Samjong KPMG "Solar Power to Become Top Energy Source by 2040"

[Asia Economy Reporter Park Jihwan] As major countries drive policies toward carbon neutrality (Net-Zero) and companies adopt ESG (Environmental, Social, and Governance) management principles, the energy market is undergoing a full-scale transition to green energy, with solar power emerging as a rising energy powerhouse, according to an analysis.

According to the report titled "In the Era of ESG, the Breakthrough for the Domestic Solar Industry at the Crossroads of Growth and Decline," published by Samjong KPMG on the 21st, overall energy demand decreased by 5.3% in 2020 compared to the previous year due to COVID-19, while only renewable energy demand increased by 0.9%. Among these, solar power showed the fastest growth.

The International Energy Agency (IEA) projected that from 2019 to 2040, coal power generation will decrease by 864 TWh, whereas solar power will increase by 4,813 TWh. Solar power was identified as the energy source with the largest increase in power generation by 2040.

The report emphasized, "Discussions about solar power have been ongoing for some time, but recently it has gained more attention as its feasibility has become concrete on both 'price' and 'policy' fronts."

Looking at solar market trends by country, China, the leader, accounts for 33% of the world's solar power installation capacity. Although the Chinese solar market was expected to shrink in 2020 due to COVID-19, it continues to grow steadily thanks to its large domestic market and strong government policies.

The United States is recovering from the COVID-19 impact due to increased residential solar power and higher Renewable Portfolio Standard (RPS) ratios. Residential solar power is increasing, especially in California, which has mandated solar installations in new homes since January 2020. Recently, Nevada declared it would raise its RPS to 100% by 2050, increasing the number of states aiming to supply more than half of their electricity from renewable energy to 13.

Japan's solar market has moved beyond subsidy-driven expansion to autonomous competition. Europe, including Germany, and other regions are focusing on fostering solar power through the introduction of carbon border taxes. Other countries actively promoting solar-led renewable energy policies include Spain, India, Vietnam, Australia, and Israel.

Domestic solar companies are actively pursuing overseas solar power plant EPC (Engineering, Procurement, and Construction) businesses to evolve from manufacturers of solar cells and modules to total renewable energy solution providers. The report explains that overseas markets are relatively low-cost and have liberalized electricity sales, which is why domestic companies are focusing on downstream solar businesses abroad. In countries with liberalized power markets such as Washington State in the U.S. and Germany, consumers can directly choose power producers, and solar power operators can develop various tariff plans.

Byun Young-hoon, Vice President and Head of Manufacturing Industry at Samjong KPMG, said, "Currently, China offers its domestic companies unique competitive advantages, making it difficult for foreign companies to enter. Domestic solar companies should focus on producing high-quality solar cells with next-generation technologies in the midstream sector to discover new business opportunities."

He added, "When entering overseas solar markets, companies should seek competitiveness not only in EPC, equipment leasing, and sales but also across the entire downstream business, from O&M to power sales. They must seize new opportunities by developing new businesses incorporating digital technologies such as VPP (Virtual Power Plant)."

This content was produced with the assistance of AI translation services.