Abstract
Korea restructured its industry following the 1998 Asian financial crisis and its ICT industry has developed strongly since that time. The Korean government regards the current economic downturn as an opportunity to adjust its economy from an export- and technology-driven economy to green-driven economy. The government envisages the solar photovoltaic industry as its next strategic industry, following the semiconductor and display industries. Despite of its efforts in 2008 to expand its support for the solar photovoltaic industry, the Korean government has begun running out of funds in 2009. This report analyzes Korean government policies for the solar photovoltaic market and examines future trends in solar photovoltaic market demand.
Government Agility Key Success Factor for Policies
In the long run, capital costs of solar photovoltaic products are expected to decrease, and the efficiency of electricity generation by solar photovoltaic processes is expected to increase. Therefore, if a government passes renewable energy laws and initiates subsidies for using renewable energy sources at a relatively late point in time, consumers will benefit in terms of good product quality and low prices; this can also save large amounts of subsidy budgets. However, if a country enacts such laws much later than other countries, it may hinder the country's chances of developing the green industry. Consequently, countries all over the world conduct careful planning for cutting price subsidies for solar photovoltaic installations in order to maintain stable solar photovoltaic demand while reducing budget costs and stimulating the industry growth.
With investment returns brought by subsidy plans, enterprises in the solar photovoltaic industry have been taking advantage of the green trend. With consumers' growing awareness of the advantages provided by solar photovoltaic energy, consumer demand for solar photovoltaic products is surging. As a result, the surging demand for subsidies will financially burden a government. The rapid use of the allocated budget will force the government to adjust its subsidy plan, causing fluctuation in solar photovoltaic market demand. Other than Spain, the Korean government also made significant adjustments to its solar photovoltaic policies. When planning a policy, a government should carefully assess costs. After implementing the policy, whether the relevant government authorities can stay alert in order to identify problems and react quickly and flexibly will play a key factor for the success of policy.
Careful Assessment to Cope with Demand Fluctuations
As for solar photovoltaic enterprises, capacity expansion includes several challenges. First, the timing of completion of capacity expansion plans could be out of line with demand trends in actual market development; secondly, plant construction is irreversible. With the rapid growth in the domestic solar photovoltaic market, enterprises are more willing to explore consumer demand in the solar photovoltaic sector in order to find opportunities for economies of scale. However, if enterprises decide to expand their capacity without careful market assessments, they will likely be affected by demand fluctuations in the market.
Moreover, when an enterprise witnesses increasing demand in a specific market, it has to carefully access growth driving factors and their sustainability in order to create precise market forecasts and shipment planning. In addition, companies also have to continue their global deployment in order to cope with demand fluctuations associated with changes in government policies.
Appendix
List of Companies