support for lighting costs and discounts on electricity and gas bills as a part of the national basic Livelihood security system of the Ministry of Health and Welfare. However, there is concern that this support system cannot be sustained. The subsidies are currently provided by energy providers such as Korean electric power corporation, Korea city gas association and Korea District Heating Corporation at significant strain to their financials. The subsidies may have to be revoked as financial viability drops.
Goals of the Initiative
- In 2008, Songpa Solar Nanum Power Plant project was suggested by the NGO, ‘Energy Peace’. Songpa’s Green Governance (local residents’ association) reviewed the viability of the project through meetings. The location and capital investment were decided, followed by renewable energy certificates (REC) and the construction structures.
- lIn February 2009, Songpa took its first step towards reducing carbon footprint by setting up a public solar power plant in partnership with a NGO. Songpa also signed a joint operational agreement to the effect that, over aperiod of about 20 years (2009-2023), 3.5 billion won would be donated to people that lack access to energy.
- According to the joint statement, 25% of the net profit will be used for people that lack access to energy, 25% forwarded to underdeveloped countries and the remaining 50% will be used to build additional Solar Nanum Power Plants.
- In 2010, operation of No 2 Songpa Solar Nanum Power Plant (2010~2029) was promoted followed by operational agreement of No. 1. The operational profits from No. 2 were used for people that lack access to energy and to improve energy efficiency. The project will now use its proceeds to repace old electrical appliances with high efficiency products. As part of the scheme, common appliances like refrigerators and washing machines will be supplied to low-income families.
- Costs for setting up No. 3 Songpa Solar Nanum Power Plant (2012~2032) were shared by Songpa, a private company and the local residents. A NGO has been in charge of plant operations since 2009. The administrative council for the project is a partnership between local residents, local government, private companies and environmental groups. We have also started an initiative to pay for energy for electricity and gas defaulters.
- In 2013, No. 4 (2013~2033) was established by agreement amongst Songpa, a NGO and an environmental group. A project to attach insulation and replace gas timers and LP gas pipes in old housing was also started. In addition, a generator was installed in a desert of Mongolia as part of a project supporting underdeveloped countries. Mongolia does not have any electricity infrastructure, so a wind solar integrated generator (4kW in total) was installed to make use of the strengths of renewable energy.
Parties and Partners to the Initiative and Resources Used for Implementation
- In February 2009, Songpa announced a ‘joint statement’ with a NGO, Energy Peace, and signed an operational agreement for the Songpa Solar Nanum Power Plant. The project is an outcome of the joint efforts of Songpa and the local communities to support people that lack access to energy and to overcome global warming issues.
- This is a project driven by local residents’ participation and efforts. An NGO and a company in charge of carrying out social responsibilities are in charge of installation, operation and management of each plant. The entities sell the electricity until the No.5 plant is built. Electricity output, reduction of CO2 and profits from each plant are reported to Songpa every month.
- The funds have been donated through a social welfare funding system until the first half of 2010, but currently the distribution is directly managed by Songpa since the ’Songpa’s ordinance on funding’ was established.
- Songpa selects eligible households that lack access to energy as beneficiaries to the support schemes.
- Social workers of 26 dong offices conduct research to identify households that urgently need support. Households with the aged, infants, pregnant women and chronic patients are preferentially selected as beneficiaries. New households are selected every year to increase the number of beneficiaries, but households requiring ongoing support will continue to benefit from the project.
- Songpa, a NGO and a company engaged in social welfare will distribute funds quarterly and take up other initiatives to support people lacking access to energy.
- 8 billion won in total was spent until No. 4 Songpa Solar Nanum Power Plant was built and among the 8 billion, 2 billion won from Songpa’s budget was invested. The remaining part of the investment was raised from PF loan(project financing loan) and donation from social contribution enterprises.
- In addition, local residents and community groups including resident committee, local women’s society, local head officer’s board and housewives’ environmental board donated a certain amount of money for this project. Songpa overcame this problem by seeking cooperation from visiting companies within the district and social welfare institutions.
- Environmental companies and financial investment companies provided the plants’ venue free of cost when the No. 3 ~ No. 4 plants were built and they also helped with the solar facility installation work. The operational profits of No.1 and No. 2 solar power plants were guaranteed by applying for FIT of the central government’s renewable energy support policy. This system of guaranteeing a certain minimum profit is adopted for encouraging renewable energy businesses.
- However, the government policy has been changed to RPS by the time the No.3 plant was established so the profit was decreased compared to No. 1 and No. 2. The profit might not be guaranteed as other competitors started to participate in the market. There were disadvantages for the Songpa Solar Nanum Power Plant in terms of prices.
- Despite its small size, Songpa Solar Nanum Power Plants had the advantages of contributing to the wide-spread use of renewable energy, and supporting the people that lack access to energy, thus spreading its operation every year. No. 3 was installed in the district to attract local residents’ attention, while No.1 and No. 2 plants were installed in other districts having more sunlight.
- Local residents have taken great interest in the plant even though the size is relatively small due to the lack of space. Local residents have donated for building
- No. 3 plant. The Resource Circulation Park, where No. 3 and No. 4 plants are built,
- is a good visiting place for kindergartens, schools, institutions and organizations.
Innovation for the Initiative
- The Songpa Nanum Power Plant can be considered an innovative program due to the following 2 reasons.
- First, when most conventional environment programs were led by the government, this program is a private-public sector collaboration which established a relationship between a city office and a private NGO. In other words, the program executed a practical and continuing policy in collaboration with a private environment organization rather than a declaratory campaign.
- In particular, the No. 3 plant is financially supported by Songpa-gu, citizens of Songpa-gu and Korea Southern Power Co. Ltd. The building's rooftop was provided free of charge by Korea 3-R Environment Company, and Energy & Peace took the promoting and managing responsibility of the power plant realizing the citizen-city office-private company-environmental organization collaboration to reduce carbon emissions and support the energy-needy.
- Second, the program differentiated from other programs due to its capability of achieving two objectives simultaneously; welfare and environment. With the operation of the No. 1, No. 2 , No. 3 and No. 4 Songpa Nanum Power Plant, the program will reduce a total of 22,000 tons of CO2 in the next 25 years and this figure is equal to planting 5.24 million pine trees.
- Also, the operation profits from the program, 3.5 billion won, will be used to support the needy in Songpa and 3rd world countries and also reinvested for the building of additional Nanum Power Plants in the future.
- This project is innovative as it actually attempts to improve energy efficiency instead of just supporting the energy costs. Furthermore, the Songpa Solar Nanum Power Plant was started under several constraints.
- The government’s energy support policy has not been integrated and the level of support has been low. In addition, the support was concentrated on electricity and gas, so no support was available to people that use kerosene and oil boilers. In a certain district, there was excessive support to provide briquette.
- We were not able to confirm whether the cash grant is actually being used for energy. When cash was provided, households with low income used the money for more urgent matters like medical fees or food.
- Profits from the first Songpa Solar Nanum Power Plant have been donated as cash grants but from 2011, we have focused on replacement of the old electric products and installation of insulation to avoid the fundamental energy waste.
- Recognized as Korea's first power production profit redistribution policy formed by a government agency, Songpa Nanum Power Plant is a program designed to preserve the environment and utilize renewable energy and further realize public added value with its profits.
- Moreover, a fixed amount from the program's profit is allocated to help resolve the difficulties of the energy-needy by reorganizing the conventional "energy fund support" to focus on "improving energy efficiency."
- The biggest reason for such a transition is due to the fact that monetary support only makes the needy spend money on more urgent matters. Also, most low-income households are in possession of old electronics which consume excessive electricity which later results in increased difficulty deepening the 'power poor' status. The program replaces old refrigerators and washing machines to resolve the fundamental problems of the issue and contribute to the reduction of greenhouse gas emission.
Obstacles and Solutions to the Innovation
- Songpa adopted a solar nanum power plant integrating welfare and environmental responsibility. However, as a first time initiative in Korea, it hasn’t been easy.
- It was criticized that the profitability is low as the initial project cost of this long-term project was high. Generally, the initial cost is high for renewable energy projects and investment returns are higher only in the long term.
- In the beginning, there was a problem to secure adequate budget for the project. We visited every congressman to explain the cause and meaning of the project. Songpa Solar Nanum Power Plants have higher investment costs, but it is important as it is environmentally friendly and profitable.
- In addition, profitability and safety were strictly analyzed in consultation with the relevant institutions. The budget for the project was arranged jointly with a NGO and private companies donated the remaining part. In 2009, we set up <ordinance on countermeasures against climate change>.
- This was the first such initiative by a local government in Korea to encourage energy efficiency and energy welfare projects.
- In addition, we also prepared budgetary allocations for paying energy bills for people with in low income. Simultaneously, we also prepared foundations to systemize and continuously promote the government’s energy welfare project.
Outcomes and Assessments
- The most important outcome has been the creation of a continuous energy welfare fund. From 2009 till now, No. 1~ No. 4 plants are operational and it is expected that an energy welfare fund of approximately 3.55 billion won will be created through sales of electricity over 25 years.
- In 2015, the sales of Songpa Solar Nanum Power Plant amounted to approximately 5.5 billion won. It has barely been operational for four years, but it already made more than 2 billion won, which is the project cost Songpa incurred. It is expected that there will be net profits of at least 7 billion won over 20 years. Songpa has generated 450 million won in total over 6 years’ operation and donated it to households that lack access to energy.
- Songpa is supplying LED lighting supply project to 3,000 households while concurrently financing the earlier projects. Songpa is also slated to expand support to underdeveloped countries.
- Secondly, it established partnerships with private companies.
- The current energy welfare project is managed by an administration organization, but the project was promoted by a NGO, a private company and local residents. It was promoted by a joint statement and each party performed its own obligations and responsibilities Songpa establishes infrastructure for energy welfare and supports administration and finance.
- Private companies also perform social responsibilities. Communities and local residents attempt to raise awareness by campaigns. This is a good example of long-term cooperation between a local government and communities as the project lasts 25 years.
- Thirdly, it can reduce greenhouse gas emission.
- The Songpa Solar Nanum Power Plants will reduce potential emission of CO2 by 22,000 tons over 25 years. It is equivalent to plating trees over a land area of 17,476,800㎡. Songpa has already achieved reduction of 4,429tons of CO2 through Solar Nanum Power Plants.
- Songpa is planning to build No. 5 and No. 6 Solar Nanum Power Plants, which are expected to reduce 40% of Greenhouse gas BAU by 2020.
- The Songpa Solar Nanum Power Plants are operated automatically and the output can be confirmed real-time through a monitoring system. Monthly operational profits and CO2 reduction are reported to Songpa.
- The electricity generated from the power plants are traded according to < Electric Utility Act> through the Korea Power Exchange. Korea Power Exchange purchases the electricity based on a long-term supply agreement.
- The government guarantees the sales price for a certain period and accordingly, the price of electricity generated from No. 1 solar nanum power plant is guaranteed for 15 years and the price of No. 2 plant electricity is guaranteed for 20 years. The equivalent amount to the principal can be made within 12 years. After 20 years, when Songpa makes profits, it will be retained as a common operator of solar nanum power plants.
- In case of No. 1 and No. 2, 2.8 billion won in total was designated for donation to people that lack access to energy, utilizing the guaranteed price of electricity generated at No. 1 and No. 2. The profits acquired after 20 years will be discussed with an NGO. Once the No. 3 plant is fully operational, a supply compulsory system will be set up and it is expected to save approximately 750 million won over 20 years.
- A NGO will invest 100% capital for No. 5 plant and operate it; a private company in the district will provide the land for building the plant. Songpa will provide support for general issues and initiate projects for people that lack access to energy. In addition, 200 million won, which is 25% of net profits, will be donated for a project to support people lacking access to energy.
- The net profits expected of Songpa Solar Nanum Power Plant is 8 hundred million won approximately. 25% of net profits can be spent on a project supporting people lack of access to energy is because that Songpa has had a good relationship with local people.
- Being a long-term project, the Songpa Solar Nanum Power Plants’ efficiency has been confirmed through Korea Energy Management Corporation’s certificate on facilities for generating energy from sunlight.
- This project has received favorable reviews in Korea and overseas.
- Internationally, it received the bronze award from LivCom Awards, and was awarded as the winner of Sustainable City area in 2011 Globe Award.
- Awarded the grand prize of the ‘UN Public Service Award’ in 2015 for the first time among the local autonomies of Korea, after receiving the silver prize in the 2013 International Green Apple Awards.
- Domestically, it received the Green Growth Committee Leader Prize in <Low CO2 Environment Friendly Awards> in 2010, a ‘Ministry of Environment Department prize’ in the <Korea’s Green Climate Awards>, as well as ‘Prime Minister and Knowledge Economy Minister prize’s in <Korea Green Management> in 2012 and 2013 continuously.
- It can be said that Songpa Solar Nanum Power Plant has been recognized as the sustainable future environment policy to support people in poverty and as a policy that can be continued with all of the world.
- In addition, it was presented as a good example in <C40 world cities’ climate meeting> hosted in Seoul in 2009. From 2013, Seoul also has been promoting a solar nanum power plant project as a part of the ‘reducing one more nuclear power plant’ campaign, and other local governments including Seongbuk-gu, Dongdaemoon-gu, Suwon-si and Pyeongtaek-si, are benchmarking our project.
- One of the advantages of the project above is that it has been able to provide actual support for people that lack access to energy.
- The government’s current energy welfare system provides only a monthly reduction of 8,000 won on electricity bills and 10~20% discounts of gas bills every month to beneficiaries of basic livelihood support. To do this, the beneficiaries should follow procedures of application to the service providers.
- From 2009, Songpa has spent all profits from its Solar Nanum Power Plants on supporting people that lack access to energy in the district. This is the first energy welfare policy carried out by a local government.
- Up to 2010, 72 million won net profits were donated in cash to 240 households, including beneficiaries of basic livelihood support and low income citizens. From 2011, the project emphasis shifted from support for energy costs to improvement of energy efficiency. 35.37 million won in total was donated and it included 24 million won cash grant to 120 low-income households and a project for improving energy efficiency.
- Insulation materials were attached to buildings where the disabled and infants stay, and as a result, the heating systems were improved by 15% and 61% respectively. Insulation materials were also attached to 43 old housing units.
- In addition, 150 million won was spent to replace refrigerators and washing machines with high efficiency products in 230 low-income households, thereby reducing the electricity costs. Electricity and gas bills of 385 households, amounting to 81 million won, were paid.
- In 2013, old LP gas facilities of 209 senior citizens who live alone were replaced and gas timers were installed to prevent any fire accidents.
- In 2014, we replaced the existing bulbs to LED lightings for 3,300 beneficiary households of basic livelihood support. There are plans to expand the service so that more low-income households can enjoy energy-saving benefits
- In 2013, we donated a generator to Mongolia and the support for underdeveloped countries will be continued. The funds for this project are generated from operation of solar nanum power plants.
- The Songpa Solar Nanum Power Plants aim to work towards a healthy environment and a cooperative community, setting a good example of sustainable energy and welfare projects.
Benefit to Other Cities
- Recently, the number of that people lack access to energy has increased as the energy costs for low income groups rose. Globally, people with low incomes spent more on energy comparatively. An exclusive support system is required to identify and support such people that lack access to energy.
- Therefore, Songpa has been operating a solar nanum power plant since 2009 and donated the profits from the sales of electricity to people lacking access to energy in Korea and other countries. The profits are also used for building additional solar nanum power plants. Plants will be operated stably as energy welfare funds will continuously be created until 2033.
- In addition, Songpa has established ordinances on energy and climate change countermeasures to guarantee local residents’ energy use systemically. Songpa established a good example of governance with cooperation amongst local government, local residents, NGOs and private companies.
- Currently, Korea’s energy welfare system is dominated by the central government, while local governments are now adopting it. However, Songpa took a leading role in energy welfare policy amid the central government’s limited efforts due to the lack of rights, finance, human resource and information. It also has played the role of a coordinator integrating energy welfare services systemically.
- Korea has started to promote renewable energy but we are still in the initial stages. Songpa Solar Nanum Power Plants are relatively small solar power plants but it has become a medium to attract people’s attention to renewable energy and environment.
- It is now time to expand and provide renewable energy that can be used whenever and wherever without contamination.
- Therefore, the support project for countries that lack access to energy has a significant meaning. 90% of land in Mongolia has become deserts and Vietnam was selected as the most vulnerable country to climate change. now we have made a small initiative, by installing a generator, to improve the quality of life and to support children’s education.
- Songpa will continue its support projects to third-world countries, which are vulnerable to climate changes, such as droughts, tornadoes and floods. It might be possible to promote energy sharing projects with global NGOs to avoid disputes between countries.
- Songpa is taking a leading role in raising awareness of renewable energy and supporting people that lack access to energy by promoting Solar Nanum Power Plants. We hope our Solar Nanum Power Plants will reduce poverty and protect the environment.