Solar Power Biz
LG is speeding up its new businesses, including solar energy after automotive application components, from the beginning of the year. The company is planning to take the leadership in the market with aggressive investment and secure a future growth engine early.
LG Electronics held a ceremony for a memorandum of understanding (MOU) to invest in new solar module production facilities with North Gyeongsang provincial government and Gumi city government at North Gyeongsang Provincial Office on Jan. 13. Under the agreement, the company will invest 527.2 billion won (US$437.87 million) in its Gumi plant and add six more production lines by 2018. Currently, the Gumi plant has eight solar cell production lines. Once the expansion is completed, the number of lines will be increased to 14. LG Electronics expects that the expansion plan will create a total of 870 new jobs in research and development, administrative and sales, and production.
With the latest plan, particularly, the current annual production capacity of 1 gigawatt will increase to about 1.8 gigawatts by 2018. By 2020, the company will bring up the figure to 3 gigawatts, which is equivalent to the electric power consumed by 1 million families in a year.
LG Electronics has chosen energy business as its next-generation growth engine in the future, and strengthened the manufacturing competitiveness by producing cells to modules in Korea.
Moreover, the company established “Energy Business Center” in Nov. 2014 and is improving its business ability by strengthening the synergy with the merger of its solar, energy storage system (ESS), LED lighting, and energy management system (EMS) business units. It is also strengthening close cooperative relations with its affiliates, such as LG Chem, which has the world’s No.1 competence in the medium and large battery sector, and LG CNS, which carried out smart grid projects.
LG Electronics’ expansion plan came from its confidence in growth of the solar power industry. According to market research firm IHS, global solar demand will grow 17 percent from 58GW last year to 68GW this year, and to 82GW by 2019.
Active supporting policies in countries across the world are also buttressing LG’s solar power business. The U.S. government has decided to extend the solar Investment Tax Credit (ITC) to 2022, while the Chinese government has announced 23 policies related to renewable energy for two years from 2013. France and India are also proceeding with renewable energy expansion policies, including solar energy.
LG Electronics’ latest movement goes along with the group’s new business development strategy. LG Group posted 2.7 trillion won (US$2.24 billion) in sales in the energy solution sector in 2014, and it aims to increase the figure to some 4 trillion won (US$3.32 billion) in 2017. LG Group Vice Chairman Koo Bon-joon, the younger brother of LG Chairman Koo Bon-Moo, directly handles LG Group's new business projects, and the group is seeking and supporting future growth projects, such as energy solutions and automotive application components. Meanwhile, LG Electronics is highly likely to accelerate the automotive application components business, which is considered its new business project, along with energy, further. Vice Chairman Koo participated in the CES 2016, which began last week in Las Vegas, the U.S., and met the heads of global automakers, including General Motors and Ford, to expand LG’s business areas.
Currently, the domestic solar module market is led by Hanwha. Hanwha Q CELLS, which was renamed as a new entity after the merger early last year, has established a parent subsidiary relationship from solar cells and modules to generation, becoming the leader in the global market. Hanwha Q CELLS is the world’s largest manufacturer of solar modules and solar cells with a production capacity of 5.5 GW and 5.2 GW as of the first quarter this year. There is still a huge gap between LG Electronics with a production capacity of 1GW.
An official from the industry said, “It is still impossible to consider LG Electronics as Hanwha Q CELLS’s competitor. However, there is a good chance that LG Electronics would become a fast follower as it has the world’s top-level solar module original technology and its leader is directly directing the business.”