HDC Group Tongyeong Eco Power Launches Full-Scale Energy Business

[Asia Economy Reporter Yoo In-ho] HDC Group's Tongyeong Eco Power signed a contract worth approximately 800 billion KRW on November 30 with Hanwha Construction, which was selected as the EPC (Engineering Procurement Construction) contractor for the Tongyeong LNG Power Plant.

The Tongyeong LNG Power Plant project is a private power plant construction project to build and operate a 1,012 MW class LNG combined cycle power plant and a 200,000 ㎘ storage tank on a 275,269㎡ site within Seongdong Shipbuilding & Marine in Gwangdo-myeon, Tongyeong-si, Gyeongnam.

The total project cost amounts to about 1.3 trillion KRW. Currently, site development work for the power plant is underway, aiming for financial agreements and the start of main plant construction in 2021.

The Seongdong Shipbuilding & Marine site in Tongyeong has geographical advantages as it is adjacent to the coastline and near the Korea Gas Corporation Tongyeong base, with the final land purchase completed in September 2019.

Since 2015, collaboration has been ongoing with Korea Gas Corporation through an MOU, and on November 10, an agreement was signed to use the gas corporation's manufacturing facilities for the Tongyeong power project.

This has established a foundation to use Korea Gas Corporation's unloading facilities for directly imported overseas fuel. It also enables a reduction in pipeline usage fees charged by Korea Gas Corporation, which constitute a large portion of fuel costs, thereby securing competitiveness in power generation costs.

HDC Group stated, "To build a more competitive business structure for the Tongyeong LNG Power Plant project and develop it into a new business platform, Hanwha Construction was selected as the EPC contractor through competitive bidding. Our group company, HDC Hyundai Development Company, did not participate in the EPC bidding but plans to collaborate in various areas alongside Tongyeong Eco Power."

HDC Group aims to use the Tongyeong power project as a foothold to expand its business platform through related projects. Beyond power generation, it plans to establish a stable profit structure by leveraging LNG trading, LNG storage facility leasing, and power plant and storage facility operation and maintenance businesses, thereby evolving into a sustainable enterprise.

A representative of Tongyeong Eco Power said, "As this is HDC Group's first project entering the energy development sector, we have devoted great effort to thoroughly considering business feasibility, economic viability, profitability, and scalability. We will contribute to stabilizing Korea's power supply and revitalizing the local economy."

Meanwhile, in November last year, HDC signed a joint promotion agreement for the Tongyeong LNG Power Plant project with Hanwha Energy, stipulating that HDC would be responsible for the construction and operation of the power plant, while Hanwha Energy would handle the natural gas supply. Currently, they are preparing to sign a Heads Of Agreement (HOA) regarding key conditions for direct fuel import.