Hanwha Solutions stock flies on solar panel boon from U.S. Inflation Reduction Act

South Korea’s Hanwha Solutions, a select non-U.S. entity with solar panel production facility in the United States through subsidiary Q Cells, can expect quadrupled sales in the U.S. as it would enjoy tax incentive from the Inflation Reduction Act (IRA) designed to combat climate change.

Hanwha would be eligible to save taxes of up to 260 billion won ($198.36 million) under the new act. Prices of solar panels have gone up 24 percent in a year due to spike in demand, also boding well for future business in the U.S.

Its stock has been flying on the sanguine prospects. The Kospi-trading stock added 3.03 percent to 47,650 in the early trading Tuesday, or more than 30 percent higher from the beginning of the year. On Thursday, it hit 52-week high of 47,300 won, a rare winner in the bear market.

Under the IRA that passed both U.S. legislative houses, the investment tax credit (ITC) applied for solar and offshore wind power facilities would be revived and extended to 2032, with tax credit for installing residential solar panels raised to 30 percent from previous 26 percent.

Tax credits would also be provided for solar panels and other components manufactured in the U.S.

Hanwha Q Cells operates a 1.7GW solar module plant in the U.S., which can be eligible to tax credit of around 140 billion won. When the capacity is ramped up to 3.1GW as planned, tax savings would be jumped to 260 billion won.

“The increased tax grant and period would help Hanwha expand presence in the U.S. solar power market,” said Jeon Yu-jin, a researcher at HI Investment & Securities.

Besides the benefits from the IRA, Hanwha enjoys price hikes in solar modules amid the rising energy costs. Although some Chinese firms operate production facilities in the U.S., their production is relatively small. The conflict between Washington and Beijing works favorably for companies like Hanwha.

The monthly average price of its modules rose to 460 won per 1W in the first half of the year, up 24 percent from 372 won in 2020 and 2021.

Hanwha Q Cells, a dominant supplier of residential and commercial solar panels under Hanwha Solutions, recently filed documents in Texas that it was evaluating sites in Georgia, South Carolina, and Texas for massive new facility.

Hanwha Solutions acquired 21.34 percent state in REC Silicon, the largest silicon materials producer in the U.S. for 250 billion won, and is mulling 200 billion won ramp-up in the Georgia plant.

According to Hana Securities, Hanwha Solution’s operating profit for this year is estimated at 913.4 billion won, which would be rising 23.7 percent from the previous year. Solar module business is expected to see quadrupled profit next year, with operating margin reaching 8.3 percent.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]