LG invests in solar business despite low oil prices

By Choi Sung-jin

Although international oil prices plunge to their lowest in decades, LG Electronics is making a massive investment in the solar energy business, causing expectations - and concerns.

Business outlooks for sunlight power generation are uncertain, at best, as global oil prices threaten to sink to the $20-a-barrel range, industry sources said. “However, now is the time to secure a future growth engine through preemptive investment,” said an LG Electronics executive.

The company signed a memorandum of understanding to expand manufacturing capacity at its solar panel plant in Gumi, North Gyeongsang Province, with the municipal government Wednesday. It will invest 527.2 billion won ($436.7 million) to add six more manufacturing lines to a total of 14 by 2018, said Lee Sang-bong, a president in charge of LG Electronics’ energy business center.

LG Electronics’ capacity to produce solar modules will increase from 1 gigawatt to 1.8 GW in 2018, and the company plans to raise it further to 3GW by 2020 through additional investment, which is sufficient to supply power to 1 million households for a year.

The investment will create 870 jobs in research and development, business/marketing and manufacturing, Lee said.

According to IHS, a market survey firm, the global solar generation market this year is estimated to grow 17 percent to 68 GW, from 58 GW last year. Demand in the U.S. market, the second largest in the world with 15 GW to China’s 20 GW, is expected to increase sharply, riding on robust economic recovery in the world’s largest economy. The U.S. government is encouraging power generation from sunshine by extending tax credits to it until 2022, industry sources said.

LG Electronics aims to raise the efficiency of its solar modules, which now stands at 19.5 percent, hovering above the 18-percent level regarded as highly efficient, company officials said. The company also has lifted the efficiency of its solar light cells to 22 percent.