[Feature] Seeking Solutions Through a Virtuous Cycle of Continuous Investment in Technology, Equipment, and Budgets

[The Crisis in the Energy Industry] ② The Reality of Domestic Hydropower and Pumped Storage
Without Follow-On Orders After Localization, It's Over... The Closure of Company D Proves It
Main Contractors and Design Entities Change Every Time... No Continuity, Just a Mirage
Half Success at Hwacheon and Daecheong Dams, The Other Half Faces Extinction

Thirteen years have passed since 2013, during which the challenge of localizing domestic hydropower equipment has undergone more than four separate projects. However, despite the development of technology, companies have disappeared, and even when equipment was completed, there were no follow-on orders. Four structural reasons are cited as to why localization is so difficult.

First, the lack of original design technology and high barriers to entry are key factors. Most existing equipment relies on foreign-made components, and advanced overseas companies have exclusive control over design know-how accumulated for over a century. Even when technology partnership agreements are signed, the core design capabilities are rarely disclosed.

Discharging at Seomjin River Dam Photo by Yonhap News

Restrictions on new dam construction and lack of opportunities for technology verification also play a significant role. Most of Korea’s medium- and large-scale hydropower resources were developed in the 1980s. Even if technology is developed, without a stage to apply and validate it in real equipment, that technology cannot mature.

The burden of initial investment and localization costs is also holding back progress. If unproven domestic components are selected, the ordering parties face increased risks, which leads them to avoid localization—creating a vicious cycle.

The lack of continuity in government budgets ultimately makes business difficult. During the process of promoting localization projects, budgets are cut off and there is no linkage between projects. Even if technology development is completed, if there is no transition to the next project, companies lose the opportunity to recoup their investments.

Although four projects have been carried out since 2013, the main contractors and technology partners have changed each time, resulting in a lack of continuity. Notably, the core equipment design entity differed for each project. In other words, there was almost no connection between institutions and no continuity in technology development.

The most painful example is Company D, a leading domestic hydropower generation company. Company D carried out the localization project for the 15MW Seomjin River Dam in Imsil-gun, North Jeolla Province, and had been a frontrunner in the small hydropower equipment sector for over 20 years. However, according to corporate information, the company was confirmed to have closed as of July 2025. This is not unrelated to the reality that, even after ten years since the modernization of Unit 2 at the Chilbo Hydropower Plant in Jeongeup, North Jeolla Province, no further modernization has taken place.

Even when technology is developed, if companies are not given the opportunity to utilize it in the market, they cannot survive. The closure of Company D served as a cautionary tale, demonstrating the consequences of ‘disrupted continuity.’

The 30MW hydropower equipment at Hwacheon Dam being carried out by Doosan Enerbility is scheduled for completion at the end of 2026. This is the first time a major domestic conglomerate has participated in supplying main equipment for medium- and large-scale hydro turbines through a technology partnership with an advanced overseas company. However, for this to lead to true technological independence, follow-on orders for Units 1 and 2 must be secured without interruption.

Of the two 45MW units at the Daecheong Dam hydropower plant, only one was completed in 2022, and modernization of the remaining unit has yet to begin. If continuity is broken while achieving only ‘half success,’ another situation like Company D’s could unfold.

Hwang Youngho, CEO of Shinhan Precision, stated, “A company can only exist if it generates profit. Once investment has been made in technology development, sales utilizing those outcomes must be secured, and operators of power generation equipment must be fully aware of this and take the lead in related projects.”

He continued, “If power generation operators prioritize project budgets (costs) and high efficiency above all else, the government funding invested thus far in fostering technological independence and related ecosystems will become meaningless. Attempting to directly compare with advanced overseas companies after just a single round of development and testing, without going through gradual phases toward self-reliance, is a reckless judgment.”

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