Moon Jae-in, the current President of South Korea, has promised that renewables will account for 20% of the country’s energy mix by 2030. A key plank of the strategy for reaching this target is fostering the development of local solar enterprises and PV power stations. However, a recent report from the Korea International Trade Association (KITA) states that South Korea’s solar market still depends heavily on imports from China.
According to KITA, PV modules shipped to South Korea from China were 100 times greater in unit volume compared with PV modules shipped to China from South Korea in 2020. A value-based comparison finds that modules shipped to South Korea from China during the period from January to November 2020 were worth US$317.31 million. KITA’s data also show that the total value of module imports from China in 2019 came to US$367.53 million, translating to a huge increase of 67% from US$219.52 million in 2018. In contrast, the total value of modules that South Korea exported to China during the first 11 months of 2020 reached merely US$3.4 million.
A weight-based comparison finds that module imports from China during the January-November period of 2020 totaled 80.17 million kilograms, whereas modules exported to China in the same period amounted to 1.58 million kilograms. Hence, Korean exports were only 1/50 of Chinese imports.
What factors are behind such extreme imbalance in the trading of PV products between the two countries? Obviously, cost is a major factor. South Korea has solar companies that specialize in high-efficiency PV products. Hanwha Q Cells is a well-known example. However, Chinese manufacturers of PV products continue to have a considerable advantage in production cost. Furthermore, the prices of the renewable energy certificates issued by the South Korean government has fallen. This development has the effect of reducing the subsidy for adopting renewables and encouraging domestic buyers to seek more affordable products. Media outlets in South Korea have also pointed out that their government, unlike the counterparts in the US and India, has yet to erect trade barriers against cheaper PV imports from China and other countries.
In the case of India, the government there decided last year to extend its safeguard duty on PV imports from China, Vietnam, and Thailand by one year. This duty was first established at a rate of 14.9% and came into effect on July 30, 2020. The rate will remain constant to January 29, 2021. Afterward, it will step down to 14.5% and stay at this level to July 29, 2021.
The Indian government has also raised the basic customs duty for imported cells and modules. The basic rate for modules was increased to 25% starting last August and is set to jump significantly to 40% this year. As for cells, their basic rate rose to 15% last August and is set to elevate further to 20-30% this year.
The measures initiated by the Indian government are intended to protect the domestic manufacturing of PV products and build up the domestic solar industry so that it can compete in the international market. Data from industry research organizations reveal that around 80% of India’s domestic demand for PV modules between 2015 and 2019 was met by foreign imports, and that the country imported around US$12.4 billion worth of cells and modules in the same period.
In South Korea, local solar enterprises are now calling for government intervention in order to maintain their competitiveness and prevent the dumping of foreign imports. Due to strong sales of imports from China, the market share of domestically produced cells and modules in South Korea has been reduced to around 20%. Domestic solar enterprises have complained that the labor cost and corporate tax are too high for them to improve competitiveness and grow market share.
(Photo credit: Pixabay.)