Go to contents

Renewable Energy Utilities Thriving

Posted August. 01, 2007 07:06,   


More and more enterprises are expanding into the renewable energy business as a new growth engine.

As it seems likely that the oil price will stay high for a long period of time, enterprises are setting eyes on renewable energy business such as solar and wind energies, while simultaneously strengthening conventional energy businesses like the development of oil reservoirs.

“In the USA, the time has gone when adding ‘.com’ to a company name meant the rise of its stock price, and the era for ‘watt.com’ companies has come. South Korea is going through similar stages,” explained Professor Kim Sang-guk of KyungHee University (department of Industrial Engineering).

Enterprises Joining the “War of Energy”-

In early July, LG CNS launched a “renewable energy business team” consisting of 30 staffers.

It purports to make use of the experience of LG CNS in integrating systems in the information technology field and to manage the renewable energy field, including fund raising for renewable energy businesses and the construction of power plants.

This company established solar power plants in Taean, Chungnam, and Shinan, Jeonnam, and recently began to examine the feasibility of getting into the wind power business.

LG Group is encouraging expansion into energy businesses on a group level by developing an air cooler and heater system that utilizes underground heat (LG Electronics) and carrying out business plans based on the Clean Development Mechanism (LG International Corporation), which allows the trade of the rights to discharge carbon dioxide.

Samsung Corporation plans to establish a solar power plant in Greece within this year. Following this plan, it will start to enter in earnest the business of transforming the strong sunrays of the Mediterranean into electricity to fully expand into the renewable energy business.

Samsung Electronics is also making many expect that it will nourish energy business as a new growth engine following its success in the semiconductor business by employing Choi Chi-hun, President of General Electric (GE) Asia-Pacific region, as a president (as reported by the Dong-A Ilbo on July 30 on page B1).

The Hyundai Kia Automotive Group formed a taskforce on resource development in Hyundai Hysco and recently underwrote an oil field in Jambil, Kazakhstan worth 11 billion won. This is the first time the Hyundai Motor Company has invested in an energy-related business.

SK Energy recently began to produce crude oil in Brazil and plans to increase its oil reserve from 500 million barrels as of now to 700 million barrels by 2010.

Half of the Top 10 Net Income Earners are Energy Enterprises-

The economic circle is interpreting the recent strategy of major South Korean companies to expand into the energy business as an attempt to find a new growth engine that will surpass the “semiconductors of Samsung Electronics” in a congested situation since the foreign exchange crisis.

“Due to the prolonged high price of Dubai oil which recently almost hit 70 dollars per barrel and the prospected shortage of oil, the energy field is arising as the strongest appetizer for companies,” explains a person related to Samsung Group.

According to the Fortune, about half of the top 10 net income earners last year were energy companies, such as Exxon Mobil, Shell, BP, Gazprom, and Chevron.

“It is possible the South Korean companies can come from the behind and win in the renewable energy business, which has high growth potential, if they steadily invest in R&D, integrating this field with their strong point, which is the semiconductor technology, and if such a policy is favorable for them.”