With history as proof, Trump win threatens Korean renewable energy firms

With billions of dollars committed to investments in the U.S. under Biden administration initiatives, Korean energy firms are wary of a Donald Trump win that could result in a rollback of the incentives.

U.S. Vice President Kamala Harris speaks during her visit to Hanwha Solutions' solar manufacturing facility in Dalton, Georgia. [HANWHA SOLUTIONS]

Both U.S. presidential hopefuls Vice President Kamala Harris and former President Donald Trump each come with their own share of uncertainty in the energy industry, but Korean energy companies are on alert over a potential Trump win, which would likely have a more detrimental impact.

While Vice President Harris is expected to reinforce supportive measures for the use of renewable energy, former President Trump is doubling down on fossil fuel-centric policies with a belief that oil and coal are the most competitive sources of energy in existence.

The destiny of $128 billion in tax credits for renewable energy projects under President Joe Biden’s Inflation Reduction Act (IRA) faces the chopping board with Trump’s earlier declaration that he will shred the climate law, which is anticipated to benefit Korean solar producers like Hanwha Solutions and SK Eternix.

Renewable energy is the sector with the largest allocation of tax credits, around 10 times the $12 billion budgeted for clean vehicles.

“If Harris is elected, the United States will expedite renewable energy, and in that, the solar sector will be the largest beneficiary, followed by wind and hydrogen,” said Yi Jun-sin, the chairman of the Korean Society for New and Renewable Energy.

“A Harris win won’t have a big impact on Korean companies as incentive programs will likely proceed as planned,” Yi added, while domestic firms are expected to be “hurt by a Trump win as he strongly calls for the IRA's abolishment and Korea injected the most amount of investment into the United States under the law.”

U.S. Vice President Kamala Harris shakes hands with a Hanwha Solutions employee at its solar manufacturing facility in Dalton, Georgia. [HANWHA SOLUTIONS]

Hanwha Q Cells, the solar panel-making arm of Hanwha Solutions, is investing $2.5 billion to establish a solar power manufacturing plant in Georgia, marking the biggest solar investment ever in the United States.

Harris paid a visit to the factory in April of last year in a show of appreciation for the investment and to emphasize the importance of renewable energy. Hanwha also has operated a 5.5-gigawatt solar module factory in Dalton, Georgia, since 2019.

SK Eternix, Korea’s largest energy storage system (ESS) provider, has entered the U.S. market with a 200-megawatt ESS project in Texas. The capacity is expected to rise to 1 gigawatt.

SK Eternix shares hit the daily gain ceiling of 30 percent on Sept. 11 after a broad consensus deemed Harris the winner of her first and only head-to-head presidential debate with the former president.

Hanwha Q Cells' solar power complex in San Diego, California [HANWHA Q CELLS]

Trump, in contrast, leading chants of “drill, baby drill” during a speech in Las Vegas, Nevada, on June 9, pledged to unlock new lands for drilling by justifying fossil fuel as necessary to reduce energy costs and achieve energy dominance in global markets.

During his term as president from 2017 to 2021, Trump withdrew the United States from the Paris Agreement on climate change, the international pact to limit the global average temperature increase to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial levels, “well below” 2 degrees Celsius.

The United States rejoined the Paris Agreement under Biden, but Trump has vowed to again pull out of it if he is re-elected.

“Trump’s main pledge is centered on promoting U.S. manufacturing, and to achieve it, he sees oil, natural gas and coal as the sources of the most potential to achieve the cheapest energy supply,” said You Seung-min, a researcher at Samsung Securities. “A second Trump presidency will inevitably deliver a big blow to the U.S. clean energy industries."

Some experts, however, say the result of the presidential election — even if Trump wins — won’t derail growth in the renewable energy sector.

"The general trend of U.S. renewable energy growth will remain unshaken, no matter who wins, as it is an important method to cut electricity prices while electricity demand skyrockets with the AI transformation,” said Prof. Kim Seung-wan from the Korea Institute of Energy Technology, who also serves as the CEO of the energy and climate think tank NEXT group.

“The ironic point here is that Texas, a state that traditionally has a high tendency to vote for Republican candidates, produced more renewable energy than any other state.”

Rystad Energy, a Norway-based energy consultant, issued a report at the end of August mirroring Kim’s perspective, adding that the chances of Trump repealing the IRA remain low due to concerns over economic competitiveness, job creation and the need to counter China.

“Cleantech is increasingly becoming a bipartisan success story in the U.S.,” Lars Nitter Havro, Rystad Energy’s head of energy macro research, said in the press release.

“Despite a mixed record on cleantech, fossil fuel production during Trump’s presidency was lower than current levels under Biden, and the growth of investments maintained a striking similarity, indicating a persistent momentum in U.S. decarbonization efforts,” the analysis said.

The small modular reactor (SMR) industry is predicted to receive a boost on either’s win, with both candidates showing a supportive stance on the advanced form of reactors that is around 10 times smaller and less powerful than conventional nuclear reactors but considered an electricity production solution.

Korean companies like SK Inc., SK Innovation, Doosan Enerbility, GS Energy and HD Korea Shipbuilding & Offshore Engineering have jumped all on the bandwagon seeking demand in the U.S. market.

BY SARAH CHEA, CHO YONG-JUN [chea.sarah@joongang.co.kr]