Analysis of institutional constraints in distributed energy policy implementation: Focusing on implementation of the Special Act on Activation of Distributed Energy

South Korea, like many countries, is moving toward a distributed energy system to achieve carbon neutrality and enhance energy security. A major step was the Special Act on Activation of Distributed Energy (June 2023). However, despite this legal framework, the policy implementation has been slow, with notable delays in areas such as establishing a master plan, introducing a new electricity pricing system, and designating special energy zones. This study argues that these issues are not simple delays but are caused by deep-seated problems within the policy design and its implementation structure. This study examines enactment of the Special Act on Activation of Distributed Energy, focusing on the roles of key players such as government agencies, KEPCO, and private companies. Using policy implementation theory, we identify critical institutional constraints in the implementation structure, arising from the conflict between the new, decentralized policy and the old, centralized energy system. The core problems include the absence of a clear ‘Distributed Energy Activation Master Plan,’ a monopolistic retail electricity market that prevents effective price signals, and lack of a clear mechanism to resolve conflicts among stakeholders. To succeed, the transition requires more than just new laws; it needs fundamental change in the market structure and the roles of major players. We recommend establishing a clear plan with specific implementation roadmaps, reforming the monopolistic market structure through gradual retail market liberalization, and strengthening financial incentives for private investment to facilitate competition that aligns with the policy goals.