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[Sustainable Future] Is Korea ready to embrace renewables?

The Moon administration wants to phase out fossil fuels and nuclear power

Oct 23,2019
JINCHEON, North Chungcheong - The solar cell factory run by Hanwha Q Cells in a remote part of Jincheon, North Chungcheong has a distinctive chemical smell and a low hum of activity.

The plant looks like a cross between an advanced automobile factory and a semiconductor facility. Row after row of solar cells pass through red and blue lasers before futuristic robotic arms pick up a stack of 16 and swiftly and systematically dips them in plasma.

Only a handful of humans are visible on the production floors. Some consult computer monitors propped up next to the thrumming production lines. There are both Koreans and foreigners.

“There are five German engineers working at our plant,” says Lee Byung-cheon, general manager of the Jincheon plant.

The plant produces 2.2 million solar cells a day and 12,000 panels a day. Each panel has 60 to 72 cells.

If you include the plant in nearby Eumseong, Hanwha Q Cells’ daily module production rises to 48,000.

According to Hanwha Q Cells, the Jincheon plant is the most advanced for production of cells among its four around the world. The other three are in Malaysia, China and the United States.

The most advanced module production is the plant in the U.S. state of Georgia that officially opened last month.

The Georgia plant is the largest solar module production plant in North America, with an annual capacity of 1.7 gigawatts.

Hanwha Q Cells said its plant in Jincheon, which covers an area of 190,000 square meters (2,045,143 square feet), is one of the largest solar cell factories in the world with an annual production capacity of 4.3 gigawatts. That’s equivalent to supplying electricity for 6 million people a year.

And despite continuous upgrades and expansions, general manager Lee says it’s not easy keeping up with demand.

“Participating in local [solar] projects won’t be easy, as we are barely meeting demand from overseas, especially from the U.S.,” Lee said. “The U.S. recently has been seeing a sharp resurgence in solar energy.”

In fact, according to energy research consultant Wood Mackenzie, as of the second quarter of this year, Hanwha Q Cells ranked top in the U.S. residential photovoltaic cell market with a 27.6 percent market share, squarely beating runner-up LG Electronics, which holds a 12.7 percent share in the U.S. market.

But Hanwha is thriving elsewhere - it has the largest market share in other advanced economies including Germany, Japan and Australia.

While China is the largest market for solar cells, most of its suppliers are Chinese companies subsidized by Beijing.

Hanwha Q Cells’ corporate clients include the third-largest electric utility in the United States, NextEra.

It expects more opportunities to come with major global companies, including Amazon and Google, announcing greater use of renewable energy. Amazon last month announced a plan to completely use renewable energy for its operations by 2040.

“The data centers of global IT companies like Amazon and Google consume large amounts of electricity,” general manager Lee said. Because of such growing demand, Hanwha Q Cells had to hire 500 additional employees at its Jincheon plant last year, and they might have to hire more.

Including the nearby plant in Eumseong, Hanwha Q Cells in North Chungcheong alone has 2,027 employees.



Shifts toward renewable energy

Some 3,500 energy-related government officials from roughly 30 countries as well as representatives of leading energy companies, academics and global institutions will be participating at the International Renewable Energy Conference held at Coex for the next three days, in collaboration with the Global Green Growth Institute.

This is the first time for Seoul to host the global renewable energy conference, which is celebrating its eighth year. Although the Moon Jae-in administration was not the first to come up with ambitious green goals, the Lee Myung-bak administration’s “green growth” agenda was downsized during the Park Geun-hye administration.



Myriad of far-reaching goals

Since taking office in May 2017, Moon announced his 3020, which has the following goals.

First, to raise renewable energy’s share of overall energy production to 20 percent by 2030 and 35 percent by 2040. Renewable energy use as of 2017 accounted for 8 percent of all energy produced in Korea.

Second, to phase out nuclear energy as well as reducing reliance on fossil fuels.

By 2030, the government expects energy generated from renewable sources to amount to 63.8 gigawatts. That’s a significant increase from the 15.1 gigawatts generated as of 2017. Solar energy will be contributing 63 percent of the renewable energy, followed by wind generators at 34 percent.

In the last two years, renewable energy facilities have been set up rapidly.

Solar power capacity increased 35 percent in 2018 compared to the previous year. It accounts for the largest portion of renewable energy at 37.2 percent.

The government plans to quadruple the production capacity of solar energy by 2030.

As the fastest growing renewable energy source, the unit price of solar power is dropping relatively faster than other renewable energy sources.

According to Woori Finance Research Institute, the unit price of solar energy in 2018 was 150 won ($0.13) per 1 kilowatt hour, compared to 325 won for wind power and 220 won for hydrogen power.

Wind power is another renewable energy source that has huge potential. Wind power generation capacity last year grew 15 percent.

The government plans to boost wind power capacity from 1.31 gigawatts to 17.7 gigawatts by 2030.

Hydrogen fuel cell production capacity will be raised from 251 megawatts as of 2017 to 15 gigawatts by 2040.



Attracting global competitors

The government’s ambitious goals are attracting foreign companies.

A Danish state-owned company specializing in offshore wind power plants officially announced its entry into the Korean market in August.

Matthias Bausenwein, head of Orsted Asia Pacific, said Korea is an appealing market in a visit to Seoul in August.

“We believe Korea has the potential of generating more than 30 gigawatts [in renewable energy],” said Bausenwein. “Korea is surrounded by sea on all three sides and has the best shipbuilding technology in the world.”

Shipbuilding and offshore wind farm technologies have a lot of similarities.

“The 3020 renewable energy goals pushed by the Korean government will play a significant role in offshore wind power,” Bausenwein added.

Orsted runs the world’s largest offshore power plant. It is in Britain and has 87 wind turbines generating 659 megawatts, which supplies power to over 600,000 households.

The company stressed the business partnerships it has forged with Korean companies. In June, Orsted signed contracts with Hyundai Engineering and Steel and Samkang M&T in delivering 55 jacket foundations, the structures that hold offshore wind turbines.

In July, LS Cable signed a contract with Orsted to supply undersea cables for Orsted’s offshore power plant project in Taiwan.

According to a report by Ernst & Young in May, Korea is the world’s 24th most attractive market for renewable energy. That represented a rise from last year’s 31st place - the sharpest jump among the 40 countries that were ranked. China ranked No. 1, followed by the United States. The report is updated every six months.

Ernst & Young gave high marks to the Korean government’s ambition to build a 4-gigawatt renewable energy “cluster” on reclaimed land that President Moon announced last October.

Moon visited the Saemangeum reclaimed land project in Gunsan, South Jeolla, where he announced plans for a renewable energy cluster that would be globally competitive.

The grand plan includes building a 3-gigawatt solar power plant on Saemanguem. Two gigawatts will be produced from floating solar panels.

Saemangeum is reclaimed land covering a total area of 291 square kilometers (112 square miles), with a 33.9-kilometer (21.1-mile) seawall, the longest in the world.

The government hopes to attract 100 renewable energies to the cluster over the next 10 years that would help create 100,000 quality jobs and generate an economic effect valued at 25 trillion won.



Not a choice but a necessity

Teen climate activist Greta Thunberg made headlines when she demanded action on climate changes at a United Nations climate summit last month.

Thunberg started a global movement in August 2018 when she led students in a strike outside the Swedish parliament. Her movement now has students in 125 countries participating.

Experts say the transition to renewable energy is no longer an idealistic goal of environmentalists but has become inevitable for economic reasons including the need for sustainable growth.

“IHS Markit has been studying the renewable energy market since the 80s, and back then there were very few wind turbines and most of the power came from coal, natural gas and nuclear [power],” said Xizhou Zhou, head of global power and renewables at IHS Markit.

“Electricity consumption has been growing alongside GDP growth,” Zhou said. “Whereas fossil fuel energy is on the decline.”

Zhou said renewables must replace fossil fuel energy sources as key energy sources for the future.

With interest in global renewable energy growing, global investments since 2010 have been above $200 billion, according to a REN21 report.

The transition to renewable energy is expected to boost the global economy. In a 2016 report, the International Renewable Energy Agency (IRENA) estimated that the global GDP will increase between 0.6 and 1.1 percent, or $700 billion to $1.3 trillion, when the share of renewable energy doubles to 36 percent by 2030.

In the case of Korea, the economy could see a 1 percent or more boost in economic growth from the transition to renewable energy and cutting back of fossil fuel consumption.

The study also said that switching to renewable energy will generate positive benefits beyond GDP gains - it will improve human well-being through gains to the environment.

Additionally, 24.4 million people are expected to be employed directly or indirectly in jobs related to renewable energy by 2030.

In 2017, some 10.3 million people were working in the renewable energy business globally. That’s a 5.3 percent increase compared to the previous year.

The transition in energy sources is expected to generate over 11 million additional energy jobs by 2050, according to an IRENA forecast.

According to the Korea Energy Agency, the number of renewable energy companies in Korea as of 2017 increased 8.1 percent from the previous year to 438, and they currently employ 13,927 people. While revenues for the 438 companies declined in 2017 from the previous year - a 5.4 percent decline to 9.55 trillion won - that was largely due to a decline in domestic sales. Export from those companies rose 21.7 percent to 4.3 trillion won thanks to growing demand overseas.

Investment in 2017 increased 17.7 percent year-on-year to reach 809.7 billion won.

Solar power accounted for 118 of those companies, or 26 percent. The solar power industry accounted for 54 percent of people employed in the renewable energy industry and 67 percent of its revenue.

Wind power only accounted for 6 percent, or 27 companies. It accounted for 13 percent of the jobs in renewable energy and 11 percent of revenue.



The solar cell production line at Hanwha Q Cells’ plant in Jincheon, North Chungcheong province. [HANHWA Q CELLS]
State-owned companies’ plan

A switch to renewable energy is also expected to lower Korea’s heavy dependence on imported materials for energy.

According to the government, as of 2017, Korea’s reliance on imported sources of energy remained high at 83.5 percent.

After excluding nuclear power plants, Korea’s import dependency was 94 percent.

Under the Moon administration’s 3020 plan, state-owned energy companies have been expanding their renewable energy portfolios. As of 2017, roughly 70 percent of energy produced in the country was generated from the state-owned power companies.

Under the government’s 3020 plan, 21 power companies - including state-owned companies - with more than 500-megawatt power capacity will have to meet the government’s renewable portfolio standard (RPS), which will push them into using renewable energy sources.

Starting with a 5 percent mandatory share for renewable energy in 2018, companies will face a 7 percent requirement for 2020 and 10 percent for 2023. By 2030, the ratio is raised to 28 percent.

The government plans to invest 92 trillion won by 2030, of which 51 trillion won will be invested in state-own companies.

In 2017, Korea Electric Power Corporation (Kepco) announced a plan to produce renewable energy, which will take up 20 percent of the Moon Jae-in government’s goal of 63.8 gigawatts of energy generated from renewable sources. Most of Kepco’s renewable energy will be from wind farms.

The power company will invest 53 trillion won to reach the goal of 20 percent of the 63.8 gigawatts.

Kepco said 11.5 million tons of carbon dioxide will be reduced annually and 310,000 jobs will be created.

Even before that ambitious plan was released, Kepco had been expanding its renewable energy portfolio by purchasing overseas power plants.

In April 2017, the company entered the U.S. renewable market by purchasing a solar power plant in Colorado.

In March 2018, the company bought three solar power plants in California that were owned by a subsidiary of Canadian Solar.

The power generated by those plants - at 235 megawatts - is nearly eight times larger than the plant in Colorado.

While the 30-megawatt plant can supply energy to 10,000 households, the three power plants in California can supply energy to 80,000 households.

“The 53 trillion won not only includes investment in Korea but also overseas,” said a spokesperson for Kepco. “Especially in the case of overseas projects, it has the potential of expanding other economic effects such as opening up opportunities for Korean companies to participate in overseas projects.”

“While the phase out of nuclear power is debatable, transitioning into renewable energy is not a choice but a direction that must be taken as advanced economies are already on that path,” he continued.

The biggest obstacle that the energy company faces is that it can not directly run a power company.

Since 2001, the government has separated the sale of energy from production.

Kepco can only purchase power that has been generated from other state-owned companies including Korea Hydro and Nuclear Power (KHNP) and coal-powered thermal plants and distribute it.

Kepco can only participate in renewable energy by investing in power plants.

KHNP is Korea’s largest power-generating company. It produces 31.5 percent of the energy generated in Korea.

The majority of its power comes from the 24 nuclear power plants it operates and 21 hydropower plants.

Renewable energy only accounts for 2.7 percent of KHNP’s total power capacity.

The company recently announced a plan to raise its share of renewable energy to 24 percent by 2030. The plan includes setting up solar power plants in Saemangeum. Other projects include a power plant on Biegum island in South Jeolla.

Other state-owned power companies, including Korea Midland Power, Korea Western Power as well as Korea South-East Power, have laid out their own plans for increasing renewable energy.

Korea Midland Power plans to invest roughly 18 trillion won through 2030 in raising its renewable energy production by 20 percent.

The company recently signed an agreement with the Inje, Gangwon, provincial government to set up a test project installing solar panels. It also plans to use land along expressways and railroad tracks to install solar power panels as well as an 80-megawatt floating solar power plant on Seokmun lake.

“We’re not saying that we are going to dramatically stop all thermal power plants,” said a spokesperson for Korea Midland Power. “However, we are making changes according to the current trend, step by step.”

Korea Western Power plans to raise its renewable energy production up to 25 percent of its total by 2030 starting with 12 solar energy projects, 13 wind power plants and 11 fuel cell plants by 2023.

Korea South-East Power plans to focus on hydrogen fuel cells. The company was the first in the country to build a hydrogen fuel cell production plant.

In 2006, the company’s first hydrogen fuel cell power plant was built in Bundang, Gyeonggi. It generated 300 kilowatts of electricity a year. Recently, the capacity has been increased to 42 megawatts.

By 2030, the company plans to raise the capacity to 350 megawatts.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]


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