[Exclusive] "1.44 Trillion Jackpot at Saemangeum"... KHNP's 'Economic Feasibility Analysis' Mystery

Economic Feasibility Analysis of Saemangeum Offshore Wind Power... Revenue Expected at 144 Billion KRW
Wind Speed at Site is 5.64 m/s... Half of Rated Wind Speed (10 m/s)
Wind Turbine Normal Operation Difficult... Doubts on 'Rosy' Economic Feasibility Analysis
"Economic Feasibility Hard to Secure... Due to Hasty Renewable Energy Deployment"

Former President Moon Jae-in Tours Saemangeum Floating Solar Power Plant
(Gunsan=Yonhap News) Photo by Hwang Kwang-mo = Former President Moon Jae-in is touring the Saemangeum floating solar power plant located in the reservoir of Gunsan, Jeonbuk, on the morning of October 30, 2018. 2018.10.30
hkmpooh@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] It has been confirmed that Korea Hydro & Nuclear Power (KHNP) reported expected sales of 144 billion KRW for the Saemangeum offshore wind power project at the board meeting held at the end of last year. However, the wind speed at the site, as investigated by KHNP itself, was found to be only about half the level required to generate power with wind turbines, raising concerns that the economic feasibility analysis may have been exaggerated.

According to a comprehensive investigation by this paper on the 24th, KHNP reported to the board in December last year that it could generate sales of 144 billion KRW from 2024 to 2044 through the Saemangeum offshore wind power project. At that time, the expected net profit calculated through KHNP's economic feasibility analysis was a total surplus of 12 billion KRW. Accordingly, KHNP's board resolved in the same month to invest 5.95 billion KRW in The G.O.D., a special purpose company (SPC) holding the Saemangeum offshore wind power project rights.

The problem lies in the wind speed at the Saemangeum offshore wind power site. Before deciding on the investment, KHNP measured the average monthly wind speed at the Saemangeum offshore wind power site to be 5.64 m/s. In contrast, the wind turbines KHNP intended to install at Saemangeum were products of Siemens Gamesa, the world's largest wind turbine manufacturer, with a rated wind speed of 10 m/s. The rated wind speed is the minimum wind speed required to generate power in the generator motor.

This essentially means that it is difficult to operate the wind turbines normally at the wind speed of the site. In fact, the wind power generation built by KHNP in 2008 at the Gori nuclear power plant site in Gijang-gun, Busan, had a site wind speed of 3.5 m/s, which is about 30% of the rated wind speed (11.5 m/s), resulting in an annual average utilization rate of only 6.2%. The Gori wind power project has incurred losses amounting to 910 million KRW over the past 10 years and was decided to be dismantled early last month.

To make matters worse, controversy over 'unfair profits' surrounding the Saemangeum offshore wind power project has also erupted. Last month, Park Soo-young, a member of the People Power Party, raised suspicions during a national audit that Professor S from Jeonbuk National University, the real owner of The G.O.D., attempted to gain a speculative profit 7,000 times the market price by transferring the Saemangeum offshore wind power project rights to foreign capital. In response, the Ministry of Trade, Industry and Energy recently conducted a fact-finding investigation and has begun procedures to revoke The G.O.D.'s power generation project rights. The Board of Audit and Inspection is also currently conducting an audit of KHNP's renewable energy projects.

KHNP is ultimately moving toward withdrawing its investment. According to materials submitted by KHNP to Park's office, KHNP plans to confirm its withdrawal from the project following the Ministry of Trade, Industry and Energy's revocation of the transfer approval for The G.O.D. Considering that the ministry will decide on the revocation of the project approval next month, KHNP is expected to resolve the withdrawal of the investment plan through a board meeting as early as the beginning of next year.

Park said, "The investment and permit decisions were made despite difficulties in securing economic feasibility due to being swayed by a hasty renewable energy expansion policy," and added, "The current government must establish accurate and strict renewable energy investment and permit procedures to prevent the damages that have frequently occurred over the past five years."