The nation’s clean energy businesses are going downhill, squeezed by a slump in domestic demand and exports, according to a report.

The report released by the Renewable Energy Center under Korea Export-Import Bank forecast that sales of the local renewable energy industry were expected to post minus growth this year over 2012, mainly due to slow local demand. Sales in the clean energy industry have shown a downward trend for two consecutive years in 2011 and 2012, after peaking in 2010 at 8.1 trillion won ($7.5 billion). 

In sharp contrast, the global renewable energy market has continued to grow amid the world’s economic downturn for the past five years and it is expected to grow 4 percent to $271.3 billion this year compared to more than a year ago, CleanEdge, a U.S. energy consultancy, said.

The local renewable energy industry also hasn’t performed well in exports since 2010. Outbound shipments are forecast to fall 9 percent on-year to $3.82 billion this year, which will be the biggest drop in three years, the Renewable Energy Center said.

Industry watchers said the faltering solar and wind power energy industries the current government has developed and promoted for the past five years were behind the slump in the industry. The solar power industry, in particular, was hit harder by dwindling product prices caused by oversupply, compared with other renewable energy sectors.

“The local solar power industry stands at a critical juncture. It is critical to gain more support from the government in creating local demand to revive the industry,’’ a senior official of the Korea Photovoltaic Industry Association said in a recent seminar on the future of the solar power industry, adding that financing is another area where government support is needed.

The government has adopted a variety of policies to boost the green energy businesses, including the 1 million green home scheme in 2009, mandatory use of renewable energy in public buildings in 2011 and the renewable portfolio standards, or RPS, in 2012.

RPS forces 13 public and private utilities companies to supply a targeted amount of energy from renewable sources per year. RPS in 2012 was 2.5 percent, which means those utilities firms had to generate 2.5 percent of their total power supply from renewable energy sources.

A survey of the Korea Energy Management Corporation at the end of 2012 showed that more than half of 13 utilities companies failed to meet the 2.5 percent target.

“The new government has to put more focus on implementing and evaluating the green energy policies. For instance, it would be a big help to the renewable industry, if RPS takes roots,” an official from Meritz Securities said. 

According to the Third Basic Plan for New and Renewable Energy, Korea is aiming to increase the portion of renewable energy in total electricity supply to 11 percent by 2030. However, the rate stays reportedly low at around 3 percent as of 2012.

By Seo Jee-yeon (jyseo@heraldcorp.com)