SK To Integrate Renewable Energy Business...Considering Joint Venture With KKR

SK Group is pursuing a plan to integrate its renewable energy businesses, which are currently dispersed across its affiliates.

Yeonggwang Wind Farm viewed from Baeksu Coastal Road in Yeonggwang County, South Jeolla Province. Photo by Kang Jinhyung

According to the business community and other sources on the 12th, SK Group is working to integrate its renewable energy businesses within the group and is seeking a strategic partnership with global investment firm Kohlberg Kravis Roberts (KKR). SK Group and KKR are reportedly reviewing a plan to integrate the renewable energy businesses (excluding hydrogen operations) of three companies, including the establishment of a joint venture (JV): SK Innovation, SK Ecoplant, and SK Discovery.

This initiative by SK Group appears to take into account the characteristics of the renewable energy business, in which large-scale investments are required at an early stage while the payback period is long. In the case of offshore wind power in particular, projects are becoming larger in scale, increasing the funding burden. Industry sources estimate that, based on a 100 MW project, the total project cost reaches around 870 billion won. Civil complaints in local communities, environmental impact assessments, and construction costs are also among the factors that increase the financial burden.

By contrast, the period required to recoup the investment capital is typically at least 4 to 8 years. For that reason, the group aims to reduce the initial financial burden and enhance business sustainability by bringing in financial investors (FIs) as strategic partners.

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