An analysis that a resurrection of the Japanese solar energy market is becoming an opportunity for Korean business has just come out.  Under the circumstances that the Japanese domestic supply is insufficient, the high product competitiveness and power generation solutions of Korean companies are acting as a strong point.  However, curtailed subsidies and low-price offensives by Chinese companies have been pointed out as key risk factors.

On the 1^st of last month, the LG Economic Research Institute explained in its report that “the Japanese solar energy market has emerged as the world’s top-ranking market.”  According to the report, the world’s solar energy demand for the first quarter of this year recorded 9.34 GW, of which Japan accounted for 24% of the total demand with installation of 2.21 GW.  China, which was the largest demand market in 2013, ended up with 1.61 GW.

Since the Fukushima Nuclear Power Plant accident triggered by a big earthquake in East Japan in March 2011, the solar energy market has changed and it has become urgent for Japan to secure an energy source that can substitute nuclear energy. For this reason, new renewable energy, especially solar photovoltaic power generation, began to attract more attention.  Such an increase in demand from the Japanese solar energy market has played a big role in the increased profitability and turnaround of Korean solar energy companies such as OCI, Hanwha, and the like, according to an analysis.

In addition, this is expected to result in opportunities for Korean companies, as it is possible for them to engage in solar energy business through joint ventures between companies that manufacture solar power generation systems, configure solar power generation systems with energy saving systems (ESS), and build and construct power plants.

However, some risk factors still remain.  Although the market share of Chinese companies in Japan is still low, this is increasing through the conscious efforts of the Chinese solar industry toward increasing their market share by cooperation with Japanese companies and original equipment manufacturer (OEM) suppliers or the like.  Further, since the Japanese government continues to decrease subsidies, there is an increasing possibility that downstream industries such as EPC, power generation companies, and the like will require low-price modules, therefore providing an advantage to Chinese businesses.

June 1, 2014 Financial News