Smart grid-related stocks seen as savvy investment

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Smart grid-related stocks seen as savvy investment

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The stock prices of companies that possess technology linked to a prospective digital system for supplying electricity are on the rise as the electricity reserve has been running low due to the continued hot weather.

A so-called smart grid is now being tested on Jeju, with plans to expand nationwide if it proves successful in an effort to ramp up efficiency and stave off another blackout. On a similar note, the government met yesterday to discuss raising the consumption price of electricity by as much as 15 percent to tamp down demand.

The government also held a nationwide drill to prepare people for a possible blackout last month and encourage them to save energy.

A smart grid is a digitally enhanced electric grid that gathers, distributes and acts on information about both electricity providers and consumers in order to improve the efficiency of electricity services. It is supposed to minimize the waste or loss of electricity in the course of its delivery.

Tightening efficiency is seen as crucial given that electricity demand is expected to rise by 4.8 million kilowatts this summer.

“Establishing a digitally managed smart grid system will be the most utilitarian way of fighting the electricity shortage,” said Yoon Jeong-sun, a researcher at Hyundai Securities in his recent report.

“Companies that possess technologies relating to the transmission of electricity or that calculate hourly usage or offer solutions linked to the energy-saving system, should be closely watched [as they are likely to rise],” added Yoon.

Nuri Telecom, which produces a variety of automatic devices that measure changing in electricity usage, has seen demand for its stocks surge since last month, with the price jumping from 3,750 won ($3.30) to around 4,900 won now. The stock price has shown about 30 percent hike as of yesterday since June 1.

“It is much more crucial to be able to measure electricity usage correctly at peak times than the total increase in overall usage,” said An Byeong-jin, the manager of Korea Power Exchange’s electric planning team.

LS Industrial Systems (LSIS) and Iljin Electric, both of which focus on transmitting electricity through high-pressure cables, have also seen some attention from investors. The two companies have seen their stock prices rise almost 12 percent since last month.

As well as measuring precise usage, the smart grid system aims to save surplus energy and make the most efficient use of it when needed. For example, the energy generated at night, when demand is low, can be effectively stored for daytime use.

“If the electricity bill goes up, people will try to find ways to save money,” said Son Jong-cheon, director of the Korea Smart Grid Institute’s policy planning team. “And this may expedite the commercialization of a smart grid system.”

Korea has established a full test bed for the smart grid system on Jeju, where 168 companies are testing the grid’s technology, including power, telecom, automobile and home appliance companies. Around 6,000 homes are supported by the system, which has attracted experts from overseas to come and benchmark its technology.

By Lee Sun-min [summerlee@joongang.co.kr]

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