| 4. In which ways is the initiative creative and innovative?
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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.
In 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 a period 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 replace 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.
Songpa Solar Nanum Power Plant No. 5 is slated to start in the Southeast Distribution Center in Seoul and it will be completed in 2015. It was promoted by three parties’ agreement of Songpa, NGO and logistics center, and specially, this place is envisioned to be the Mecca of renewable energy and the largest building-type solar power plant facility. It can be also used as a training center to educate local residents on the benefits of renewable energy.
In 2014, Songpa has started a drive called ‘Replacement to high efficiency LED lights’, and has been phasing out the production and import of light bulbs. So far 3,300 beneficiary households of basic livelihood support have received replacement LED lamps and more low income families will be benefit from this project next year.
Songpa has operated four plants over the last five years for improvement of the energy welfare system. It also invests a part of its profits for installation of additional Solar Nanum Power Plants. In addition, it also attempts to improve quality of life for people that lack access to energy by enhancing the structures of energy industries.
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| 5. Who implemented the initiative and what is the size of the population affected by this initiative?
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In February 2009, Songpa announced a ‘joint statement’ with a NGO, Energy Peach, 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.
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| 6. How was the strategy implemented and what resources were mobilized?
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10.3 billion won in total was spent until No. 5 Songpa Solar Nanum Power Plant was built and among the 10.3 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.
The central government has not been able to promote an appropriate energy welfare policy due to budgetary constraints. Local governments, which have smaller budgets, are faced with difficulties too when promoting energy welfare policy. 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. 5 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.
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| 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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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 30 years. In 2013, the sales of Songpa Solar Nanum Power Plant amounted to approximately 3 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 350 million won in total over 5 years’ operation and donated it to households that lack access to energy. This year, 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 3,459 tons 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.
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| 8. What were the most successful outputs and why was the initiative effective?
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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, slated for completion in 2015, 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.
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| 9. What were the main obstacles encountered and how were they overcome?
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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 . 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
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