Chinese products dominate 68 percent of South Korea’s solar market

Solar panels are installed in an apartment. [Photo by Kim Ho-young]

Chinese-made solar cells accounted for nearly 70 percent of the market in South Korea in the first five months of this year as they offer the merit of low cost.

According to a report submitted by the Korea Energy Agency to Representative Han Moo-kyung of the People Power Party on Sunday, the supply of Chinese-made solar cells in Korea stood at 743,397 kilowatts between January and May.

This represents 68 percent of the total supply of 1,093,279 kilowatts in the same period.

The share of Chinese-made solar cells in the local market fell from 45.2 percent in 2017 to 31.8 percent in 2018 and 33.5 percent in 2019 before surging to 65.2 percent in 2020, followed by 59.3 percent in 2021 and 53.8 percent in 2022.

Many in the solar component industry say that not only the cell but also the module market is being dominated by China.

The reason for the rapid growth of the Chinese market share is that Korean solar power operators have no incentive to use domestic components that are relatively expensive.

“We need government subsidies to compete with China, which has relied on a low-cost offensive strategy, but Korea has no such support,” said a business owner who runs a small solar component company.

“We are losing out to Chinese products in terms of unit price, and the related technologies we have been developing for a long time are at risk of becoming obsolete,” the owner added.

Although the solar market has been growing rapidly in recent years, the government says it cannot discriminate against foreign products under World Trade Organization (WTO) rules that prohibit preferential treatment of domestic products.

Korea recently scrapped incentives for offshore wind projects with a local content rule (LCR) of 50 percent or more due to opposition from the European Union.

China’s low-cost offensive is spreading not only to solar power but also to other promising industries such as electric buses, drones, and service robots. While Korea was able to increase its lead over China in the past by a large gap in key industries such as semiconductors, petrochemicals, and shipbuilding, it is now in a position to compete with China for leadership in emerging new industries.