[Exclusive] KEPCO's 'Urgent Debt'... Pursuing Acquisition of US Mega Solar Power Plant

KEPCO to Launch Texas Mega Solar Project... Largest Scale Ever
Letter of Intent Submission Next Month... Commercial Operation Starts May 2024
To Secure US Renewable Market... "Feasibility Assessment Underway"
"Overambitious Overseas Project" Criticism... 7.8 Trillion KRW Loss in Q1

Korea Electric Power Corporation Seoul Headquarters located in Jung-gu, Seoul. [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Lee Junhyung] Korea Electric Power Corporation (KEPCO), which is mired in deficits, has begun pursuing the acquisition of a mega solar power plant to be built in Texas, USA. This move is based on the judgment that securing future revenue sources in line with the carbon neutrality policy requires preempting the US, the world's largest renewable energy market. However, there are also criticisms that this is an excessive overseas project amid KEPCO's rapidly deteriorating financial structure due to soaring fuel costs.

On the 29th, according to comprehensive reporting by Asia Economy, KEPCO is pushing forward with the acquisition of a solar power plant that the US solar developer Company A is set to build in Webb County, Texas. KEPCO has recently sought technical and legal advice with the plan to acquire 100% equity in the solar power plant. KEPCO plans to submit a Letter of Intent (LOI) to Company A next month and then begin formal negotiations. The acquisition is expected to be completed within this year.

The Texas solar power plant that KEPCO is pursuing to acquire is a mega facility with a capacity of 500MW. A 500MW capacity can supply electricity to approximately 170,000 households. This is the largest scale among KEPCO’s overseas solar projects to date, more than twice the size of the 235MW solar power plant in California, USA, acquired in 2018. The solar development project promoted in Mexico in 2019 was also 294MW in scale.

The power plant is scheduled to begin construction by the end of this year and commence commercial operation in May 2024. Company A is also reportedly planning to install a 500MW energy storage system (ESS). By utilizing ESS, solar energy?which is difficult to produce on demand?can be stored and used when needed.

KEPCO is pursuing this large-scale overseas solar project to preempt the US renewable energy market. Many companies in the US have declared ‘RE100 (100% renewable energy)’, resulting in high demand for solar energy. Unlike Korea, the US has many large sites suitable for solar installation, such as deserts. This is why the US has become the world’s largest renewable energy market. A KEPCO official said, "(The Texas solar project) is at the stage of verifying business feasibility," adding, "It is necessary from the perspective of preempting the renewable energy market."

However, some view KEPCO’s aggressive overseas expansion as reckless. Despite soaring fuel costs such as oil prices, electricity rate hikes have been delayed, causing deficits to balloon like a snowball. Critics argue that KEPCO should focus on improving its financial structure through self-help measures rather than overseas projects. KEPCO already posted a deficit of about 7.8 trillion won in the first quarter alone. In response, the government recently revised existing regulations and raised electricity rates by 5 won per kWh in the third quarter.

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