The government has announced plans to lower solar power generation costs. However, the costs actually borne by solar operators are not determined by panel prices alone. This is why critics say installation costs, permitting, and grid connections must also be reduced.
3-Line Summary
1. The government is pursuing measures to reduce solar power costs.
2. The goal is a contract price of 80 won or less by 2035.
3. Installation costs and grid connections must also be considered.
Goal: A Contract Price of 80 Won or Less by 2035
Kim Seong-hwan, Minister of Climate, Energy and Environment, said during the National Assembly’s audit of state affairs on October 6 that domestic solar power generation costs remain higher than those in Germany, Japan, and the United States. His position is that solar power must become genuinely inexpensive electricity if it is to surpass coal and gas as a primary power source.
As the government pursues the deployment of 100GW of renewable energy by 2030, it has set a goal of lowering solar power contract prices to 80 won or less per kilowatt-hour (kWh) by 2035. Minister Kim said a comprehensive plan would be prepared through the Committee for Strengthening the Competitiveness of the Solar Industry, chaired by the vice minister, and that the prices of domestically produced products would be lowered through measures such as joint purchasing. These are plans and targets; they do not mean that cost reductions have already been achieved.
Installation Costs Were a Greater Burden for Smaller Facilities
During the audit of state affairs, concerns were also raised that lowering only contract prices could further reduce the investment capacity of small-scale operators. According to a study by the Korea Energy Economics Institute cited by the Electric Power Journal, installation costs per kW were 130만3000 won for facilities in the 100kW class and 105만8000 won for facilities in the 20MW class, a difference of approximately 19%.
In other words, even for the same type of solar facility, initial costs vary according to scale. Representative Lee Yong-woo pointed out that installation costs for small-scale projects should be lowered through joint purchasing and joint ordering, and that financing costs should be reduced by shortening the time required for permitting and grid connections after obtaining a power generation business license. This is why readers evaluating solar power generation costs should consider not only contract prices but also installation costs and the project implementation period.
Grid Capacity Is Also Linked to Project Costs
Even if solar facilities are installed, it is difficult to transmit the electricity they generate if they cannot be connected to the power grid. During the audit of state affairs, Korea Electric Power Corporation was reported to have secured 7.3GW of grid capacity by clearing 79 projects, including 61 projects that had not submitted an interconnection-use application for more than 1 year after receiving a power generation business license and 18 projects that had not signed a contract for more than 1 year after submitting an application.
Minister Kim explained that, under the first-come, first-served process for accepting interconnection applications, there had been a problem in which even operators with a low likelihood of actually proceeding with their projects secured capacity. How the reclaimed capacity is redistributed and how quickly genuinely prepared projects are connected could determine the effectiveness of cost-reduction measures. The price competitiveness of solar power generation depends not only on panel efficiency but also on the structure governing access to the power grid.
References
Tags #SolarPowerGeneration #SolarPowerGenerationCosts #SolarPowerContractPrices #RenewableEnergy #SolarInstallationCosts #SolarPowerBusiness #PowerGrid #GridConnection #SolarPolicy #EnergyTransition #NationalAssemblyAudit #PowerGenerationCosts