South Korea’s Renetec Co., managing a 1 trillion won ($917 million) project to generate power from tidal currents, said it will raise as much as 30 percent of required funds in equity and the rest through project financing.
“Our equity partners are being asked to get a certain percentage of their energy from renewables so there won’t be any challenge to raise 200 billion won to 300 billion won from them,” Chief Executive Officer Park Jong Seon, 52, said in an interview in Seoul. “For the debt portion, we’ll start fundraising in May 2014” as most funds will be needed starting 2015 and terms could be better then.
Renetec highlights a push by renewable energy companies to tap larger industrial groups for funds. Backers of Renetec’s project include Korea Electric Power Corp. (KEP); Hyundai Amco Co., a construction unit of Hyundai Motor Group; and the local governments of Jeollanamdo and Jindo Island.
Globally, sixteen tidal projects of more than 200 megawatts are in development using competing technologies, Milo Sjardin, the Singapore-based head of Asia-Pacific analysis at Bloomberg New Energy Finance, said in an email.
“Location is naturally important if you’re talking about tidal, but once you have that as well as government support, you still need a good, reliable technology and an experienced project developer that can execute the project well,” he said.
Renetec estimates its 200-megawatt tidal project 420 kilometers (261 miles) southwest of Seoul will be the world’s first and biggest of its kind. The park will use tidal currents to generate power for as many as 180,000 homes when the second phase of installation is completed in 2016.
Seoul-based Renetec set up a venture in 2007 with Voith Hydro Holding GmbH & Co., the world’s largest water power generating group, to produce tidal turbines. The Wando island, South Korea-based venture is set to install a 1-megawatt prototype tidal current turbine off the U.K. coast in February before manufacturing one for the Korean project, Park said.
Renetec, established in 2001, plans to almost double its workforce next year, Park said, adding that an initial public offering is planned for Korea in 2015. Renetec aims to obtain related licenses and approvals for the 200-megawatt tidal project by early 2014, Park said.
The company plans to ask the government to consider offering incentives for power from tidal projects, said Park, owner of a 25 percent stake in Renetec.
South Korea introduced a renewable-energy quota this year requiring that the nation’s 14 generators boost renewable sources to 2 percent. The mandatory quota for the proportion of electricity generated by renewables will be increased to 10 percent in 2022.
“Once we finish the project, we will go to overseas markets with that track record,” Park said. “We are already tapping potential locations in Asia for tidal parks.”
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