FKCCI: Renewable Energy Value Chain Dominated by China...Urgent Need for South Korea to Secure Competitiveness

China's Global Market Share in the Solar Power Generation Value Chain

[Asia Economy Reporter Park Sun-mi] Concerns have been raised that the value chains of major renewable energies such as solar and wind power are highly likely to be dominated by China. It is forecasted that China’s influence in the renewable energy power generation industry will intensify in the future.

The Federation of Korean Industries (FKI) stated in its report titled ‘Current Status and Implications of the Renewable Energy Industry Value Chain’ on the 23rd that China’s rapid progress in the nuclear power sector is remarkable. While China’s share of global nuclear power generation rose from 4th place (6.6%) in 2015 to 2nd place (13.5%) in 2020, domestic nuclear-related suppliers’ sales and overseas sales have declined over the past five years.

The FKI emphasized that in order to reduce the domestic share of fossil fuel power generation, a corresponding level of nuclear power generation must be supported. Therefore, as an essential task for restoring the nuclear power ecosystem, the immediate resumption of construction of Shin Hanul Units 3 and 4 and the prompt supply of work to the industry must be ensured.

In the case of solar power generation, a representative renewable energy, the monopoly of Chinese companies in the value chain was prominent. In particular, China occupies more than 95% of the global market for ingots and wafers, essential raw materials for building solar power systems. The situation is similar in the wind power industry. In 2021, among the top 10 global wind turbine manufacturers, six were Chinese companies.

Regarding this, an FKI official said, “China’s renewable energy industry has rapidly grown in recent years based on massive government support,” and added, “As renewable energy power generation expands worldwide, it is urgent to revise corporate support policies, such as increasing the investment tax credit rate, to secure the global competitiveness of domestic companies.”

Meanwhile, opinions were also voiced that long-term government support policies are necessary to vitalize the hydrogen economy amid intensifying global competition. It is argued that the hydrogen industry should be focused on as a future domestic growth engine to secure global leadership in the hydrogen sector. The hydrogen value chain is broadly divided into production, transportation & storage, and utilization sectors. In the production sector, Japan and Germany are dominant; in transportation & storage, France and the United States lead; and in utilization, the United States (fuel cells for power generation), Japan (fuel cells for homes and buildings), and Korea (fuel cells for power generation) show strengths.

The FKI advised in the report, “Since major countries such as the United States and the United Kingdom are creating mid- to long-term action plans to vitalize the hydrogen economy and focusing their capabilities, Korea should also support global market entry by reviewing hydrogen-related regulations and supporting hydrogen technology development.”

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