Tuesday, January 21, 2020
Rising Electricity Bills Compel Korean Solar Panel Producers to Leave Korea
Manufacturers' Exodus from Korea
Rising Electricity Bills Compel Korean Solar Panel Producers to Leave Korea
  • By Jung Min-hee
  • March 27, 2019, 10:54
Share articles

Leading Korean solar panel manufacturers including OCI and Hanwha Chemical are considering relocating production plants overseas due to an increase in electricity charges and operational costs.

Despite growing demand for polysilicon, leading Korean solar panel manufacturers including OCI and Hanwha Chemical have announced their intention to reduce or give up domestic production due to an increase in electricity charges. Industry analysts say that these companies are weighed down by a gradual hike in electricity bills that amount to hundreds of billions of won a year. They also face rising costs due to a lack of subsidies and the imposition of a carbon tax.

"It is difficult to pay up to 300 billion won in electricity charges a year," OCI vice chairman Lee Ki-woo said in a meeting with reporters after the regular general shareholders meeting on March 26. "We need to consider closing our factories in Korea and moving them to Malaysia." Lee clearly stated that it was difficult to do business in Korea due to cost problems. OCI had a sluggish year in 2018 due to a sudden change in China’s photovoltaic policy and a gas leakage accident at its Gunsan plant in Korea.

Lee noted the business upturn at OCI’s overseas plants at the regular general shareholders meeting, as he did at the company's IR show at the beginning of this year. He explained that the company would gradually expand its overseas plants, including the capacity expansion of 10,000 tons in OCIMSB, a polysilicon plant in Malaysia that the company acquired in 2017 to overcome the growing domestic operation costs.

OCI’s annual electricity bill is about 300 billion won a year. A 5 percent increase in electricity price would lower its profit by 15 billion won.

Kim Chang-bum, CEO of Hanwha Chemical, said in a general shareholders' meeting on March 26 that the company would choose overseas, not Korea, for the expansion of facilities for polysilicon, the basic material for solar cells. Kim predicted that the Korean photovoltaic (PV) market would steadily grow to 2 GW this year. He emphasized that he would continue to invest in protecting the Korean market out of concerns that the proportion of Chinese solar products in the Korean market will expand.

Hanwha Chemical's affiliate Hanwha Q CELLS ranks first in the global solar cell module market. If Hanwha Chemical or Hanwha Q CELLS does not invest in the photovoltaic business, Chinese products will surely replace Korean products in the Korean market. "There is no plan to expand polysilicon facilities in Korea where electric bills are high," Kim said.