Hidden Costs of Solar Power Generation
The South Korean government is planning to impose a levy on solar panel manufacturers and importers with regard to recycling of solar panels. Those companies are opposed to the plan, saying that the levy is equivalent to up to 40% of the prices of their products. Under the circumstances, the Ministry of Environment decided to consider postponing the implementation of the levy by two years.
The ministry recently released for public comments its proposal to amend the enforcement decree to the Act on the Resource Circulation of Electrical and Electronic Equipment and Vehicles. The amendment is intended to impose the levy on such companies by designating solar panels as an extended producer responsibility (EPR) item. At present, there are 27 EPR items, including refrigerators, washing machines and computers. The ministry is planning to increase the number by 23.
Those companies are claiming that their additional cost burden is excessive. According to the Korea Photovoltaic Industry Association, recycling of one kilogram of solar panel will lead to an additional cost of 2,129 won, which is divided into 1,696 won in levy and 433 won in collection cost, and this means an additional cost of no less than 14 billion won for a facility capacity of 100 MW.
“Basically, waste recycling costs should be borne by producers,” the ministry explained, adding, “A cooperative of producers will be required to bear the cost to keep the recycling ratio below the required level and the levy will be imposed only when the ratio is not reached.” It also said that the implementation may be postponed from 2021 to 2023.
Still, companies in the industry are saying that solar panels should not be classified as an EPR item. “With our current profit ratio standing at 1% to 3%, a levy amounting to 40% of product prices will compel us to shut down our business,” one of them complained, saying that solar panels are power generation equipment and should not be included in the same category as electrical and electronic products.
According to some experts, solar panel disposal costs may become comparable to nuclear power plant decommissioning costs once the levy is implemented. “Based on the ministry’s plan, solar panel disposal will cost 5.3 won per kilowatt-hour and this is close to the nuclear power plant decommissioning cost, which is five to eight won now,” said Korea Advanced Institute of Science and Technology (KAIST) professor Jung Yong-hoon, adding, “This cost burden will be shifted to electricity consumers in the end.” According to the professor, recycling of 1 kW of solar panel costs 140,000 won and disposal of 1 kWh of solar panel costs 5.3 won assuming that one-kilowatt photovoltaic equipment produces 26,280 kWh of power for 20 years.