Korea Electric Power Corporation (KEPCO) will invest in a joint venture (JV) to be established by seven domestic inverter manufacturers. An inverter is a key device that converts direct current (DC) electricity produced from renewable energy such as solar power into alternating current (AC) and connects it to the power grid.
KEPCO's investment in the inverter JV is aimed at strengthening the domestic inverter supply chain. It aligns with recent trends in the European Union (EU) and the United States to regulate the use of Chinese-made inverters. The solar industry estimates that 80% to 90% of the inverters currently installed in Korea are Chinese-made.
On the 8th, according to the government and the energy industry, seven inverter manufacturers, including OCI Power, Dasstech and ECOS, are discussing the establishment of a joint company. KEPCO plans to invest in the JV through a technology holding company to be established this month, with the goal of fostering the domestic inverter industry.
KEPCO decided to establish a technology holding company to support the commercialization of new technologies and patents held by its power generation subsidiaries. It is in full swing preparing for the launch, including an open call for president.
A KEPCO official said, "Inverter manufacturers with factories in Korea will come together to establish a JV," and added, "The KEPCO technology holding company will not only invest in the JV but also provide technical support and support standards for localizing inverters."
Earlier, the Ministry of Climate, Energy and Environment launched the "Solar Inverter Industry Development Council" in May with KEPCO and domestic inverter manufacturers. The domestic manufacturers' establishment of a JV is one of the inverter localization tasks being pursued by the council.
The inverter JV also plans to pursue a strategy of lowering manufacturing unit costs by purchasing core inverter components in bulk from the United States, Germany and other countries. This is a measure to respond to Chinese-made inverters, which are relatively cheaper than domestically manufactured inverters.
◇ Security concerns raised over Chinese inverters via remote communication equipment
Inverters serve as a conduit for various power-related data such as generation, load and grid conditions. Inverters are built to allow remote access for operating software updates and maintenance.
If communication equipment that enables remote access is used, inverter manufacturers could cause disruptions to power supply. At the center of such concerns are Chinese-made inverters. In May last year, U.S. energy authorities discovered an undocumented communication device in the manuals of Chinese-made inverter products and conducted an investigation.
China is the world's largest inverter producer. According to a report released early this year by consulting firm Wood Mackenzie, Sungrow and Huawei Technologies rank first and second in global inverter market share. Six of the top 10 inverter suppliers are Chinese corporations.
Europe was the first to roll out security measures targeting Chinese-made inverters. The EU last month banned the use of Chinese-made inverters in energy projects financed by EU funds. The European Solar Manufacturing Council estimates that more than 200 gigawatts (GW) of European solar capacity is consolidated with Chinese-made inverters.
That is comparable to the generation capacity of 200 1-GW nuclear power plants. Experts say that even controlling just 3 to 4 GW with inverters in Europe could trigger widespread disruptions to power supply.
The Donald Trump administration in the United States is reviewing a ban on imports of foreign-made inverters, targeting Chinese products, citing national grid security. The concern is that China could disrupt power supply in the United States using inverters. Reuters said, "The Federal Communications Commission (FCC) is preparing new restrictions and could release them as early as this year."
◇ Government "support to replace aging inverters with domestic products"
As the government is calling for an expansion of renewable energy, Korea is not free from inverter security concerns. The government set a goal of reaching a cumulative renewable capacity of 100 GW by 2030 and has moved to expand solar deployment by an average of 10 GW per year.
However, the inverter production capacity of domestic companies is only about 1 GW per year. Currently, 80% to 90% of the inverters installed in Korea are estimated to be Chinese-made.
An official at the ministry said, "The government is also working to find various solutions related to foreign-made inverters," and added, "We plan to strengthen security standards related to inverters and promote measures to support the use of domestic products when replacing aging inverters."
The ministry has drawn up a supplementary budget of about 20 billion won related to replacing aging inverters.