KEPCO to bid for U.K. offshore transmission project with overseas partners

Korea Electric Power Corp. (KEPCO) headquarters in Naju, South Jeolla Province, southwestern South Korea [Courtesy of KEPCO]

Korea Electric Power Corp. (KEPCO) is considering a consortium with British and Japanese partners in its bid for the world’s longest offshore transmission business in the U.K. in hopes to have a higher chance of winning the bid while spreading financial risks by taking an optimized stake given its current financial strain.

According to industry sources on Thursday, preliminary bidding results for Round 10 of the U.K.‘s Offshore Transmission Owner (OFTO) tender are expected to be released at the end of this month. KEPCO tendered a bid on the project offered by the U.K. Office of Gas and Electricity Markets (Ofgem) in April. The main candidates will be selected by July, at the latest, with the main bidding process is scheduled for October.

The U.K. project entails the operation of an underwater transmission network on the floor of the North Sea connecting to three offshore wind farms, over the span of 25 years, with an estimated cost of about 3.2 trillion won ($2.5 billion). KEPCO’s bid is for the Dogger Bank A Offshore Wind Farm, where the transmission networks are located about 131 kilometers off the northeast coast of England. The transmission network is the world’s longest high-voltage direct current (HVDC) cable system, with cables that stretch 175 kilometers underwater and 30 kilometers onshore, with a total capacity of 1,200 megawatts.

KEPCO’s plan is to engage in the project as a strategic investor to secure a stake and to have dividends and operating profits. It is in discussions to form a consortium for the project with potential strategic and financial investors from the U.K. and Japan, preparing for the company to remain as a bidder for the main tender process. A consortium with the Japanese utility company Kyushu Electric Power Co. and British asset management firms could increase its chances of winning the bid and mitigate financial risks.

KEPCO faces challenges. While it has experience in power transmission from the Korean Peninsula to the island of Jeju, the company has not engaged in power transmission in the opposite direction, from offshore to onshore.

The operation of transmission cables is also new to the power company, without building the facilities themselves. The company seems to have shifted in its approach to overseas projects, to include investment projects, since its transmission network project in the United Arab Emirates in 2021.