It has been found that the amount the Korea Technology Finance Corporation (KOTEC) paid back on behalf of solar power corporations' loans over the past 3 years and 8 months but failed to recover reached 30 billion won. In contrast, losses from guarantees for nuclear power corporations operated during the same period amounted to only around 300 million won. The Korea Technology Finance Corporation (KOTEC) is a public institution that specializes in supporting technology finance. As support for corporations such as solar power is expected to be strengthened in line with President Lee Jae-myung's policy of expanding "renewable energy adoption," some argue that there is a greater need to strengthen "separating the wheat from the chaff" for insolvent corporations.
According to data submitted by the office of Rep. Lee Jong-bae of the People Power Party to the Korea Technology Finance Corporation (KOTEC) on the 1st, the subrogated payment amount for solar-related guarantees operated by the Korea Technology Finance Corporation (KOTEC) totaled 34.7 billion won from 2022 through August this year. Considering that new guarantees during the same period amounted to 409.7 billion won, the guarantee accident rate came to 8.5%.
A technology guarantee refers to a system in which the Korea Technology Finance Corporation (KOTEC), to support bank loan applications by corporations lacking collateral strength, receives a certain fee from the corporations and guarantees a certain percentage of the loan amount to the bank.
To foster the new and renewable energy industry as a national growth engine industry, the government has been providing instruments such as the new and renewable energy mutual growth agreement guarantee since 2011. The Ministry of Trade, Industry and Energy grants-backed new and renewable energy guarantee was implemented from June 2021 and ended at the end of 2023, and the Ministry of Economy and Finance grants-backed carbon value assessment guarantee has been supplied since May 2022 and continues to this day.
The occurrence of subrogation means that the government repaid loans that corporations could not repay. However, the amount the government recovered from the subrogated payments was 5.258 billion won, with a recovery rate of only 15.15%, according to the tally. In effect, 29.442 billion won was not recovered and became a loss.
In detail: ▲ In the privately funded "new and renewable energy mutual growth agreement guarantee," 17.8 billion won in subrogation and 3.776 billion won recovered ▲ In the Ministry of Trade, Industry and Energy grants-backed "new and renewable energy guarantee," 10.8 billion won in subrogation and 696 million won recovered ▲ In the Ministry of Economy and Finance grants-backed "carbon value assessment guarantee," 6.1 billion won in subrogation and 786 million won recovered were recorded.
By contrast, accidents occurred relatively infrequently in the special guarantees for nuclear power corporations that the Korea Technology Finance Corporation (KOTEC) began operating in 2022. The subrogated amount was limited to 400 million won, of which 7 million won was recovered, resulting in an actual loss of 393 million won. The scale of guarantee losses for solar power corporations is 100 times that of nuclear power corporations. The accident rate (400 million won) relative to the total guarantee scale for nuclear power corporations (122.2 billion won) was also markedly low at 0.3%.
Regarding this, an official at the Korea Technology Finance Corporation (KOTEC) explained, "Solar guarantees mostly involve large-scale facility funds, so each accident tends to be large in amount, whereas nuclear power is centered on operating funds, so accidents tend to be relatively small in amount."
The government recently announced 123 national policy tasks and said it would increase renewable energy installed capacity to 100 GW by 2030. President Lee Jae-myung said at a press conference marking 100 days in office, "It takes 15 years just to build a nuclear plant, there is no feasible site, and I cannot trust its safety," adding, "We need to massively grow renewable energy."
Accordingly, while support for corporations such as solar power is expected to continue to be strengthened, there are growing calls that countermeasures against repeatedly occurring guarantee accidents are urgently needed.
Jeong Chang-su, head of the Nara Salim Institute, said, "The accident rate is slightly higher than that of policy finance for low-income groups," adding, "It is time to consider measures for efficient fiscal support."
Rep. Lee Jong-bae of the People Power Party said, "As the government lends momentum to its renewable energy expansion policy, I am concerned that vetting of insolvent corporations may have been weakened," adding, "We must review the entire system to prevent waste of government grants-backed funds."