By Kim Hyun-binThe U.S.
Inflation Reduction Act, which will likely take effect next year, is expected to benefit local companies in the solar and wind power sector, according to industry officials, Tuesday.The act, which is primarily designed to fight inflation, was passed by the U.
S. Senate last week and will soon be signed into law by President Biden after a democrat-controlled House vote.
The act will enable the U.S.
government to secure money through hikes in corporate income taxes and invest it in responses to the escalating climate change.About $369.3 billion will likely be invested to fight climate change alone.
As for renewable energy, $60 billion is expected to be used for the manufacture and production of solar panels, wind turbines, and batteries in the U.S.
, and local solar and wind power companies are expected to benefit.Although Chinese companies control 80 to 90 percent of the global solar energy value chain, it is highly likely that Korean players will benefit from the bill, whose purpose is to reduce dependence on China.
Hanwha Solutions, the No. 1 solar module company in the U.
S., is considered a major beneficiary.
"The purpose of the bill is to reduce dependence on China in the value chain of renewable energy such as solar power and batteries and to encourage production in the U.S.
as much as possible by establishing a value chain centered on allies," Kang Dong-jin, a researcher at Hyundai Motor Securities, said. "Although China controls 80 to 90 percent of the entire value chain, Korea and the U.
S are the only countries that are competitive, so Korea's solar and rechargeable battery industries will benefit the most."Hanwha Solutions operates solar modules generating 1.
7 gigawatts (GW) of electricity in the U.S.
It plans to invest 200 billion won to build an additional 1.4GW module plant by next year.
Analysts also expect Hanwha Solutions to benefit between 1 trillion ($765 million) to 5 trillion won by 2030 through the bill."The budget for eco-friendly industries included in this IRA is four times higher than that of the bill passed during the Obama administration in 2009. The move is expected to benefit Hanwha Solutions, which has production facilities in the U.
S. and has the largest share of the U.
S. residential and commercial markets," an industry official familiar with the matter said.
Wind power equipment companies such as Unison and CS Wind also have high expectations. Exports are likely to increase as the U.
S. wind power market expands.
In a recent report by the U.S.
Energy Information Administration (EIA), wind power generation in the U.S.
would increase by 24 percent if the tax credit for wind production is extended through 2050.