LG Completes Biggest Solar Plant in Korea
By Kim Yoo-chul, Staff Reporter
TAEAN, South Chungcheong Province, Korea, 6 July 2008
LG Solar Energy, an affiliate of LG Group, has completed the nation’s biggest solar energy plant here in the western coastal region and started producing electricity. The facility, which is the result of some 110 billion won investment by teaming up with the local government on some 300,000 square meters of land, will have a 14-megawatt total output capacity, which is enough to meet the power needs of 8,000 households around the region, a company spokesman said.
The first plant was built on 193,821 square meters of land with a nine-megawatt production size, while the second plant was constructed on a 108,154 square meter lot with five-megawatt capability. The project will make LG the first South Korean firm to launch full-scale solar power operations.
In an effort to cut carbon dioxide emissions, the government is offering incentives to promote solar power generation. Thanks to this initiative, annual sales from the Taean solar facility will reach at least 13 billion won by selling the electricity to KEPCO for 677 won per kilowatt. “We’ve engaged in talks with some foreign companies to construct a solar cell plant on a turnkey basis,” Dennis Ahn, CEO of LG Solar Energy, said in a press briefing. “It is expected to reap an additional $285,000 this year as the plant could make the company consume 12,000 tons less of carbohydrates on a yearly basis,” he said, emphasizing the rising demand for solar energy.
Power from solar energy emits about 30 grams of greenhouse gases per kilowatt-hour, compared with 400 grams for a gas-fired power plant and 915 grams for a coal-fired power plant. Another positive factor of solar energy is that it creates high-tech jobs, analysts say. According to market research firm Yano Research Institute, solar cell production worldwide jumped 29.5 percent year-on-year to 1787.7 megawatts in terms of power generation capacity in 2005 and is expected to grow more than threefold by 2015. Japan’s Sharp is the world’s No. 1 solar cell and module maker with a market share of some 25 percent, or 428 megawatts, according to industry estimates.
Challenges
But industry experts say LG needs to be more aggressive in polysilicon and cell modules to put the solar energy business on the right track. Polysilicon is an essential raw material in production of solar cells. Increased production of solar or photovoltaic cells caused the contract price of polysilicon to triple in the past few years. Despite being hampered by severe shortages of such material, makers of polysilicon have been slow in adding new capacity because companies are closely associated with the more cyclical semiconductor industry.
Semiconductor makers over invested and were hit hard financially during the last semiconductor downturn, making them more cautious in building new facilities. “We should not operate the solar cell business unless more polysilicon materials come out,’’ Ahn of LG Solar Energy said.
“As growing companies are joining the fray in the polysilicon business, the material prices will be lower than now. But what concerns me is that LG Chem hasn’t disclosed the exact time and amount of investment, leaving doubts about its solar project,’’ Kim Dong-jun, an analyst at Goodmorning Shinhan Securities said.
In April, LG Group integrated system among its affiliates for synergy in the solar business. Under the blueprint, LG Chem is responsible to supply polysilicon and LG Electronics is tasked in the development of solar cells ― components used to turn sunlight into electrical power ― while LG CNS is to be changed into the solar energy plant construction project. “It is unlikely LG Electronics will massively churn out solar cells in the first half of 2009 and Siltron, a wafer producer, has also been hesitating to increase wafer outputs,” said another local analyst.
Meanwhile, the government plans to cut a subsidy program to larger solar cell operators by 30 percent from a few months later, urging companies to reduce costs, further. “Unlike European governments, the incentives are small, here. We cannot rely on such subsidies forever. We have to slash costs,’’ Park Seong-joon, division leader at Strategic Biz. Development Division of LG CNS said.
Germany, Italy and Spain require power companies to buy electricity produced by solar power at a sizable fixed price.