Decision time for the Korean PV industry

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The rain has been steadily falling on the last day of the 9th International Green Energy Exposition (IGEE) in Daegu, South Korea. The three day event is said to have attracted over 300 exhibitors, but many say the numbers have steadily declined over the last two years, due to the downturn in the global solar market, while the booths have gotten bigger.

Although there are no concrete visitor numbers available yet, the second and third days saw an influx of people, including many students, attending the show. Overall, the exhibitors say that while the numbers are smaller than in previous years, worthwhile meetings have been held, and new customers found. Consequently the event is still thought to be relevant, at least for the time being.

One top level manager at a leading Germany company commented however, that the next two years will be crucial for determining the relevance of the Korean solar industry. The decision-making process in the country, he said, takes too long and if it is not careful, by the time the domestic manufacturers decide to ramp up their relatively small cell and module capacities, China will already be way ahead of the game, with unbeatable capacities.

Elections signaling change?

Elections are looming in Korea and, depending on the outcome, there is a slight chance that more support could be garnered for solar, if the United New Democratic Party is elected, since it places more emphasis on the development of renewable energies, as opposed to the current political leaders, which favor nuclear. However, the issue is said to be very sensitive and, as such, it is difficult to gauge just how the vote will go.

According to HyungJin Kim, director of Korea’s New and Renewable Energy Center (NREC), the current government is "making all-out efforts to support NRE (new renewable energy) technology development and deployment, while strengthening its policy scheme that covers budget, law and regulation, institutions etc." For example, the government has a goal of supplying 11 percent of the country’s total primary energy supply (TPES) with new and renewable energy by 2030. In reality, however, there is not enough support to foster a healthy solar industry.

Looking at Korea’s solar industry, the trend seems to be for more focus to be placed on developing technology, with capacity expansions seen as less important. James Ji from the Korean Photovoltaic Industry Association (KOPIA) adds that there is a current shift in strategies by companies to focus their sales efforts from Europe to Asia, and other emerging markets. This view was backed up by several companies that pv magazine spoke to.

Korean project plans

As already mentioned on the first day of the IGEE, Korea has a very small domestic installation market, due to the new Renewable Energy Portfolio Standard (RPS) brought into play in 2011. Under it, the government has stipulated that the country’s utility companies, of which there are said to be 13, have to provide a certain percentage of their electricity from renewables – around two percent – each year. Currently for solar, 220 megawatts (MW) must be installed annually until 2014. In 2011, KOPIA’s Ji tells pv magazine that initial figures suggest that just 135 MW were installed. Cumulative figures were not immediately available.

Due to the more attractive incentives, the rooftop market is a bigger focus for photovoltaic project developers. Min-Chul Kim, assistant manager of the photovoltaic system team at LS IS Co. Ltd says that for a rooftop project, the electricity can be sold to the government for 150 Korean Won (around US$0.13) per Watt, compared to a ground-mounted project, which receives just 100 KRW.

LS is developing projects in three main areas in Korea: on the rooftops; for the government; and under the RPS program. In terms of rooftop projects, around 24 MW are currently under construction. For the government, the company is installing ground-mounted projects between five and 100 kilowatts (kW) in size, worth roughly 40 MW. Under both categories, the projects are scheduled for completion in 2012. Meanwhile, under the RPS, it is aiming to work on around 10 MW worth of projects this year.

Investment for LS’ projects comes from the Korean government: it provides around 4,600,000 KRW (US$4,059.59) per kW, says Kim. While the company manufacturers its own photovoltaic modules (capacity: 100 MW per year) and inverters (capacity: 1.5 MW per year), it does not always use its own equipment for projects, but rather is sometimes required to use parts from other domestic suppliers.

STX Solar Co. Ltd is another company focused on project development in Korea. It is planning to develop two large-scale projects in the country in 2013, in addition to a series of smaller projects. The company also manufacturers cells and modules, and is expected to ramp up capacity in 2014 at its new factory in Gumi.

SunPower also installs photovoltaic projects in Korea, although on a much smaller scale, i.e. around 10 MW a year. It is mainly focused on the rooftop market. A spokesperson for the company said that for a smaller system of around three kW, installation costs range between $4 to 4.25 per Watt, while costs for ground-mounted systems are between $2.6 to 3.2 per Watt. Investment is mainly said to come from the banks in Korea.

Meanwhile, a spokesperson for Delta says that system costs are around $10,000 for a three kW system, and SMA believes that they are around four million KRW (around $3,530) per kW.

In terms of photovoltaic module costs in Korea, an exhibitor told pv magazine that they have dropped from approximately $4 per Watt four years ago to $1 a Watt today.

Interestingly, Korean company, Daesung Energy Co. Ltd is developing concentrated solar power (CSP) and off-grid hybrid photovoltaic projects. While its main markets are in Africa and Asia – Mongolia, Kazakhstan and Uzbekistan – it has already installed a 200 kW CSP plant near Daegu, and is planning a one MW plant in the country in the near future.

Watch out for the May edition of pv magazine, which will review the IGEE in more detail, and provide an overview of the Koream market.