Korea Electric Power Corp. (KEPCO) has become the first Korean power company to land a gas combined cycle power plant project in the United States.
KEPCO was selected as a preferred bidder to build and operate the 20MW, Dededo Gas-fired Combined Power Plant, issued by the Guam Power Authority (CPA). It is the first time a Korean power company has landed a U.S. thermal power plant project though an international bidding.
The project, which will break ground next May, is going to go on stream in October 2022. KEPCO, struggling from dwindling business performances caused by the government’s energy paradigm shift, is looking for the answer to the domestic headwinds abroad.
KEPCO’s winning the latest U.S. power plant project may give the power company a fresh lease on life. Now that KEPCO is doing business abroad, it is free from snowballing policy costs in Korea, such as the country’s new renewable portfolio standards (RPS), a system that forces power producers to supply a certain amount of new and renewable energy in their power portfolio.
The project takes a Build–operate–transfer (BOT) or build–own–operate–transfer (BOOT) format. The BOT is a form of project financing, wherein a private entity receives a concession to finance, design, construct, own, and operate a facility stated in the concession contract. The project will allow KEPCO to construct a power plant and recoup investments by selling the electricity it will produce for 25 years.
KEPCO, which has a successful track record of winning photovoltaic power projects, teamed up with Korea East-West Power Co. (EWP), which has experience operating thermal power plants, in forming a consortium to participate in the international bid for the project.
KEPCO and EWP own a 60 percent stake and a 40 percent share, respectively.
A KEPCO official said the CPA, the owner of the project, will be responsible for supplying fuel for the plant, a move to remove cost fluctuations, caused by fuel price changes.
Hyundai Engineering will participate in the project through the engineering, procurement and construction (EPC) format, and Korean SMEs are expected to supply auxiliary equipment and systems related to the construction of the plant, so the economic benefits Korean companies will receive are projected to stand at roughly 200 billion won.
In July 2017, KEPCO won an order for a 60MW photovoltaic power plant in Mangilao, eastern Guam. If the latest project is completed, KEPCO’s power capacity will rise to a combined 260MW, accounting for 55 percent of Guam’s power generation.
KEPCO’s overseas power generation business started with its participation in a power plant rehabitation project in Malaya, the Philippines.
The power company is in a full-fledged shape with 41 projects that get underway in 27 countries, including the ones in North America, the Middle East and Asia. They include 20 power generation projects, 20 power transmission and distribution projects and a resources development project.
The projects KEPCO is undertaking will have a power generation capacity of 25,141MW. Thermal power generation tops with a capacity of 18,025MW, followed by nuclear power with 5,600MW and new and renewable energy with 1.516MW.
KEPCO said the latest gas-fired combined cycle power project in Guam, is expected to serve as an opportunity to give a pump-priming for Korean companies’ entry in the North American power market in earnest.