The Interview: Improving Solar’s Image

REW interviewed Charles Kim, president of Hanwha SolarOne, for his insight on how solar can outshine its competitors.

REW: How should solar power improve its image?

CK: The solar industry has an inferiority complex right now. Brought on, in part, by the slow economy and the election season in the US, the solar industry has found itself on the defensive. This is in spite of setting new installation records in 2011, an influx of new investment, and positive growth for the long term. The solar industry needs to take credit for the tremendous advancements it’s made, remember where it stands in 2012 and stop apologising. But above all, the solar industry needs to believe in itself again.

REW: How can solar companies adapt their structures to the new context?

CK: Undoubtedly, 2011 was not all good news. However, like any competitive market, the industry is adapting and finding new ways to profit. We will see solar players move further downstream to find new sources of revenue and, despite the turmoil of a competitive market, companies that are able to innovate will thrive.

REW: What are solar’s key advantages over competing power technologies?

CK: Natural gas is the current hot topic in the energy industry, but it is volatile. No one knows where gas prices and supply will be in 30 years. Solar, on the other hand, will continue down the path of higher quality, lower cost and greater predictability. If governments take action to curb climate change and start factoring in the carbon costs of fossil fuels, solar will be hard to beat.

Even without a sudden shift in the political climate, the cost of solar power will continue to fall. Utility-scale solar is very new. Great improvements have been made in a very short time by both the technology providers and the project developers. The pressure of a competitive market is driving companies like us to invest heavily in R&D, continuously looking for ways to drive down cost while improving quality and performance.

REW: Is the US still a promising solar market?

CK: Yes, the US is absolutely still one of the most important markets for the solar industry. The US surpassed 1 GW of PV installed in a single year for the first time in 2011, and demand for PV is projected to almost double in 2012 to 2.8 GW, primarily from the utility sector, according to the Solar Energy Industry Association.

With total 2011 investment equalling US$55.9 billion, the US was the number one country for clean energy investment in the world, the first time it’s held the top spot since 2008. It was also a strong job creator, with job growth of 6.8% last year.

Furthermore, solar projects are proving more reliable. In the past, nearly 30%-40% of solar projects announced in California never made it to completion. The market in the US has matured, gaining valuable experience over the last decade. The US now has the infrastructure necessary – a network of solar engineers, designers, installers and financiers – to successfully lead projects from start to finish. These are not the signs of a dying industry.

REW: What threat do new import duties pose for Chinese companies in the US?

CK: I think you will see international companies remain committed to the US market and find different ways to service customers there. Hanwha Solar is a global company with Korean management, but because we have a manufacturing presence in China, we have had to shift our production strategy to supply the US. We have been using an original design manufacturer (ODM) in South Korea to continue supplying the US market since February with no disruption to our customers and we have no plans to slow down or scale back our operations.

REW: What is the outlook for European solar markets such as Germany and Italy?

CK: Europe is experiencing a period of consolidation and many PV players will need to re-think their business plan. Germany and Italy will keep their positions as important and influential markets in the PV industry, with significant volumes forecasted for 2012. It is also important to note that the strong focus on a few key markets has shifted, and emerging markets such as Eastern Europe and the UK are rapidly gaining in importance.

The FiT reductions seen in Germany, Italy and also in the UK are mainly affecting the large-scale market, but with the reduced system prices we are seeing, other financing schemes – like PPAs – are becoming viable alternatives. And in southern parts of Italy, grid parity is within reach for large-scale systems. For the residential markets, we expect a positive development even under the revised FiT schemes.

REW: How dependent will the solar industry remain on subsidies?

CK: The truth is, all energy sources receive government subsidies. This fact was lost on a lot of people during the Solyndra fallout. The solar industry was made to feel guilty for receiving subsidies, when in reality coal, oil, natural gas, nuclear and every other form of energy has received the same kind of support for decades.

Hanwha Solar plans to compete long-term with these traditional fossil fuels. PV costs have fallen tremendously over the last decade, and we are reaching a point where the price to build a new PV power plant is competitive with building a new coal-fired plant.

REW: How is China’s solar PV market likely to develop?

CK: Although hurdles remain on the path ahead, China’s PV market has a very bright future. Not only did domestic PV demand in China grow to 2.75 GW in 2011 – elevating China to the third-largest PV market globally – but recent forecasts also suggest another extremely strong year in 2012, with China’s PV market projected to nearly double to 5 GW or more.

Helping drive the growth are FiT mechanisms and government rebate programmes, in addition to new incentive plans currently underway. As evidenced by this and other key initiatives in China’s 12th Five-Year Plan for the PV Industry, issued in late February, the continued development of China’s PV market in a smart, sustainable way is a priority for the Chinese government.

The plan also emphasises more research into solar energy storage and other technologies to integrate solar electricity into the grid.

REW: How is Hanwha aiming to bring down its costs?

CK: Hanwha Solar is making a big commitment to R&D. We recently opened a new $14 million advanced R&D centre in California to complement our two other R&D facilities around the world. We also made strategic investments in innovative companies like 1366 Technologies and Crystal Solar to advance our products and manufacturing processes. Through this continuous commitment to pushing the boundaries of solar technology and strengthening alliances along the solar value chain, we will consistently drive down cost, while improving quality and performance.

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