[Exclusive] KEPCO Intensifies Entry into US Green Energy Market... Profitability Remains 'Questionable'

KEPCO to Acquire Solar Power Plant in Imperial County, California
Plans to Secure Over 90% of New Renewable Energy from Solar Power in Next 5 Years
Colorado Power Plant to Exit Business 3 Years After Acquisition Due to Profitability Decline
"KEPCO's Solar Power Business Is a Result of 'Denuclearization' Political Logic"

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Jun-hyung] Korea Electric Power Corporation (KEPCO) is pushing to acquire a large-scale solar power plant located in Imperial County, California, USA, based on the judgment that realizing 'economies of scale' is paramount to securing the world's largest eco-friendly energy market. By acquiring the 89MW solar power plant, KEPCO can fully launch its attack on the US eco-friendly power market together with its existing solar power plants in Guam (60MW) and California (235MW).

This acquisition of the solar power plant also accelerates the overseas energy storage system (ESS) business. KEPCO plans to actively utilize ESS along with solar power generation to expand participation in the local US power market and generate profits. A representative example is storing energy and selling it when prices are high. Through ESS charging and discharging, it is also possible to generate profits by adjusting frequency changes caused by mismatches between power supply and demand.

This aligns with KEPCO's management strategy focusing on renewable energy. In the '2022-2026 Mid-to-Long Term Management Goals' announced at the end of last year, KEPCO stated it would increase renewable energy generation capacity to 1102.9MW by 2026. It is also reported that over the next five years, more than 90% of the total renewable energy generation will be secured through solar power.

However, economic feasibility is an issue. With more than 100 billion KRW expected to be invested in this acquisition, KEPCO's overseas renewable energy business has mostly failed to avoid losses. KEPCO's decision to withdraw from the Colorado power plant business just three years after acquisition was due to economic effects falling far short of expectations. Originally, KEPCO anticipated generating sales of 230 million USD (approximately 275.4 billion KRW) over 25 years from the Colorado power plant. However, actual power generation was only about 80% of the initial plan, and the profitability rate recorded was 0.7% as of 2018. The sunk investment cost due to contract termination and other factors amounted to about 19 billion KRW.

This is why opposition voices are growing regarding this acquisition. There are criticisms that KEPCO is recklessly expanding its solar power business, being trapped in the government's nuclear phase-out policy.

Professor Lee Deok-hwan, Emeritus Professor of Chemistry at Sogang University, pointed out, "KEPCO's overseas solar power business is a result of political logic," adding, "It goes against the global trend of expanding nuclear power generation."

This content was produced with the assistance of AI translation services.