Settlement structure is the most essential aspect of rural landscapes and habitations in China. The process of merging rural settlements has given rise to tensions in spatial-social structures, posing significant risks to rural sustainability. However, little research has been undertaken to analyze potential resolutions for the challenges of sustainable development in the context. Based on the technological mediation theory, we used participant observation and interviews to investigate the effects of the photovoltaic system on spatial-social structures, governance patterns, and rural sustainability. By focusing on a representative merger project area situated in Shandong Province, our research revealed that the photovoltaic system improved spatial, social, and governance sustainability in rural areas rather than only the environmental aspect. In the spatial dimension, the photovoltaic system reconstructed domestic spaces and activated scenarios conducive to public life. In the social dimension, it fostered the eradication of disparities in identity and facilitated the reintegration of social networks. In the governance dimension, a large-scale governance pattern supported by mutual interest, collective trust, and the integrated system was developed to successfully resolve emerging problems and ultimately promoted the sustainability of the community–village region. The findings highlight the efficacy of employing technological design as a means to resolve resettlement dilemmas, which could shed light on the elimination of conflicts arising from the interplay between urbanization and sustainability of rural areas.