KEPCO Intensifies Saudi Market Push... Will the 23 Trillion 'Jackpot' Hit?

KEPCO Bids for Taiba LNG Power Plant Project Worth $4 Billion
Also Pursuing Qassim LNG Power Project... Bidding Closes This December
Saudi Electricity Market Rapidly Growing... '12 Trillion Won' Nuclear Power Project Also Underway
"KEPCO's Competitiveness at World-Class Level... High Chances of Winning Bids"

Korea Electric Power Corporation Seoul Headquarters located in Jung-gu, Seoul. [Photo by Yonhap News]

[Asia Economy Sejong=Reporter Lee Jun-hyung] Korea Electric Power Corporation (KEPCO) is accelerating its penetration into the Saudi Arabian power market by participating for the first time in the bid for a liquefied natural gas (LNG) combined cycle power plant, emphasizing ‘de-oilization’ and increasing the share of LNG and nuclear power generation. Success in the Taiba and Qassim projects is also expected to strengthen KEPCO’s position in the 12 trillion won-scale Saudi nuclear power plant bidding war, which is expected to narrow down to a two-way competition between Korea and Russia.

According to a comprehensive report from our coverage on the 13th, KEPCO is preparing to participate in the bidding for the Saudi Taiba LNG combined cycle power plant in November, followed by the Qassim LNG combined cycle power plant in December. The Qassim LNG combined cycle power plant is one of the large-scale LNG power generation projects promoted by the Saudi government along with the Taiba LNG combined cycle power plant. The power generation capacity is 3,500 MW, and the project scale is estimated at 4 billion USD (approximately 5.5 trillion KRW). The Saudi side plans to select the project operator early next year.

KEPCO is also advancing the Rabigh fuel conversion development project in Saudi Arabia. This project involves converting the main fuel of the 1,204 MW-class Rabigh thermal power plant, KEPCO’s first Saudi project, from heavy oil to natural gas. KEPCO won the Rabigh power plant project in 2009 and completed it in 2013. This project is being promoted under the ‘Fuel Conversion Cooperation Memorandum of Understanding (MOU) in the power generation sector’ signed with the Saudi Electricity Company earlier this year. A KEPCO official stated, "The Rabigh project is currently at the stage of preparing the development proposal," adding, "We are coordinating the proposal submission schedule with the Saudi side."

"Sufficient Global Competitiveness"

Experts believe that KEPCO has a high possibility of winning the Taiba power project. This assessment is based on KEPCO’s technological capabilities as well as its superior price competitiveness compared to competitors such as the U.S. General Electric (GE) and the French Electricit? de France (EDF). Professor Jung Dong-wook of the Department of Energy Systems Engineering at Chung-Ang University explained, "If we look only at technological capabilities, a two-way competition between KEPCO and Japan’s Kansai Electric Power seems likely," adding, "Since the gas power generation market is already oversaturated, price competitiveness will be an important negotiation point."

Experts unanimously agree that KEPCO’s accumulated know-how in constructing and operating large-scale power generation facilities domestically and internationally through its power group companies is world-class. Professor Yoo Seung-hoon of the Department of Energy Policy at Seoul National University of Science and Technology said, "One of the important indicators in power plant evaluation is the ‘forced outage rate,’ which shows how often unexpected breakdowns occur," adding, "The forced outage rate of power plants operated by KEPCO overseas is among the lowest in the world."

Given the limitations on raising domestic electricity rates, there is interest in whether the profitable Saudi power projects will serve as KEPCO’s ‘cash cow.’ Professor Yoo stated, "(The Saudi projects) will help improve KEPCO’s financial structure in the long term," adding, "If KEPCO’s overseas projects succeed, deficits will decrease, contributing to the stabilization of domestic electricity rates."

Saudi Nuclear Power Also a Target

The 12 trillion won-scale Saudi nuclear power project is another target for KEPCO. Earlier, the Saudi government sent a request for bid participation to four countries?Korea, China, France, and Russia?in May, expressing its intention to build nuclear power plants. The project involves constructing two large-scale nuclear power plants with a capacity of 1,400 MW each. It is reported that Saudi Arabia highly values Korea’s desert nuclear power plant expertise gained from constructing the Barakah nuclear power plant in the United Arab Emirates (UAE).

KEPCO is aggressively expanding its Saudi projects because the local power market is rapidly growing. Since announcing ‘Vision 2030’ in 2016, Saudi Arabia has been actively promoting large-scale power generation projects such as LNG and nuclear power. The core of Vision 2030 is to break away from the oil-centered economic and industrial structure by significantly reducing the share of oil power generation, which currently exceeds 40%. The ambitious plan also includes raising the share of renewable energy power generation, currently close to 0%, to 50% by 2030.

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