By Baek Doo-ok, Ph.D. in Law (jadebeck@hanmail.net)
Former Commissioner of the Seoul Regional Office of SMEs and Startups
Regional depopulation is no longer a distant threat in South Korea. Rural villages, fishing communities and mountain towns are steadily losing residents, weakening local economies and placing essential services under growing strain.
For decades, successive governments have pursued balanced development through industrial parks, startup support and region-specific industry programs. Yet population decline has continued. After 35 years of working in regional industrial and small business policy, the lesson is clear: infrastructure remained, but people left; subsidies were distributed, but sustainable local income failed to take root.
The government’s plan to provide solar-income villages with financing structured around a one-year grace period and repayment over the following 19 years is a constructive step. Long-term finance can ease the initial burden on communities and allow renewable energy revenue to accumulate over time.
Financing alone, however, cannot resolve the structural barriers that limit community energy projects. Korea needs a cross-government Regional Energy Self-Reliance Zone that brings together farmland regulation, policy finance, electricity trading, housing renewal, public procurement and access to grid information within a single institutional framework.
Why Korea Needs a Regional Energy Self-Reliance Zone
Government agencies responsible for policy finance may reasonably question whether a 19-year repayment period ties up public capital for too long and weakens fiscal efficiency. Public funds must be managed carefully, and their ability to support multiple projects over time cannot be ignored.
But communities facing rapid depopulation are confronting a more fundamental issue: economic survival. When most solar-generation revenue is absorbed by principal and interest payments, little remains for resident dividends, community welfare or programs designed to help younger people settle in rural areas.
The solution is not to abandon long-term lending. Korea should instead introduce performance-linked financing. Communities that meet operational, financial and social targets could retain access to long-term, low-interest loans, while weaker projects would be required to submit restructuring or improvement plans. This would protect fiscal discipline without undermining the income stability that community energy projects are intended to create.
Agricultural authorities have also raised concerns that the expansion of agrivoltaics could weaken food security. Farmland is a strategic national resource, and large-scale conversion without safeguards could reduce agricultural output.
Yet farmland without farmers cannot sustain food security. As rural populations age and decline, simply restricting land use will not preserve agricultural production. Policy must make farming economically viable enough for people to remain in rural communities.
A conditional licensing system offers a practical balance. Agrivoltaic projects could receive long-term approval only when they continue to meet defined crop-production standards. Permits could be renewed based on verified agricultural output, land management and environmental performance. Such a model would protect farmland while giving farmers an additional and more predictable source of income.
The Ministry of Trade, Industry and Energy and Korea Electric Power Corp. may also be concerned that direct electricity trading among numerous small producers could complicate grid management. A fragmented network of distributed generators requires more sophisticated forecasting, balancing and control systems than a conventional power system dominated by large plants.
This is increasingly an institutional and market-design challenge rather than a technological limitation. Germany and other European countries already use virtual power plants to aggregate thousands of distributed energy resources and operate them as coordinated power-generation portfolios.
Korea could test a similar model in areas experiencing severe population decline. Village-based distributed energy zones could integrate local solar generation, storage systems and energy demand through virtual power plant platforms. Reduced transmission and distribution charges within designated pilot areas would further improve project economics and allow more of the revenue to remain in local communities.
Housing policy must also be incorporated into the model. Expanding support for heat pumps and improving aging, unregistered homes may raise concerns about policy consistency or the possibility of setting a precedent for unauthorized buildings.
Those risks can be managed through narrowly defined exemptions. Many older residents in depopulating regions have lived for decades in deteriorating homes that fall outside conventional support programs because of registration or permitting problems. Leaving those homes without energy upgrades or basic repairs does not protect the integrity of national housing policy; it deepens regional inequality.
Limited special provisions could apply only in officially designated depopulation-risk areas and only to homes that meet residency, safety and ownership criteria. This would allow essential improvements without creating a broad pathway for the legalization of unlawful development.
Public procurement rules for solar projects require reform as well. Lowest-price bidding has encouraged the use of cheaper components and contributed to poor construction, weak maintenance and reduced long-term performance.
Community energy infrastructure should be evaluated on lifecycle value rather than initial price alone. Procurement standards should consider equipment quality, generation efficiency, local maintenance capacity, financial resilience and long-term service commitments. Contractors should also be required to provide enforceable warranties and maintenance guarantees.
The concerns raised by individual ministries are legitimate. Food security, fiscal sustainability, grid reliability and regulatory consistency all matter. The problem is that each policy area continues to be managed separately, while regional depopulation cuts across all of them.
Farmland policy cannot succeed without viable rural income. Renewable energy policy cannot create local prosperity if communities lack access to electricity markets. Housing programs cannot support settlement if aging homes remain excluded from assistance. Public procurement cannot strengthen local economies if projects fail soon after installation.
A Regional Energy Self-Reliance Zone would provide the institutional space to coordinate these policies. Within a designated area, the government could align farmland use, long-term finance, direct electricity trading, housing improvement, procurement standards and grid data under a common set of objectives and performance measures.
Such zones should begin as national pilot projects in regions facing the greatest demographic pressure. Their success should be measured not only by installed solar capacity, but also by resident income, agricultural output, energy costs, housing conditions, local employment and population retention.
The objective is not simply to build more solar facilities. It is to convert regional renewable energy resources into durable economic value that remains within the community.
Sunlight reaches Korea’s farming villages, fishing communities and mountain regions in equal measure. The central constraint is not the resource itself, but the institutional system governing who can develop it, how electricity can be sold and how the resulting income is shared.
Expanding one-time subsidies will not reverse regional decline. Korea needs an energy-income structure that enables residents to build stable livelihoods and communities to finance their own long-term development.
The solar dividend should therefore be understood as more than a welfare initiative. Properly designed, it can become a national strategy that links energy transition, regional revitalization and demographic resilience—and gives communities a credible economic reason to remain.
About the Author
Baek Doo-ok, Ph.D. in Law, is a regional innovation expert with 35 years of experience in regional industrial and small business policy, including service within Korea’s Ministry of Trade, Industry and Energy and related public institutions. He previously served as Commissioner of the Seoul Regional Office of SMEs and Startups, President of the Korea Institute of Startup and Entrepreneurship Development, President of Jeonbuk Technopark, and Visiting Professor at Dankook University.
His current work focuses on addressing regional depopulation through renewable energy, sustainable local income models and integrated policy reform. Drawing on experience across law, industry and public administration, he develops practical strategies for balanced national development and stronger regional self-reliance.
