Bookmark and Share

How South Korean solar giant OCI is smartly overcoming green protectionism in Texas

0 Comment

Solar Protectionism growing by the Day

Solar Protectionism has been growing rapidly amongst major countries with global solar trade wars becoming a rage. Solar Companies not only have to overcome the vicious solar industry downturn with falling prices, revenues and margin, they have also got to successfully traverse dangerous geopolitical currents. Chinese solar companies are facing the brunt of the solar panel wars with most countries either imposing or planning to impose duties on imports of Chinese solar panels. While USA has already imposed duties, the world’s biggest user Europe has already started an investigation. India too is joining the solar war bandwagon to protect it fledgling solar industry from the Chinese solar panel juggernaut.

Korean Solar Companies getting dragged into ongoing global Solar Wars

South Korean solar companies had been relatively insulated in the global solar fight till now. However China is threatening to impose duties on imports of crystalline silicon solar panel raw material from Korea along with Europe and USA. This is despite Korean companies like LG, Samsung and Hyundai being relatively small players in the solar market and are having second thoughts given the massive glut. Hanwha Solar One is the only Korean solar company in the top 10 global solar panel company rankings. OCI is the other big Korean company in the solar market being a top 5 polysilicon producer. The company has costs comparable to the lowest cost producer and exports mainly to Chinese companies. OCI has been trying to derisk its model by entering the solar system and development segment. The company has a close partnership with Nexolon which is a downstream solar manufacture of solar panels and wafers.

OCI facing huge pressure in polysilicon manufacturing

OCI Co. Ltd. (KRX:010060) has been facing huge price and revenue pressure in its mainstay polysilicon manufacturing business. With polysilicon prices crashing to $15 levels from around $80-100/kg levels a year ago, even the biggest and lowest cost companies are feeling the heat. Smaller polysilicon companies have closed shop with only 3-4 players in China running their factories. The reason is that the price has become far lower than even the variable costs of these companies. OCI which has one of the lowest costs in the industry announced that it is cancelling the plan to build 2 factories in Korea. The news is not unexpected, given the massive overcapacity in all parts of the supply chain. LDK has fired 20% of its workers as its capacity is not competitive with the cost being much higher than the ASP. Even the biggest poly company GCL is only running at 50% utilization.

OCI Diversifying into solar plant development

South Korean companies like POSCO, LG, Samsung and OCI have been entering the solar power plant business to ensure demand for their solar panels. OCI bagged the world’s biggest solar municipality project to build a 400 MW solar farm in Texas. The company signed a contract with San Antonio utility CPS Energy to sell solar power under a 25 year PPA. Under the agreement, the company is not only building these plants but also building solar manufacturing in the San Antonio area. This is to prevent a backlash against foreign solar investment through creation of local solar jobs.

OCI partners in San Antonio solar manufacturing

OCI has partnered with Nexolon to build solar panels, Kaco to build solar inverters and Spanish ECRAM to build a solar mounting structure factory. OCI is carefully building a solar ecosystem in Texas through local linkages which would prevent a strong reaction like that against Chinese wind energy developer, A-Power which planned to build huge wind farms (A-Power is bankrupt now).

1) Kaco – 70 jobs

2) ERCAM -130 jobs

3) Nexolon – 400 jobs

Samsung had signed a similar deal with Ontario in 2010

Earlier Samsung had partnered with Canada’s province of Ontario to build a solar and wind manufacturing factories and jobs in return for winning contracts for supplying electricity from its wind and solar farms in the province. The deal had generated controversy as well with the Japanese complaining to WTO about Ontario’s unfair domestic content laws for renewable energy.

The Chinese have not been astute as Backlash against their Wind Farms testifies

a) A-Power Story

Chinese investment in US Renewable Energy has drawn a lot of criticism with the biggest protest seen against the $1.5 billion Chinese wind farm proposal by A-Power in 2009. NY Democratic Senator Schumer, had opposed the use of federal stimulus money to support a huge, $1.5 billion Chinese-based wind project in Texas. as it would  project would create 2,000 jobs in China and just 300 temporary construction jobs in the US. Despite A-Power promising later to build a wind turbine factory in the US later, the plan ultimately got shelved and A-Power went kaput.

b) Obama blocks Chinese acquisition of Oregon wind farms by Chinese nationals.

President Barack Obama blocked foreign investment in a U.S. company by two Chinese nationals from acquiring four wind-farm projects in Oregon. It marked the first time in 22 years that a U.S. president blocked a foreign acquisition in such a manner. The wind-farm sites are all within or near restricted air space at the Naval Weapons Systems Training Facility Boardman in Oregon.In blocking the investment, Mr. Obama followed the recommendations of the Committee on Foreign Investment in the U.S., which is chaired by Treasury Secretary Timothy Geithner and includes top officials at the Pentagon and State Department.


Chinese solar companies need to take a leaf from OCI Chemical’s book on foreign investment in order to reduce the protectionism impulses of other countries. Having decimated hundreds of western solar companies through vicious cost and price cutting, this backlash is got to be expected. Playing smartly by creating local jobs through local solar manufacturing would reduce the friction and allow smooth global trade and investment flows.


Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to

No Responses so far | Have Your Say!