Korea Midland, Posco Unit Win $1 Billion U.S. Solar Project

Korea Midland Power Co. and Posco Engineering Co. won an auction to build and operate a $1 billion solar project in the U.S. as Korean companies seek opportunities to invest overseas following slowing demand at home.

The 300-megawatt plant will be located in Boulder City in Nevada, and is expected to be completed by December 2014, Korea Midland, a unit of the country’s largest utility Korea Electric Power Corp. (KEP), said today in an e-mailed statement. The plant will be the largest by capacity that any Korean company has set up overseas, Seoul-based Korea Midland said.

South Korean companies are building solar power plants abroad as demand for them at home is limited by the small size of the market. The U.S. will become one of the world’s largest solar markets by 2013 as utilities comply with state renewable energy quotas and global costs to produce solar modules decline, Bloomberg New Energy Finance said in an Oct. 14 note.

“Korean companies, led by power generators, are going out of Korea, betting they have a competitive edge,” said Kang Sung Jin, an economics professor at Korea University in Seoul. “Their exit will be more vivid over time as the domestic market is limited.”

The strength of South Korean companies in the production of electronics components and semiconductor materials provides them an advantage in applying the know-how for the solar industry, Kang said. The world’s second-largest maker of polysilicon, a key raw material for solar panels, is South Korea’s OCI Co. Ltd.

Desert Location

Korea Midland said it won the project with the Posco unit through an international auction held by the Boulder city government in August, beating seven other bidders, including one led by Sempra Energy. The Korean companies obtained final approval on Oct. 25 for the project, according to the statement.

The plant will be located at a 1,550-acre (627-hectare) plot, called Dry Lake Bed South, in a desert 25 kilometers (16 miles) southeast from Las Vegas.

Korea Midland will manage the financing and operate the facility for 50 years until 2064 while the unit of Posco (005490) will construct the plant, the statement said. Korea Midland plans to own a 30 percent stake in the project, with Posco Engineering holding 10 percent. The remaining 60 percent will be given to investors, Korea Midland said in a separate document.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net Sangim Han in Seoul at sihan@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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