US curbs on Chinese solar panel makers expected to benefit Korean companies

A solar power plant in Beacon County, California, U.S. built by Hanwha Q CELLS. Courtesy of Hanwha Solutions

By Kim Hyun-bin

Korean solar panel manufacturers such as Hanwha Solutions and OCI need to take advantage of U.S. import restrictions on Chinese-made solar products due to the Inflation Reduction Act (IRA), the Korea International Trade Association (KITA) said in a report published, Monday.

The recently passed IRA includes a provision for tax credits for investments in solar power facilities, creating opportunities for Korean solar companies.

According to “The U.S.-China Solar Trade Dispute and Impact of the IRA Part 2” published by KITA Monday, Korean solar cells accounted for 1.9 percent of total imports of the product into the U.S. in 2011, but increased to 47.8 percent last year. During the same period, solar module imports from Korea rose from 1.1 percent to 7.6 percent.

“Especially Hanwha Solution is benefitting from the IRA as the U.S. put China imports in check as well as providing huge tax credits to companies operating solar production plants within the U.S. Hanwha is already No.1 in the U.S. residential solar panel market and the IRA is expected to further expand its market share not only in the residential sector, but the commercial field,” an industry source familiar with the matter said.

The report analyzed that the U.S. sanctions on Chinese solar products and the influence of the IRA are creating a favorable environment for Korean solar companies including Hanwha and OCI. Since 2012, the U.S. has imposed additional tariffs and quantity restrictions on Chinese solar products.

Starting this year, imports from the Xinjiang region of China have been comprehensively banned on the grounds of forced labor. For polysilicon, a raw material for solar modules, Xinjiang accounts for 45 percent of the global supply.

"The Korean government should also expand benefits, such as tax support, so that Korean companies can accelerate their entry into the global solar market including the U.S.," a KITA official said.