SEOUL/TOKYO -- South Korea's Hanwha Group is delving deeper into the solar business, seeing an opening as Europe and the U.S. try to steer clear of the Chinese panel makers that now lead the market.
The conglomerate, which ranks 7th in the country in terms of assets, completed late last month the 727 million euro ($842 million) acquisition of RES Mediterranee, better known as RES France, a renewable-energy development company with 5 gigawatts of solar and wind projects in the pipeline. Hanwha plans to leverage the expertise of RES to win more projects in Europe.
Hanwha, which started off in chemicals and has expanded to defense, finance and retail, sees renewables as a promising path to long-term growth overseas, as the outlook for the domestic market on which it has long focused looks dim.
Development companies typically handle the broad strokes of design for renewable energy facilities while contracting with engineering, procurement and construction companies to handle details such as securing equipment.
Hanwha's acquisition of a development company provides it with a channel to sell its solar panels. RES's involvement in building and operating wind farms also lets the conglomerate expand its portfolio of renewables.
"France is a market with high growth potential, but one that's hard for new players to enter," said Kim Hee-cheul, president of the Q Cells division of Hanwha Solutions. "The acquisition gives us an opportunity to secure a foothold in renewable-energy plant construction in Europe."
The European Commission aims to have renewables account for 65% of the European Union's power generation by 2030. France, which relies heavily on nuclear power for its energy needs, is at only 22%, leaving plenty of room for more solar and wind.
Hanwha started off big with its foray into solar, buying German solar cell maker Q Cells in 2012. The field has remained a priority for the conglomerate, as shown by moves such as last year's acquisition of Geli, an American startup that develops software for energy storage management.
Chinese production of solar panels surged in the early 2010s, and companies there have since gained a firm grip on the market, with a total share of roughly 70%. The top three solar cell makers -- China's Longi Solar, JinkoSolar and Trina Solar -- leaped to the top of the list on the back of highly competitive pricing. Hanwha sits in sixth place at just 6%.
But trends appear to be shifting. This year, the U.S. government said it is considering tighter restrictions on imports from companies with supply chain links in Xinjiang, over concerns about forced labor there. This may become a roadblock for Chinese solar panel manufacturers, which rely on polysilicon from Xinjiang .
This comes alongside a decarbonization drive by President Joe Biden's administration, with renewables at the center. The Department of Energy has estimated that solar could generate 40% of U.S. electricity by 2035, compared with about 3% now.
South Korea's Meritz Securities called these policies "a big opportunity for Hanwha," adding the conglomerate would benefit from restrictions on Chinese materials.
Hanwha in September completed in Texas a solar farm capable of generating enough power for 240,000 households. The company in 2019 started up a solar panel module factory in the U.S. state of Georgia that should enjoy a boost from Washington's efforts to bring manufacturing home.
Hanwha has earmarked billions of dollars for more acquisitions and investments. It raised 1.35 trillion won ($1.14 billion) this year through a rights issue, and has received a 5 trillion won financing commitment from state-run Korea Development Bank to promote renewable energy.