KEPCO Withdraws from US Solar Power Business... 19 Billion KRW Loss

Joint Investment of 40 Billion KRW with National Pension Service... Decision to Liquidate Due to Low Profitability

Aerial view of a solar power plant in Colorado, USA.

[Asia Economy Reporter Moon Chaeseok] Korea Electric Power Corporation (KEPCO) has suffered a loss of 19 billion KRW due to failure in its solar power business in the United States.

On the 25th, according to overseas solar power business operation data submitted by KEPCO to Yang Geum-hee, a member of the United Future Party, KEPCO's board of directors resolved in July to liquidate a 30MW solar power plant operated in Colorado, USA.

KEPCO acquired the solar power plant located in Alamosa, Colorado, in April 2017.

KEPCO invested 20.1 billion KRW for a 50.1% stake, and the National Pension Service Corporate Partnership (COPA) fund invested 19.9 billion KRW for a 49.9% stake, establishing a joint investment company called 'KEPCO Alamosa.' KEPCO directly handled equipment, maintenance, and repairs.

At the time, KEPCO announced, "We have entered the world's largest electricity market, the United States, for the first time," and "We have secured a local base for full-scale entry into the U.S. market."

A 25-year long-term sales contract was signed with Colorado Electric. It was expected to generate sales of 230 million USD (approximately 250 billion KRW). Annual dividend income was anticipated to be about 1.2 million USD.

However, power generation remained at only 80-88% of the plan, resulting in lower-than-expected sales. Profitability was also below expectations. It was lower than the expected annual return rate of 7.25%, with 4.7% in 2017, 0.7% in 2018, and a loss of 1.142 billion KRW last year.

KEPCO decided to sell the remaining power plant assets and liquidate the corporation by the second quarter of 2022. The sunk investment due to contract termination and liquidation amounts to 19 billion KRW.

Representative Yang said, "The decision to withdraw from the overseas solar power business, in which 20 billion KRW was invested, after four years can only be seen as a lack of verification during the business preparation stage," and added, "Since overseas renewable energy projects involve many variables, a thorough verification system must be established from the business planning stage."

This content was produced with the assistance of AI translation services.