Power players: Korean firms lock in $20B in energy plant deals

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Power players: Korean firms lock in $20B in energy plant deals

Published: 28 Nov. 2024, 06:00

CHO YONG-JUN
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A view of the new Dukovany nuclear power plant site in the Czech Republic. [KHNP]

Korean power plants are gaining popularity around the world, with Samsung C&T, the Korea Electric Power Corporation (Kepco) and Hyundai Engineering & Construction (Hyundai E&C) all recently securing projects.

The total amount of industrial facility construction deals signed by Korean companies for the January-October period was estimated at $20 billion, according to data from the International Contractors Association of Korea (ICAK) — double the amount seen in the 10-month period the year before.

Korean companies have also been in charge of not just the simple construction of such plants, but the design and operation as well.

A consortium of Samsung C&T and Japan’s Sumimoto said Tuesday that it secured a $3.7 billion deal to build a power plant in Qatar. Samsung C&T is responsible for $2.84 billion in the plant's engineering, procurement and construction, making it the company’s largest contract since that for its power converting stations in the United Arab Emirates in 2021.

Korea Southern Power and Korea Overseas Infrastructure & Urban Development are also joining the construction through equity investments worth $3.9 million each, along with Woori Bank's $580 million in financing.

Kepco secured two combined cycle power plant projects in Saudi Arabia estimated at $3 billion, according to the state run energy firm on Nov. 21. The company will be responsible for both the construction and operation of the power plants and will in turn bring in 2 trillion won ($1.43 billion) in revenue for Doosan Enerbility, who will be providing generators for the plants.

Kepco also won solar projects in Saudi Arabia and Guam earlier this month, responsible for the construction and operation of the solar power plants. The company, with the rights to sell the energy generated from the plants for 25 years, is estimated to make 1.1 trillion won in the period.

Korean companies have also signed deals on the construction of nuclear power plants, with Hyundai E&C signing a design contract on Nov. 4 for the construction of a Bulgarian nuclear plant with the Kepco-led consortium. In July, a consortium led by Korea Hydro & Nuclear Power was also selected as the preferred bidder for a nuclear power plant in the Czech Republic. The deal, estimated at approximately 24 trillion won, involves Doosan Enerbility and Daewoo Engineering & Construction.

The high quality of Korean-made power plants and the tendency of the contracted Korean companies to adhere to the scheduled timeline have fueled the recent increase in demand, including the Barakah Nuclear Power plant in the United Arab Emirates, which started operation in 2021.

“The trust [in Korea] by Middle Eastern and Eastern European countries has increased lately, [and] this applies not just to Korean power plants but also the ability to construct infrastructure, in the defense industry and more,” Korea Energy Economics Institute researcher Cho Seong-jin said.

“The tendency is for Korean construction firms to try to find their way with foreign power plant construction deals when the local construction business is suffering a slump,” a spokesperson of ICAK said.

In the case of Kepco, securing overseas construction deals is a means to help reduce its debt of more than 200 trillion won.

“We will support [companies] to continue securing power plant deals,” the Ministry of Trade, Industry and Energy said.

The upcoming Donald Trump administration in the United States may, however, have a negative impact on Korean companies' future overseas deals, according to a report published by the Construction Economy Research Institute of Korea.

"President-elect Trump is [more] favorable to Israel and has warned of a hard-line policy against the Middle East while criticizing the Joe Biden administration's Middle Eastern policies," the institute said.

"The rising tensions in the Middle East can result in a decrease in the demand for new projects from the countries and cause a slowdown in projects."

BY KIM MIN-JOONG, BAEK MIN-JEONG [[email protected]]