Korea to build large-scale solar power plant in Texas

[Image source: Gettyimagesbank]

South Korean public and private entities will team up to build a 600 billion won ($450 million) worth large-scale solar power plant in Texas, U.S., which will help Korea secure a track record of renewable energy development.

According to industry and investment bank industry sources on Sunday, Korean companies SK ecoplant Co., Hyundai Engineering and Construction Co., Topsun Co. as well as the Korea Overseas Infrastructure and Urban Development Corporation (KIND), Plant, Infrastructure, and Smart City (PIS) fund recently signed a membership interest purchase agreement (MIPA) with High Road Energy Marketing LLC, a developer of a solar power project in Concho County, Texas, for the right to build a 459-megawatt solar power plant in the county.

For the contract, the Korean entities participated as limited partners in a fund created by EIP Asset Management, a local energy infrastructure investment firm.

The project is a large-scale solar power plant development project that encompasses investment worth 600 billion won. The plant, with a capacity of 459 megawatts (MW), will be built on an area of 11.73 million square meters in Texas, which is six times the size of Yeouido in Seoul.

The plant will generate 852 gigawatt-hours (GWh) of electricity annually, which is enough to power approximately 240,000 households based on the monthly average consumption of 300 kilowatt-hours (kWh) per 4-person household. The plant is expected to operate for 35 years after completion.

EIP Asset Management is seeking to generate revenue through long-term power purchase agreements (PPAs) with overseas tech giants. It has been reported that companies with a commitment to achieving 100 percent renewable electricity use, or RE100, are showing interest in signing PPAs with EIP Asset Management.

The investment carries significant meaning as Korean companies have found opportunities in the U.S. Inflation Reduction Act (IRA).

Despite many considering the IRA a challenge for Korean companies, the U.S. act highlights the potential for generating substantial profits in the renewable energy sector.

Currently, the U.S. government has set aside about 481.5 trillion won for policies to promote investments in renewable energy facilities in the country, creating a favorable environment for Korean solar power companies, which are considered to have world-class technology.

“Korea is competing with China in the global solar energy sector,” said an energy industry insider. “As the U.S.-China conflict intensifies, Korean companies have relatively gained more attention and opportunities abroad.”

The Korean companies participating in the fund expect two benefits - One is the revenue generated by the fund itself, and the other is the contract opportunity effect.

The companies are expected to generate profit by winning contracts for projects initiated via the fund. Additionally, the Korean companies may create a virtuous cycle within the domestic solar ecosystem by outsourcing necessary materials and components to suppliers.

“As we oversee all of the core processes of building an ultra-large solar power plant in the U.S., an advanced market for renewable energy, we expect to gain momentum in our global business development,” said Park Kyung-il, chief executive officer of SK ecoplant.

Lee Kang-hoon, president and CEO of KIND, echoed the view, saying that “by participating in the U.S. renewable energy power generation project in the U.S., we aim to strengthen project development capabilities and enhance our track record, and strive for environmental, social, and corporate governance (ESG)-focused business development and investment.”