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Material production stoppage augurs ill for Moon's energy policy
Korea's solar power materials industry is falling apart. OCI, the nation's largest and the world's second-largest maker of polysilicon, a key material for solar cells, said Tuesday that it would stop domestic production. Another major polysilicon maker, Hanwha Solution, is also reportedly considering withdrawing from the business.
These local makers are at a loss about what to do in the face of relentless attacks from low-priced Chinese competitors. Now is the time for the Moon Jae-in administration to face not just the problems of the solar power sector but also the government's overall energy policy.
Signs that the domestic solar power industry's ecosystem was deteriorating could be sensed a while ago. The sector's value chain is composed of polysilicon, ingots, wafers, cells, and modules. Woongjin Energy, Korea's sole wafer maker, filed for court receivership last May. Because the nation will likely increase its reliance on Chinese suppliers for the primary materials of polysilicon and wafers, the entire solar power industry, including cells and modules, is likely to weaken.
The government has focused its renewable energy policy on solar power. Unexpectedly, however, Chinese makers are armed with cheap electricity provided by their government and are reaping the benefits of Korea's energy policy by crowding out their Korean competitors even in the latter's home market. Power bills account for 40 percent of the cost of producing polysilicon, and the electricity rates in China are only one-seventh of Korea's. These low prices became possible because the Chinese government secured sufficient generation capacity by building nuclear power plants on a massive scale.
In contrast, Korea Electric Power Corp. is under pressure to raise power rates amid accumulated losses resulting from the government's policy to phase out nuclear power plants. To succeed in the Fourth Industrial Revolution led by heavy power consumers, such as electric and hydrogen cars, securing a stable power supply is a prerequisite. The second-best alternative is, therefore, to combine renewable energy with next-generation nuclear plants.
All this explains why the government, while watching the global trends of technological innovation, ought to readjust its energy demand and supply portfolio.
