By Shin Ji-hye / The Korea HeraldSolar energy is among the keys in the administration of South Korean President Moon Jae-in’s push for renewable energy in response to concerns about life-threatening air pollution and demand for cleaner and safer energy.
In December 2017, the government announced “Renewable Energy 2030,” aiming to increase renewable energy’s share of generation capacity to 20 percent from the current 7 percent by 2030. Solar power accounts for 57 percent of the 20 percent of renewable energy.
The outlook for renewable energy is bright. Global demand for solar power is expected to grow from 94 gigawatts in 2017 to 125 gigawatts in 2020, according to research firm IHS Markit.
But despite Moon’s ambitious goal and market growth, South Korean solar power companies face mounting challenges at home and abroad. They are grappling with cost-cutting competition from China, regulatory challenges and resistance from local residents.
In May, Woongjin Energy, the nation’s last remaining producer of ingots and wafers for solar cells, filed for court receivership. The firm was the only survivor after many large companies, including LG, SKC and Hyundai Heavy Industries, had exited their ingots and wafers business due to a continued supply glut from China.
“We can no longer compete with Chinese rivals that keep down costs. We have already injected more than 100 billion won [$85.4 million] into the solar business since 2014. Now, we can’t afford it anymore,” said a spokesperson from Woongjin Group, parent company of the energy firm.
The continued oversupply from China has resulted in a plunge in solar product prices. The price of polysilicon, a key material for solar panels, fell to $9 per kilogram in April from $16 in the same month of last year.
Another large solar firm, OCI, which produces polysilicon, saw losses for two straight quarters. The firm is predicted to continue to post losses in the second quarter of this year, according to local brokerage houses.
Hanwha Chemical, which produces polysilicon and owns Hanwha Q Cells, which produces solar cells and modules, barely turned a profit in the first quarter this year after losing money for years, despite a massive injection of funds from the group to grow its solar business.
South Korean solar firms say high electric charges here make their products less cost competitive.
“Electric charges account for 30 to 40 percent of production costs to make solar products. While Chinese firms are enjoying government subsidies and lower electric charges, Korean counterparts are not,” said a spokesperson at the Korea Photovoltaic Industry Association.
In March, Kim Chang-beom, vice chairman of Hanwha Chemical Corporation, which owns Hanwha Q Cells, told reporters following the shareholders meeting that the firm would not add new facilities for polysilicon in South Korea. “Even if we have to add, we will do it overseas because of expensive electric charges in Korea.”
Lee Woo-hyun, a vice chairman of OCI, said it is challenging to afford electric charges that cost up to 300 billion won per year, commenting, “We are weighing a gradual shutdown of local plants and moving to Malaysia.”Speech