Strategies for supply chain risks in energy transition
Having painfully experienced the vulnerability of fossil fuel dependence through the war in Ukraine and conflicts in the Middle East, the world is accelerating the transition to clean energy. Paradoxically, however, in an effort to escape the risks of fossil fuel supply chains, countries are now facing a new risk: dependence on specific nations for energy transition technologies. Korea is highly…
The global shift towards clean energy has been accelerated by the ongoing war in Ukraine and conflicts in the Middle East, highlighting the vulnerability of countries relying on fossil fuels. While the transition to renewable energy sources presents a solution, it has introduced a new set of risks associated with supply chain dependence on specific nations.
Korea, for instance, has become highly dependent on China for its energy transition technology supply chains. In the solar power sector, the proportion of Chinese-made modules surged from 29% in 2023 to 58% in 2024 and reached 69% last year. This rapid shift from domestically produced products to a single foreign supplier raises concerns about the stability and resilience of Korea's energy infrastructure.
The dominance of Chinese modules in Korea's solar power sector is not only a matter of concern for the country's energy security but also for the global market. Korean-made cells, which are essential components of solar modules, have seen a significant decline. While Korean-made cells accounted for 35% of domestic solar power plants in 2021, this share plummeted to just 4% by the end of the following year.
This decline can be attributed to the fact that a majority of small-scale solar power facilities under 100 kW are price-sensitive and prioritize cost-effectiveness. Consequently, the cells produced in Korea are being overshadowed by those manufactured in China.
The reliance on foreign nations for key technologies in the energy transition poses a significant challenge for countries worldwide. The concentration of supply chains in a single nation leaves countries vulnerable to potential disruptions, geopolitical tensions, and trade disputes. As the world moves towards a cleaner and more sustainable energy future, it is crucial for countries to diversify their supply chains and reduce dependence on specific suppliers.
This diversification will not only enhance the resilience of energy systems but also foster innovation and competition among global manufacturers. By striking a balance between embracing clean energy technologies and mitigating supply chain risks, nations can pave the way for a more secure and sustainable energy future.
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
