The solar power industry is facing an unprecedented challenge with the prices of polysilicon and photovoltaic modules dropping. South Korean solar power companies are planning to prepare for intense competition by enhancing management efficiency and investing in R&D.
Market research firm PVinsights reported on April 8 that the price of polysilicon dropped from US$17.8 to US$8.5 per kilogram between early last year and this month. South Korean polysilicon producers cannot create profits when the price is below US$13 per kilogram. They are regarding overseas relocation of manufacturing facilities as the only breakthrough.
“We are not going to expand our facilities and, even if we did, it would occur outside South Korea, where the price of electricity is too high,” Hanwha Chemical vice chairman Kim Chang-beom said last month. “The electricity bill, 300 billion won a year, is too burdensome and we may have to relocate to Malaysia in stages,” said vice chairman Lee Woo-hyun of OCI, which is the world’s second-largest polysilicon producer.
The photovoltaic module market, where Hanwha Q CELLS is the biggest player, is in the same situation. The global photovoltaic module price dropped from US$0.31 to slightly over US$0.21 per watt during the same period. The sales of the solar power business unit of Hanwha Group fell from 3,432.4 billion won to 3,376.6 billion won last year, when its operating profit dropped from 22.2 billion won to negative 20.4 billion won and its current net loss soared from 43.7 billion won to 336.5 billion won.
The current situation has to do with China, where new solar power plants can enjoy corporate tax exemption and subsidies for three years and existing solar power plants can benefit from tax refunds. In South Korea, on the contrary, a tax deduction of only 1 percent is applied to large companies engaged in solar power generation and the price of electricity applied to such companies is about twice the price in China. Besides, the prices of power generation fuels are on the decrease these days, based on an increase in shale gas supply from the United States, and this is another challenge for companies engaged in solar power generation, which is lower in efficiency than fossil fuel-based power generation.
Hanwha Q CELLS is planning to tide over the crisis by further refining its technology. The company recently filed patent lawsuits in the United States, Australia and Germany, claiming that its technique for power generation efficiency enhancement by means of a protective film on the back surface of a photovoltaic cell was infringed upon by Chinese companies, and the United States Court of International Trade initiated its investigation early this month. Also, Hanwha Q CELLS is going to put its direct wafer technique to commercial use soon so that its cost competitiveness can be enhanced by means of the technique for turning polysilicon directly into wafers without ingot production.
Likewise, OCI is going to keep refining its high-purity polysilicon production and increase its annual semiconductor polysilicon production capacity to 5,000 tons by 2022.