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Growing Competition in Solar Energy Sector and Korea

Wednesday, July 13th, 2011
big solar panel

Not long after Google announced that it had invested US$168 million to develop the world’s largest solar energy power plant in California’s Mojave Desert, General Electric (GE) announced its plans to build an advanced technology, thin-film solar panel factory in the United States, which is anticipated to be larger than any other existing solar panel plant in the country. As international corporations spur investments into solar energy, the worldwide solar energy market is showing signs of fierce competition.

Based on reports by the Export-Import Bank of Korea (Korea Eximbank), a stiff competition among companies in the solar energy industry is expected in 2011, as the demand capacity of involved companies is exceeding supply. Until recently, supply facilitated by the result of policy aid made it possible for companies to manage stable growth. However, the problems of supplyoverabundance are rising, since Chinese companies are aggressively building additional plants. Korea Eximbank also estimated that small and mid-sized businesses that lack profitability in the solar energy industry will lose their market share, but larger companies with high profitability will show a continued increase in share. Thus, the number of companies restructuring with low profitability and M&As by leading companies to expand their market power will rise. In this sense, international companies such as Google and GE that invest in solar energy power will facilitate the competition further.

Market growth estimates of the solar energy industry provided by Solarbuzz, a company providing solar market research and analysis, state that in 2009, the global revenue of the photovoltaic solar industry was US$38.5 billion, which is an estimate that includes the sale of solar modules, related equipment, and the installation of solar systems. In 2014, however, Solarbuzz forecasts the photovoltaic solar industry will grow from US$46.3 billion to US$96.8 billion. Photovoltaic installations are also expected to show an increase to 15.4 37 GW in 2014 from 8.4 13.1 GW in 2010, which is five times larger than the size of the 2009 market’s 7.3GW.

Google’s investment in the new solar energy power plant in California is in cooperation with BrightSource Energy. Google’s official blog states that Brightsource’s Ivanpah Solar Electric Generating System (ISEGS) will produce 392 gross MW of solar energy, which is the same as “taking more than 90,000 cars off the road over the lifetime of the plant, which is projected to be more than 25 years.” Google has also invested in solar energy in Germany, cooperating with Capital Stage from Hamburg, Germany, which is Google’s first investment in renewable energies in Europe. The two companies will jointly operate the solar power plant, which is one of the largest German solar farms being connected to the grid in 2010, according to a statement by Capital Stage. 49 perecent of the acquired 18.7 MW solar power plant in Brandenburg will be sold to Google.

GE also plans to manufacture solar panels at a new factory in the U.S. As announced by GE, the company is expecting to construct a “record-setting” factory that will be larger than any other in the U.S. GE claims the factory construction will stress the expected $600 million plus investment made in solar technology and commercialization. The company also stressed that the factory will be “complemented by the recently announced acquisition of power conversion company Converteam.” The panels produced yearly by the factory are expected to power 80,000 homes annually. Major enterprises in Korea are also joining the competition in the solar energy market, especially the polysilicon market. Samsung, Hanwha, Hyundai Heavy Industries and Woongjin are currently building or operating plants to produce polysilicon, while LG Chemical stated that the company is considering building a plant if the board of directors approves the plan. Hanwha also invested US$920 million in manufacturing a polysilicon plant with a production capacity of 10,000 metric tons a year. Korea’s OCI, the second largest supplier of polysilicon in the world, has invested US$1.7 billion dollars to build their fifth polysilicon production plant that will be able to produce 24,000 metric tons a year.

OCI plans to be the world’s number one polysilicon supplier by 2012, beating out Hemlock Semiconductor Group of the U.S. With soaring oil prices and a negative perception of nuclear energy production, the solar energy market is expected to expand rapidly. Reports estimate that the grid parity of solar energy production will arrive two to three years before 2015, which is far earlier than expected. It seems clear that in the near future, with the mass production of solar power systems and subsequent price decreases, solar energy power will mean more than just an energy source that produces “expensive” electricity.

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