Can the South Koreans (Hanwha, LG, OCI) displace the Chinese solar juggernaut

The Chinese solar panel industry has become dominant through a mix of strong government support, aggressive expansion, billions of cheap finance from state owned banks and low costs. However this has angered other countries where hundreds of solar companies have gone bankrupt unable to fight against the low costs of cheap Chinese made solar modules. This has led to a backlash against Chinese solar imports from all the major countries with US already imposing anti dumping duties. This has created a void which is being exploited by other Asian countries like Taiwan and Malaysia. Taiwanese solar cell makers are seeing an increase in orders as Chinese module makers are forced to source non-Chinese made solar cells to sell to the US market. High cost western and Japanese solar companies like Panasonic, First Solar have established huge factories in Malaysia which has become one of the biggest solar manufacturing countries.

Note these South Korean companies have massive balance sheets and staying power and can outlast Chinese module companies like Suntech (NYSE: STP), Trina (NYSE: TSL) and Yingli (NYSE: YGE) despite Chinese government backing. Not only are LG and Samsung willing to match the Chinese on prices but are also using their huge global brand power and distribution strength to get a leg up. Note these companies already have a powerful distribution and marketing base in most countries. These can use this to subsidize their solar business unlike the Chinese companies which are being forced to reduce their marketing spend.

South Koreans are also slowly and steadily increasing their solar energy footprint. Most of their major chaebols like Hyundai, LG , Samsung , Hanwha already have solar factories while OCI is one of the biggest and lowest cost polysilicon producers. Other companies like Posco and Mirae have also entered the solar system development and financing business. OCI with its partner Nexolon has established a big base in Texas where they have won a contract to sell 400 MW of solar power to the local utility.

Koreans expanding into SE Asia

One of the fastest growing solar regions is SE Asia and South Koreans are using their balance sheet strength to build big solar power projects. While Chinese solar panel makers have to use state owned banks to get financing, big Korean companies can finance these projects on their own strength. A number of projects have been proposed in Japan, Phillipines and other SE Asian countries.

and America…

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.

Chinese solar makers have established a strong foothold in Africa and Latin America

The Chinese solar panel makers have already established themselves as first movers in the newer virgin markets of Africa and South America. They are using vendor financing and their cheap solar panels to win large utility scale solar contracts. Suntech, Jinko Solar, Trina and Yingli Solar are already supplying huge solar projects in Chile, South Africa, Peru, Brazil, Ghana. South Korean solar companies have been mostly absent from these markets except for Hanwha which won a > 100 MW solar panel supply deal in South Africa.

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