Asian solar markets: South Korea

General introduction to South Korea’s solar industry

The Republic of Korea (ROK), or commonly referred to as SouthKorea, is one of the world’s largest energy consumers. Yet, due to its geographical location at the Southern half of the Korean peninsula being separated from continental Asia by its nemesis North Korea as well as scarce domestic reserves, South Korea is also one of the most energy-import-dependent country in the world. As stable energy supply is the bottleneck of industrial growth, energy security and decrease of its dependence on energy imports is a top priority in Seoul. In this regard,South Korea is heavily promoting renewable energy to reduce the risk of supply and power shortages.

The solar sector inSouth Korea took off a few years ago when total PV installations grew from only 1MW of installed capacity in 2005 and 35MW in 2006 to over 350MW in 2008, catapulting the country to place 4 in the list of installed PV capacity according to statistics by the European Photovoltaic Industry Association (EPIA). In 2010, the cumulative PV capacity reached 655 MW. This surge was especially due to a very generous feed-in-tariff scheme modelled on the example of the industry’s long-time forerunnerGermany(for 2008, the cap was set at 500MW). In short: South Korea’s solar industry experienced an impressive transformation. The slight difference is, that – unlikeGermany’s model – the feed-in-tariff costs are covered by the ROK government while in Germany the costs are distributed among all electricity consumers. This has in recent years increasingly strained Seoul’s financial budget. Spoken in solar terms,Germanywas an important source of inspiration – and of technology: before the industry took off in the East Asian country, Germany was ROK’s long-time and – due to non-existent production capacities –nearly exclusive (!) source of solar technology and products. Now,South Koreahas within few years built up its own production capacities and know-how to further advance the industry.

Major Korean solar companies

Large Chaebols (a Korean form of large multi-industry business conglomerates) like LG, Samsung and Hyundai are widely engaged in solar, mainly in the production crystalline silicon modules. In order to increase market share in this highly competitive industry, particular attention is paid to the price factor. As such, Korean solar manufacturers are not only trying to reduce cost locally but also internationally by acquiring manufacturers from or installing workshops in countries with low labour costs, mainlyChina,Vietnamand increasinglyIndia. Hanwha for example, a major chaebol, recently acquired a nearly 50% share of the Chinese manufacturer Solarfun, making the Korean company one of the largest PV module manufacturers in the world and they are aggressively pushing forward in stiff competition against Chinese and Taiwanese manufacturers. Major South Korean solar companies are:

1) OCI Chemical

2) LG Chemical

3) Samsung Fine Chemicals

4) Hankook

5) KCC

6) Hyundai Heavy Industries

7) Hanwha Chemicals


Future outlook

The ROK government, which without doubt is the green technology-friendliest in the world, has very ambitious plans to make South Korea one of the world’s leading green technology countries and as such heavily supports the local solar industry to achieve the objective of 10% world market share of South Korean companies by 2020. In 2010, South Korean companies already attained a global market share of 10% in the crystalline silicon sector with projections up to 29% market share within the next 5 to 10 years. In March 2010, the South Korean National Assembly passed the introduction of a Renewable Portfolio Standard (RPS), effective from 2012. The RPS requires 4 percent renewable share in energy generation by 2015 and 10 percent by 2022. Solar companies will be increasing their investments and expand their business activities in Korea throughout the coming years in order to meet the expected mounting demand in solar PV technologies in the East Asian country.

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