Lawyer urges governance reform for Korea's community DER projects
At a forum, Ji Hyun-young, a lawyer at Seoul National University, proposed systemic reforms to the governance structure of Korea's sunshine income village community solar projects.
Our take
Does unclear governance in Korea's sunshine income villages raise risk for private partners and lenders?
Unclear governance in Korea's sunshine income villages raises counterparty risk for private partners and lenders, because the cooperative that is the legal project entity often leaves decisions to a village association without legal personality.
The gap stays hidden while village trust is high and surfaces when dividends to non-members, free-riding or liability are disputed. The fixes discussed, legal personality for village associations and special provisions for cooperatives, are proposals, so the risk has to be checked project by project until one becomes law.
For investors — Lenders should check who signs and who decides in each project, the cooperative, the village association or both, and whether its articles follow the government's model articles, which the speaker says may conflict with the Framework Act on Cooperatives.
Solar developers acting as ReSCO partners, the private firms that plan, design and build for villages, should expect scrutiny of how far they lead cooperative formation, as the proposed evaluation of disclosure and resident capacity-building would make it a selection and reputation factor.
Watch: Monitoring legislative reviews of the Cooperative Framework Act or official announcements regarding governance reforms for community energy projects.
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