Measures to Improve Energy Policy to Promote the Supply of Inland Solar Power Generation

1. Domestic inland solar power trends

❏ Deteriorated profitability due to the falling prices of the solar power generation REC (Renewable Energy Certificate)

ㅇ The spot price of the REC has fallen since ’17, down to about 69,000 won as of April 2019, which is a 60% drop compared to the peak. The decline continued and in November 2019, it fell below the 40,000 won mark, fueling the sense of crisis among the developers in terms of investment recovery.

❏ Promote large-scale business-oriented policies

ㅇ Due to the delay of implementing the local government-led renewable energy site plan, public sector-led renewable energy projects are being promoted for public enterprises, and as of April 2019, the land for 142 plants was secured capable of supplying 24 GW. Based on this figure alone, it is expected that the goal set for large-scale projects in the 3020 plan can be almost achieved.

2. Causes and possible solutions for inland solar power supply problems

❏ Causes of inland solar power supply problems

ㅇ Policy based on a centralized ‘national project’ perspective

- So far, a centralized energy supply system has been established based on the sacrifice of a few regions. If renewable energy does not take a form of dispersed generation and is supplied to other regions via nationwide power grids, the residents of the area where renewable energy facility is located could feel that they have been victimized ㅇ The role and status of the local governments are not being established

in parallel.

- The role of local governments is merely a “route” for the central government’s policy enforcement, and the authority of the regional governments to lead the renewable energy business to economies of scale and to act as mediators is insufficient.

ㅇ Promotion of unilateral policy without considering the characteristics of local energy projects

- Countermeasures against the side effects of renewable energy projects tend to be uniformly led by the central government without careful consideration.

❏ Solutions for the supply problem of inland solar power

ㅇ ‘Local industrialization’ and ‘distributed power supply’ are the fundamental measures.

- Induce the renewable energy business to be recognized as a “local industry” that directly benefits local governments and local residents ㅇ Strengthen the policy coordination system and cooperation system among

central, regional, and local governments

- Enhance the coordination capability of regional governments to solve issues that arise in the local governments at the regional government level

ㅇ Efforts to improve residents’ acceptability at each stage of the project - At the beginning of the project, the high public acceptance of renewable

energy is applied to the community as well, so efforts to reflect it in the local community are necessary.

3. Policy proposals to promote the supply of inland solar power

❏ Complement the renewable energy site planning system

ㅇ Prepare a regional plan in advance that combines environmental and economic evaluations

- Prior planning and information disclosure for candidate sites

ㅇ Strategic environmental impact assessment through non-standing consultative committee

- It is necessary to prepare a guide at the technical level for large-scale development complexes, and this suggests technical standards for establishing the scope of participation of residents after selecting candidate sites for development.

❏ Prepare a measure to activate small-scale power generation facilities ㅇ Regulation of separation distances at the level of basic municipalities for

small and medium-sized solar power generation facilities

- The ordinance of the local governments should abolish the restrictions on the separation distance and make residents’ consent procedures or briefing sessions mandatory for small businesses as well, and it is necessary to consistently search for candidate sites with high residents’

acceptance and encourage auction.

❏ Strengthening the independence of local governments

ㅇ System improvements enabling the local government to function as the main body of the regional energy business

- It is necessary to improve the situation in which the local government is merely acting as a simple implementer of the national financial input project, and in most cases, the energy committee required by local ordinances is not functioning.

- It is necessary to establish a cooperative system between the dedicated organization of the local government and regional offices of related organizations.

❏ Adjustment of the implementing entity of the government project ㅇ Virtually no mechanism to induce competition between local governments for

the public-funded projects such as the project of the Korea Energy Agency - It is necessary to change the government project execution body to the

local government (or regional dedicated organization).

- When the business entity is changed to the local government and the related budget is issued directly, competition among the local governments can be induced through the post-performance evaluation conducted by the central public institution and the budget allocation reflecting the result for the next year.

❏ Provision of financial resources for small businesses at the regional level ㅇ Need to continually build a local small-scale business financing system - It is desirable to support at the local government level small-scale projects

that are expected to undergo deteriorated business environments in the RPS system

❏ Expansion of RE100 participation at the regional level

ㅇ Attracting companies that want to participate in the RE100 campaign at the local level or reviewing support plans for companies in their area - The RE100 campaign functions sufficiently as an incentive to secure stable

profits from the perspective of solar power generation companies.

❏ Revitalization of ‘local community energy business’

ㅇ Design a policy to expand the scope of residents’ participation under the initiative of the local government, but to return practical benefits that can be experienced without huge burden to the residents

- There is a need to resolve the side effects caused by the difficulties of small businesses by making the renewable energy business more efficient and eco-friendly through economies of scale.