Shining 'Taeyang-gwang Stocks' in the Inflation Reduction Act

Hanwha Solutions Soars 50% in One Month
Rising Trend Supported by Low-Carbon Economic Viability

[Asia Economy Reporter Kwon Jaehee] As the enactment of the Inflation Reduction Act, which includes an investment of approximately $369 billion (about 481 trillion KRW) for climate change response and energy security, approaches, attention is focusing on eco-friendly related stocks. In particular, solar power is gaining attention as an energy source that combines energy security, carbon emission reduction, and economic feasibility, leading to noticeable rises in solar power-related stocks.

According to the Korea Exchange on the 12th, Hanwha Solutions has risen more than 50% in the past month. It increased from 30,850 KRW on July 18 to 47,300 KRW on August 11. On the morning of the same day, it was trading in the 46,000 KRW range.

The spotlight on solar power is due to the global power shortage crisis. Not only Europe, which depends mostly on Russia for energy, but also the United States, where exports of natural gas to Europe have recently increased, are experiencing significant rises in domestic electricity prices. Residential electricity costs, which were around $0.128 per kWh before 2021, rose by 11.2% to $0.143 in the first half of this year. Considering that U.S. electricity price increases over the past decade have been about 2%, this is a substantial rise. Moreover, the U.S. has been closing coal-fired power plants at an average annual rate of 11 GW from 2015 to 2020, causing a serious energy shortage. Among energy sources, solar power is considered the most economically efficient due to its shorter installation period and process compared to other energies and its cost-effectiveness. Bloomberg has advanced its forecast for the global solar power demand market opening, which was previously expected to exceed 300 GW annually by 2029, to 2024.

In particular, Hanwha Solutions is likely to expand its business in the U.S. and thus become eligible for tax benefits provided by the U.S. government. Hanwha Solutions has a 1.7 GW module production capacity in Georgia, U.S., and plans to expand by 1.4 GW in the second quarter of next year.

Securities firms have also focused on Hanwha Solutions. Hana Securities raised Hanwha Solutions’ target stock price from 40,000 KRW to 64,000 KRW.

Yoon Jaesung, a researcher at Hana Securities, analyzed, "Hanwha Solutions’ tax benefits will directly increase profits as they are deducted from corporate taxes in the future, and since it maintains a high market share in the fast-growing U.S. solar power market, it is expected to enjoy additional tax benefits."