Saudi Arabia aims for net zero, but Korean solar panel makers reap near-zero

 
Saudi Arabia is aggressively expanding solar power with its oil wealth, but Korean solar manufacturers are struggling to benefit as cheaper Chinese panels dominate global markets. Instead, Korean players are turning to the United States, where policy-driven efforts to distance supply chains from China are creating new opportunities.
 
The Saudi government aims to generate 50 percent of its electricity from renewable sources such as solar by 2030 and achieve net-zero emissions by 2060, according to an Arab News report.
 
In July, three Saudi companies, including ACWA Power — partly owned by the country’s sovereign wealth fund — announced plans to invest $8.3 billion in 15 gigawatts of renewable energy projects.
 
ACWA Power CEO Marco Arcelli described the deal as “a significant milestone in Saudi Arabia’s strategic vision for a more resilient and sustainable energy landscape.”
 
The kingdom’s strategy is straightforward: Replace domestically consumed oil with cheap solar power and sell more crude abroad. Citi analyst Oliver Conner told the Wall Street Journal that Saudi Arabia generates one-third of its electricity from oil, effectively forgoing $20 billion in annual crude exports, calling the practice “hideously inefficient.”
 

A general view of the solar panels pictured during an organized media tour at the Dunhuang Photovoltaic Industrial Park, in Gansu province, China, on Oct. 16, 2024 [REUTERS/YONHAP]

 
At the same time, global solar module prices have been plunging due to Chinese oversupply. Prices have dropped from more than 25 cents per watt in 2022 to under 9 cents as of February this year, according to the Korea Energy Economics Institute.
 
“The global solar industry remains in a state of persistent oversupply, and prices will likely stay low for the long term,” the institute projected.
 
Saudi Arabia, with government backing, low labor costs and abundant desert sunshine, can produce solar power at a very competitive cost — a shift that is already boosting Korea’s plant construction sector. Hyundai Engineering & Construction, earlier this year, won $389 million worth of contracts to build transmission lines in Saudi Arabia’s Medina and Jeddah, with completion slated for November 2027.
 
The state-run Korea Electric Power also secured a deal last year to build a 2-gigawatt solar project north of Riyadh through a consortium with renewables developer Masdar from the United Arab Emirates.
 
But Korean solar manufacturers themselves have little to celebrate in Saudi Arabia, as Chinese producers dominate with cheaper prices. China’s share of the solar market exceeds 80 percent, according to the International Energy Agency.
 
“China not only produces raw materials such as silicon at lower costs but has also reached technological parity with Korea,” said Kang Cheon-gu, a visiting professor at Inha University’s Manufacturing Innovation School.
 

A worker carries a solar panel on the roof of the Alta Sea building, an urban, ocean-based research and blue technology innovation campus, at Berth 58 in the Port of Los Angeles on Sept. 4. [AP/YONHAP]

 
The outlook is more promising in the United States.
 
Washington recently tightened rules on Prohibited Foreign Entities, expanding restrictions on Chinese solar materials. It also strengthened rules on investment tax credits and production tax credits for clean energy projects, making projects that use Chinese components ineligible for the credits. Hanwha Solutions is building a “Solar Hub” manufacturing base in Georgia, set for completion next year, and OCI plans to open a cell production plant in Texas around the same time.
 
U.S. President Donald Trump did stir concern in July when he wrote on social media that wind and solar are “THE SCAM OF THE CENTURY!” but analysts expect the impact to be limited, given surging demand for power and energy storage systems in the United States.
 
Mirae Asset Securities researcher Lee Jin-ho noted that “the Trump administration may delay project permits, but no solar projects have been canceled because of it.”
 
“U.S. solar demand keeps growing, and policies increasingly favor Korean manufacturers over Chinese ones,” an industry source said. “Companies will keep targeting the U.S. market while building up technology to differentiate themselves.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NA SANG-HYEON [[email protected]]