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Korea’s photovoltaic (PV) industry has flourished this year.
Korea’s photovoltaic (PV) industry has flourished this year.

 

The photovoltaic (PV) industry has flourished this year. Experts predict that this year’s solar power installations will surpass 70 gigawatts (GW), more than 68 GW of the estimated installation at the beginning of the year. This is largely due to growing demands in China and the U.S., the two biggest players in the world. However, there have been some mixed results in the domestic PV industry. Basic materials manufacturing companies failed to benefit from the boom because of the decrease in polysilicon prices, while solar cells and modules production and EPC businesses improved performance.

According to the Export-Import Bank of Korea (Korea Eximbank), the global solar power installations this year are expected to exceed 70 GW, up 2.9 percent from the prediction earlier this year, as solar energy demands in China and the U.S. continue to improve. China was expected to install around 18 GW of new solar power capacity at first, but it installed 22 GW in the first quarter alone. Moreover, the U.S. already installed over 8GW of solar PV, which was the estimate at the start of the year. In particular, the U.S. is the largest residential solar PV market in the world and it installed 4.3 GW this year alone, up 30 percent over the last year.

Although the solar power market has picked up, domestic firms have shown mixed results. The nation’s polysilicon manufacturers OCI and Hanwha Chemical made a poor showing in the solar PV business. As the price of polysilicon, which is traded in the one-time spot market, has remained low over the year, the returns have been low as well. After the price of polysilicon hit the bottom at the beginning of the year, it increased to US$17.08 (20,419 won) per kilogram in May. Since then, the price rise fizzled out and it recorded US$14.93 (17,849 won) as of December 14, which was below the break-even point of US$15 (17,933 won). Accordingly, OCI, which posted 73.8 billion won (US$61.73 million) in operating profit in the first quarter, barely ran a surplus of 2.3 billion won (US$1.92 million) in the third quarter. Hanwha Chemical is reported to continuously show a loss in the polysilicon business sector.

On the other hand, companies related to solar cells and modules and EPC attained satisfactory results. Hanwha Q Cells succeeded in getting out of the red after the merger with Hanwha SolarOne in the second quarter last year, and has been in the black for six quarters in a row. The company’s cumulative operating profits for the first three quarters this year stood at US$213.6 million (251.3 billion won), showing a whopping 790 percent increase from the same period last year. Starting with the deal to supply 1.5 GW of solar modules to NextEra Energy Resources, the second largest energy firm in the U.S., Hanwha Q Cells has expanded its solar power business in North America. Shinsung Solar Energy, a mid-sized solar energy firm, has maintained a surplus after coming out of the red in the fourth quarter of 2014.

The striking feature this year is that solar power companies have actively carried out their business reshuffle. SKC Solmics sold out its ingot and wafer production equipment to Woongjin Energy and withdrew from the solar energy business. Shinsung Solar Energy was selected as a beneficiary of a new law called One-Shot Act, which is designed to help companies conduct business restructuring on their own through a wide ranging government support, by the Ministry of Trade, Industry and Energy, and merged with Shinsung FA and Shinsung ENG.

There is unfavorable factors in the end. The Chinese Ministry of Commerce has launched anti-dumping re-investigation on South Korean polysilicon producers such as OCI and Hanwha Chemical. U.S. President-elect Donald Trump, who takes office on January 19 next year, is expected to reduce subsidies for renewable energy, expand the use of fossil fuel and not to tackle climate change, so the PV market is highly likely to be adversely affected.

 

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