A business for the leftistsNow that the heyday for corrupt connections in the nuclear reactor industry is coming to an end, one for the solar power industry may be in the making. Mafias thrive in exclusivity and opacity. They exclude outsiders. They keep the pie entirely to themselves. Getting in is the tricky part. Once inside, everything sails smoothly.
The nuclear reactor mafia was like that. State-run companies like Korea Hydro & Nuclear Power Corp. (Khnpc), Kepco E&C and their outsourced test agencies and nuclear power parts makers built a league of their own. Khnpc kept its work to a supply chain of 300. They monopolized the supply of parts, supplies and tests.
They flourished for decades until corruption was exposed in 2013 with the Shin Kori 2 and Shin Wolsong 1 reactor constructions. The industry has come to a dead end after liberal President Moon Jae-in announced a plan to phase out nuclear power. But mafias evolve.
A new mob is proliferating. To compensate for a fall in supply from nuclear reactors, the government plans to build renewable infrastructure by 2030. Instead of six reactors with the capacity of 1.4 gigawatts each, it will spend 110 trillion won ($102 billion) to establish renewable power generators with a combined capacity of 48.7GW for future power supply. The budget is more than five times the cost of 20 trillion won to 25 trillion won to build five to six reactors.
Over 60 trillion won will be spent to install generators that produce 33.5GW of solar power. Solar panels are highly vulnerable to weather conditions and thus inefficient as they can hardly generate power during winter and rainy days. They are expensive to build and need huge amounts of space. It’s not exactly a prime technology for Korea, with numerous mountains and scant space. Yet the government has a huge budget for it, which has big appeal for profiteers.
Fast movers in this sector are left-wing civilian groups. The Seoul Metropolitan government’s solar panel projects are a perfect example. Of 14,879 residential solar panel generators the city administration sponsored up to September, 10,490 will be supplied by three cooperatives. The biggest supplier, the Seoul Citizens’ Solar Power Cooperative, is headed by a labor and energy activist. The second player, Hae Dream, was started up by a former director of the Solar Power Cooperative. The third, Green Dream Corp., is led by a former head of the youth committee of the Woori Party, which was later absorbed into the Democratic Party, now the ruling party.
They took home 73 percent, or 6.6 billion won, of Seoul’s subsidy of 9.1 billion won as of September. The city government under liberal mayor Park Won-soon bent regulations to make business easier for them. Eligibility for city government subsidies requires a business history of installing at least 200 panels. But the cooperatives were allowed the subsidies with records of installing just 20. They also were exempted from a requirement to have a license for electrical power construction.
The cooperatives have expanded fast. They turned to the Seoul education authority to put solar panels on school rooftops. The city education office offers 30 million won to schools to host solar panels. Schools receive rent for lending out their rooftops.
As the business picked up after a Kepco unit joined, the cooperatives ganged up to protest that a state-run entity was moving in on their low-hanging fruit. They petitioned the Blue House and government. In September, Kepco gave in and pulled out of the business. An official of the state utility firm said that its business may resume in March, but needs to be coordinated with the cooperatives.
The scene is hardly surprising. A government official said the solar panel industry is a typical business for environmental and civilian groups. Under the conservative government of President Lee Myung-bak, the Industry Ministry questioned the presidential office’s order to expand the solar panel business for its green economy slogan, arguing that tax money should not be wasted on such a left-leaning business. The presidential office nevertheless pushed ahead with the plan to promote renewable energy.
Regardless of the good intentions of a public policy, the pace and methods should be moderated. The downside is bound to come up if it is hastened. The government thinks solar power has all the answers to Korea’s energy problem regardless of all the questions about scientific soundness, efficiency and financial resources. It is no wonder that the liberal government plan is sneered at as a policy to build a cash cow for leftists for the next 100 years.
JoongAng Ilbo, Dec. 21, Page 34
*The author is a columnist of the JoongAng Ilbo.