Domestic Industry Trends on Renewable Energy
Bloomberg said that Korea’s investment in PV (Photovoltaics), onshore and offshore wind energy in 2022 is expected to be approximately USD 6 billion, similar to the 2021 level. It indicates that investors showed less attention to these energy sources during the last 2 years than before, given the previous estimated number by Bloomberg in 2020 was USD 7.7 billion. In 2022 the investment in PV was USD 4.7 billion, taking up 80% of the total amount, and it was followed by offshore wind energy (USD 1 billion) and onshore wind energy (USD 300 million). Korea’s PV capacity from newly installed panels in 2022 is expected to be 3.8GW, a slight decrease from the 2021 level, 3.9GW, according to Bloomberg, which is attributed to high commodity prices, inflation, and difficulties in securing lands to install panels. On the other hand, capacity of newly established onshore wind turbines in 2022 is estimated to 185MW up from 67MW in 2021. In addition, two new offshore wind farms, where USD 1 billion worth of investment was made in 2022, will show higher capacity at 199MW, that outweighs the cumulative capacity of existing wind farms, 125MW.1)
PV
Hanwha Solutions, one of the biggest solar panel manufacturers, boasted of 10GW of cell and 12.4GW of module capacity as of the end of 2022. Hanwha Q CELLS has operated pilot manufacturing lines for production of highly efficient TOPCon cells since November 2021. It will soon commercialize them and plans to expand its presence in the US market with its TOPCon cells. Hanwha Q CELLS also remains committed to R&D in tandem solar cells, with an aim to mass-produce them from 2026. ShinSung E&G is in preparation for the launch of its TOPCon modules, and Hansol Technics is also working on developing ones. Chinese companies are joining the race too. OCI, once a leading PV panel manufacturer in Korea, had stopped producing polysilicon after being overtaken by Chinese rivals. However, it resumed manufacturing polysilicon in Malaysia, and its revenue has rebounded since 2021 due to the polysilicon shortage. OCI is now operating a stable business as it signed long-term contracts with multiple clients such as LONGi Sola in China and Hanwha Solutions.
Wind Energy
Meanwhile, wind turbine manufacturers are often said to be less competitive in the global market compared to their PV counterparts. One of the representative wind tower manufacturing companies is CS WIND. It partners with global companies in the wind power industry including Vestas, GE and Siemens Gamesa, while operating factories in America, China, Vietnam, Malaysia, Taiwan, Turkey, and Portugal.sup>4)It plans to expand its US factories twofold and work together with Vestas to construct new facilities in Korea. The project of building new factories is now going through the Korean government’s approval process, and the Korea market is being considered a future gateway for CS WIND to not just Korea’s but other markets such as Japan, Taiwan, Vietnam, and Australia.5)Doosan Enerbility provides 5.5MW turbines to the offshore wind power industry, a rising market across the world. In its pipeline, there are 8MW turbines which will be put on the market in 2023. UNISON is on track to commercialize its 10MW wind turbines in 2024. Korea stands out with its technologies and potentials that it is demonstrating in the floating offshore wind turbines. Along with the US and the UK, Korea is praised as one of the three biggest floating offshore wind turbine manufacturers.
Domestic Policy Trends on New and Renewable Energy
When we chronicle the trend of Korea polices on new and renewable energy, the first dates back to September 2022 when competitive bidding for the wind power industry was adopted. Under the bidding process, the government compares project prices that bidders suggested and selects one with the lowest proposed price to strike deal with it. It had been only used in the solar power industry for a while since 2017. However, as the growing number of private entities took part in the wind power industry, which had mainly led by state-backed companies, the government deemed that the wind power market was well equipped for competition and introduced the bidding process, which has been widely used in other countries.
The second is ‘Policy Improvement Measures for Renewable Energy Based on Changes in the Energy Industry’ released in November 2022. Here, the government announced its plan to change the solar/wind ratio in the energy mix from 87:13 in 2021 to 60:40 in 2030. This decision was reflected in ‘Framework Act on Carbon Neutrality and Green Growth (Apr 2023)’. New solar farms will be constructed in unused lands such as industrial complexes, factory sites, drainage canals where acceptance rates of local residents are higher than forests and farmlands. In addition, the government will draw up a guideline to address issues arising from a patchwork of different separation distances of each municipality. It will also make efforts in making Korea the first nation to commercialize next-generation technologies like tandem solar cells. Growth in wind energy generation accelerates development of an array of technologies including large turbines and critical components and core technologies of wind turbine installation vessels.7)
The third is the 10th Basic Plan of Electricity Supply and Demand. In the 10th plan, previously suggested ideas such as active use of nuclear power, a reasonable supply of new and renewable energy, and incentives to carbon phase-down took shape. In the energy portfolio in 2036, therefore, the share of nuclear and new and renewable energy is likely to grow over 30% while that of coal-fired energy will decline to below 15%. The plan suggested that PV rated capacity will reach 65.7GW by 2036 while wind farm capacity will amount to 34GW. Compared to 2021 level, 47GW PV panels and 32GW wind turbines will be newly installed.
🔻Table: The Capacity of New and Renewable Energy in 2036 of the 10th Basic Plan of Electricity Supply and Demand
* Data: the 10th Basic Plan of Electricity Supply and Demand, *Statistics of Electric Power in KOREA (no. 91), **Differences between 2021 and 2036
The last is a downgrade in the mandatory RPS ratio. In the recently released policy, the pace of new and renewable energy penetration was slowed down from the previous RPS figures, 14.5% in 2023 and 25% from 2026 to 13% in 2023 and 25% from 2030, which are drawing concerns from the new and renewable energy industry.
🔻Table: Mandatory Renewable Portfolio Standard (RPS) Ratio
* Data: Enforcement Decree of The Act on the Promotion of the Development, Use and Diffusion of New and Renewable Energy [attached Table 3], revised on Jan 4, 2022, revised on Apr 11, 2023
On balance, the current government puts significance on raising wind energy (offshore wind energy in particular) penetration. It is now actively engaged in exporting wind energy while embracing foreign investors in Korea’s wind farms. Even through the 10th Basic Plan suggests that a great amount of new solar and wind power facilities will be added, the RPS would play a less vital role in increasing the share of renewables in the domestic energy mix than before.
Hyunyoung Oh( (hyunoh@keei.re.kr)) Associate Research Fellow, Korea Energy Economics Institute
1) BNEF, 1H 2023 South Korea Renewable Energy Investment Trends, 2023.3.29. 2) Q4 2022 Earnings Presentation, Hanwha Solutions 3) Tectonic shift in PV cell trends from p-type to n-type...a fierce competition in TOPCon cells, Industry News, Mar 20, 2023 4) CS WIND breaks ground on an expansion to a turbine tower manufacturing plant in Colorado...will boost annual production to 1 million, Globaleconomic, Apr 6, 2023 5) US offshore wind power market will triple on the back of IRA... production in Portugal will double, Money Today, Apr 6, 2023 6) Technical trends on offshore energy, KISTEP Brief 53 7) Other major issues are reflected in documents as amendments to other policy materials.
*This article is extracted from Invest KOREA information center, 2023.