GEN1 Energy "Pioneering Renewable Energy Market through Geothermal and Hydrothermal Energy"

Geothermal Heating and Cooling Leader G1 Energy IPO
"Market to Grow at Least 17 Times... Positioning as a Renewable Energy Powerhouse"

Minkyungcheon, CEO of GNW Energy (Provided by Seoul IR)

[Asia Economy Reporter Minwoo Lee] Geonwon Energy, a specialist company in geothermal heating and cooling systems, has announced a full-scale leap forward through its KOSDAQ listing. The company aims to bring the focus of the renewable energy market, which has been concentrated on solar and hydro power, to geothermal energy, while also securing water thermal energy?leveraging South Korea’s geographical advantage of being surrounded by sea on three sides?as its next growth engine.

On the 7th, Geonwon Energy held a press conference at a Chinese restaurant in Yeouido, Yeongdeungpo-gu, Seoul, to proceed with its initial public offering (IPO).

Founded in 2002, Geonwon Energy holds the number one market share in the domestic geothermal heating and cooling market. It has secured orders from major domestic landmarks and public institutions such as the Lotte World Tower 2nd Building, Incheon International Airport, Naver’s second office building, and the Korea Electric Power Corporation’s new headquarters. Both sales and operating profits have shown growth every year. Sales increased by more than 10% annually, from 17.6 billion KRW in 2016 to 26.5 billion KRW in 2017, 29.4 billion KRW in 2018, and 26.8 billion KRW (sum of the first to third quarters) in 2019. Operating profit also rose from 1.7 billion KRW in 2017 to 3 billion KRW by the third quarter of last year.

Regarding Geonwon Energy’s core business, the geothermal heating and cooling system, the company explains that it has relatively greater potential due to its superior entry barriers and efficiency compared to solar and wind power. CEO Min Kyungcheon of Geonwon Energy emphasized, “Unlike solar or wind power systems, which require large equipment and wide installation areas, geothermal heating and cooling systems can be installed with only a small area beneath a building. Because it utilizes a constant temperature underground, it is less constrained than solar power, which is sensitive to sunlight, or wind power, which depends on wind speed and volume.”

In fact, Geonwon Energy’s geothermal heating and cooling system uses a heat pump to exchange heat at a depth of 200 meters underground, where the average annual temperature is 15°C, through an indirect method. Unlike existing geothermal power generation technologies that drill 4,000 to 5,000 meters deep, this system has a shallow drilling depth and maintains the geological layers intact, making it safe even in the event of disasters such as earthquakes.

The heating and cooling efficiency is also superior to existing systems that use fossil fuels such as gas. Director Lim Youngmin of Geonwon Energy stated, “The coefficient of performance (COP), which indicates heating efficiency, is 3.5 to 4.0, far exceeding that of conventional boilers (0.9) and air conditioners (2.0), allowing cooling costs to be reduced by 50% and heating costs by 77%. Additionally, the main components, the geothermal exchanger and heat pump, have lifespans of 50 years and 20 years respectively, making them semi-permanent and reducing maintenance costs.”

Geonwon Energy plans to expand into water thermal energy and fuel cells to establish itself as a leader in the renewable energy sector. In particular, with the introduction of the “Enforcement Decree of the Act on the Development, Use, and Promotion of New and Renewable Energy” in October last year, water thermal energy has been incorporated into renewable energy, and the company intends to use this as a new growth engine. CEO Min said, “In 2017, support for geothermal energy reached 78.4 billion KRW, and since then, thanks to the government’s strong public obligation system and various subsidy programs, a public obligation market exceeding 100 billion KRW annually has been formed. As the market is expected to grow 17-fold due to mandatory use of renewable energy, we will solidify our position as a market leader by expanding our business not only in geothermal heating and cooling systems but also in fuel cells and water thermal energy.”

Meanwhile, Geonwon Energy plans to list on KOSDAQ through a merger with Hana Financial 10th SPAC. The merger ratio between the two companies is 1:8.2609384, and a shareholders’ meeting to approve the merger will be held on the 15th. The merger date is scheduled for the 18th of next month, and the listing date of the new merged shares is set for March 9.