Government's haste will fatten only overseas firms' pockets
Foreign businesses are eroding Korea's renewable energy market, which is growing rapidly thanks to the government's policy to phase out nuclear power plants.
According to a report submitted by the Korea Energy Agency to Rep. Yoon Han-hong of the opposition Liberty Korea Party, the use rate of domestic wind power equipment, which stood at 100 percent in 2014, plunged to 30 percent in September. Vestas, a Danish maker of wind turbines, took 45 percent of the domestic market share, with German and Spanish suppliers also increasing their shares.
The situation was not much different for photovoltaic lighting systems. The market share of locally made solar panels dropped from 83 percent to 67 percent over the period. The fall was due mainly to Korean makers' weakened price competitiveness because of the influx of cheap Chinese products, whose adoption rate doubled to 33 percent.
The government announced an ambitious plan last year, titled 2030 Energy Shift Policy, which called for expanding the portion of renewable energy from 7 percent to 20 percent by 2030. We can't help but worry, however, the plan will end up only fattening the pockets of foreign companies, as the nation has yet to foster a proper industrial ecosystem. To increase the generation capacity of wind and solar power, Korea should speed up investment, but the poor industrial foundation will likely deepen dependency on foreign suppliers.
For instance, domestic makers complain they cannot even test wind power equipment because of complaints about noise and environmental destruction. In the case of solar energy, the nation does not even have regulations or specialized firms regarding the disposal of solar panels damaged by typhoons and discarded.
Officials estimate the total investment needed to attain the 3020 project to be as much as 110 trillion won ($96.3 billion). Given the weak domestic renewable energy industry and the market erosion by foreign competitors, the risk of draining "national wealth" is too high.
The Moon Jae-in administration should readjust the pace of implementing its policy, taking such a reality into account. The government's haste may likely make Korean businesses sandwiched between tech-savvy European companies and price-competitive Chinese firms.
Foreign businesses are eroding Korea's renewable energy market, which is growing rapidly thanks to the government's policy to phase out nuclear power plants.
According to a report submitted by the Korea Energy Agency to Rep. Yoon Han-hong of the opposition Liberty Korea Party, the use rate of domestic wind power equipment, which stood at 100 percent in 2014, plunged to 30 percent in September. Vestas, a Danish maker of wind turbines, took 45 percent of the domestic market share, with German and Spanish suppliers also increasing their shares.
The situation was not much different for photovoltaic lighting systems. The market share of locally made solar panels dropped from 83 percent to 67 percent over the period. The fall was due mainly to Korean makers' weakened price competitiveness because of the influx of cheap Chinese products, whose adoption rate doubled to 33 percent.
The government announced an ambitious plan last year, titled 2030 Energy Shift Policy, which called for expanding the portion of renewable energy from 7 percent to 20 percent by 2030. We can't help but worry, however, the plan will end up only fattening the pockets of foreign companies, as the nation has yet to foster a proper industrial ecosystem. To increase the generation capacity of wind and solar power, Korea should speed up investment, but the poor industrial foundation will likely deepen dependency on foreign suppliers.
For instance, domestic makers complain they cannot even test wind power equipment because of complaints about noise and environmental destruction. In the case of solar energy, the nation does not even have regulations or specialized firms regarding the disposal of solar panels damaged by typhoons and discarded.
Officials estimate the total investment needed to attain the 3020 project to be as much as 110 trillion won ($96.3 billion). Given the weak domestic renewable energy industry and the market erosion by foreign competitors, the risk of draining "national wealth" is too high.
The Moon Jae-in administration should readjust the pace of implementing its policy, taking such a reality into account. The government's haste may likely make Korean businesses sandwiched between tech-savvy European companies and price-competitive Chinese firms.
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