The solar power racket

The Moon Jae-in government’s emphasis on solar power in its policy of replacing nuclear and fossil fuel power sources seriously contradicts its governing philosophy. It goes against the liberal president’s signature slogan of placing the people first. His economic agenda centers on easing wealth discrepancies by taxing the rich. The novel concept of income-led growth in essence stems from a Robin Hood-esque idea of sharing some people’s excessive wealth with the poor. The solar power emphasis, however, goes against that principle.

Solar panels are one of the most costly energy sources. They are too expensive for anyone to use unless there are government subsidies reserved for eco-friendly energy. It is the same elsewhere in the world. Australia, an ideal country for solar farms with its expansive spaces and plenty of sunshine, gives out billions of dollar a year to subsidize solar power. The trouble is that the state subsidy goes mostly to the well-off.

The city of Seoul, for instance, spent 4.5 billion won ($4.2 million) this year on rebates to households installing solar panels. Of the total, nearly 4.4 billion won went to subsidize installation of residential grids on apartment balconies. To be eligible, one must own a home with a spacious balcony. An acquaintance of mine a few months ago installed a 260W module and micro-inverter at his apartment in Jamsil, southern Seoul. He paid just 150,000 won out of a 600,000 won installation fee and got the rest from the city of Seoul.

He saves about 5,000 won in his monthly electricity bill. In three years, his share of the investment will be paid off through his savings in electric bills. “If this was not my home and if I had to move in the next three years or so, I wouldn’t have bothered.” The city is using tax revenue to cut electricity bills for the rich living in spacious homes.

Going solar is a kind of a fad in provincial areas. Solar power is hugely popular in coastal regions of South Chungcheong and South Jeolla, where there is about 10 percent more sunlight than the national average. The land price for a reclaimed zone in Seosan, which is ideal to set up panels, has appreciated to 50,000 won per pyeong (3.3 square meter) from 20,000 won last month. Another area in Shinan in South Jeolla that was 4,000 won per pyeong last month now sells for 30,000 won.

Prices jump because there is money in the land. One panel business owner says solar power is deemed the best retirement investment for retirees. It is touted to ensure an annual return rate of 8 to 10 percent over the next 20 years because the government buys power from solar systems at much costlier prices.

To make decent money, one must own about 5,000 pyeong of flat and sunny land. One needs initial capital of about 2 billion won to run a solar farm including the license fee. He or she must have either excess land or money to go into solar business. Solar power can make the rich richer if the government continues to be so generous with subsidies.

The government has already pledged it would spend 70 trillion won on solar panels until 2030. It plans to expand the scope of subsidies to multi-home complexes, including apartments and single residential homes. The state would now buy or reimburse the extra power generated from multi-home complexes. That means people with panels on spacious apartment balconies also could make extra cash. That’s another subsidy for the rich.

Too much budget and attention on solar power would stall development of other renewable sources. Terrestrial heat, ocean or bio energy could have better chances if not for the special subsidy for solar energy. Other renewables must compete against solar power on a tilted playing field. It is hard to tell whether the government’s energy policy is aimed to phase out nuclear power or promote solar power. The solar panel business is dominated by left-leaning and environmental activist groups.

JoongAng Ilbo, Dec. 29, Page 30

*The author is a columnist for the JoongAng Ilbo.

Yi Jung-jae