"Rapidly Expanding Solar Power, Annual Revenue of 75 Million KRW per Capita... One-Eighth of Nuclear Power"

Renewable Energy Industry Statistics
Rapid Expansion of Renewable Energy with Low Generation Efficiency and Unstable Power Grid
"Need to Adjust the Pace of Energy Transition Policy"

[Sejong=Asia Economy Reporter Kwon Haeyoung] It has been revealed that renewable energy power producers, such as solar and wind, recorded sales of only 75.7 million KRW per person last year. This is one-eighth the level of nuclear power. This is the result of rapidly expanding solar power facilities, which have low power generation efficiency and unstable power grid systems. Concerns are emerging that if the government expands the share of renewable energy to over 70% by 2050 for carbon neutrality, the renewable energy industry will become a 'hollow shell.'

According to the '2020 Renewable Energy Industry Statistical Survey Results' announced by the Korea Energy Agency on the 7th, the number of workers in renewable energy power generation and heat supply industries was 82,810, with sales totaling 6.2696 trillion KRW.

Most of the workforce is estimated to be private individual business operators running small-scale solar power projects, meaning that the annual sales per person from electricity sales fees and others amounted to 75.7 million KRW. In the nuclear power industry, sales per person were 584.5 million KRW in 2019 (35,469 workers, sales of 20.7317 trillion KRW). The labor productivity of solar power producers is only 13% of that of nuclear power.

Professor Jeong Dongwook of the Department of Energy Systems Engineering at Chung-Ang University pointed out, "While there are many jobs in the renewable energy industry, looking at sales per person, it is clear that labor productivity is very low compared to nuclear power."

Considering that Korea Electric Power Corporation (KEPCO) bore 2.0474 trillion KRW last year as the cost of the Renewable Portfolio Standard (RPS), which acts as a 'subsidy' for renewable energy power producers, the sales excluding subsidies for solar power producers are expected to shrink to 4.2222 trillion KRW. In this case, the annual sales per person would sharply drop to 50.9 million KRW.

The actual amount that solar power producers receive is much less. Applying the pre-tax net profit margin of 8.4% for domestic companies in the third quarter, the net profit per person is calculated to be 6.36 million KRW annually, or 530,000 KRW per month.

The low value-added creation by renewable energy power producers is due to the rapid expansion making it difficult to secure profits. During the current government's 'energy transition' process, renewable energy power facilities increased from 10.97 gigawatts (GW) in December 2017 to 24.49 GW last December, a 2.2-fold increase in four years, surpassing the base power source nuclear power (23.25 GW). However, due to the intermittent nature unique to renewable energy and unstable power grid systems, the power generation as of last November was 2,047 GWh, only 16% of nuclear power (12,889 GWh). Only the facilities have expanded, but actual power generation falls short of expectations.

The decline in profitability of renewable energy power producers leads to pressure for electricity rate increases. Through the RPS, the government requires large power producers to purchase Renewable Energy Certificates (RECs) sold by solar power producers and others for a portion of their total power generation. This ratio is being raised from 9% last year to 12.5% this year and 25% by 2026. Since KEPCO compensates the cost of REC purchases by large power producers, the cost is ultimately fully reflected in electricity rates. Considering the intermittent nature of renewable energy and the additional power facilities needed for stable power supply, costs are expected to increase further.

Professor Son Yanghoon of the Department of Economics at Incheon National University said, "Solar power projects proceed mainly on cheap land and the lowest suitable sites for solar power generation, yet it has been revealed that value-added creation is still very low," adding, "If the government’s plan to increase the share of renewable energy to 70% by 2050 is realized, it means covering the entire national territory with solar panels, which is unrealistic. A revision of the rapid energy transition policy is necessary."

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