Korea's 1st Private Independent Power Producer on the Move

POSCO Power aims to be a world-class energy company



POSCO Power President Cho Sung-sik

PPOSCO Power President Cho Sung-sik said, “We’re devoting ourselves to translating into action the value of ultimately contributing to mankind’s prosperity by creating environmentally-friendly energies for the future and demonstrating affirmative leadership to initiate a shift in the global energy paradigm.” “POSCO Power is armed with an entrepreneurship and corporate culture as a ‘creator’ as well as having accumulated experiences and technological power as being the nation’s first private independent power provider,” Cho said.
“POSCO Power is confident as an affiliate of the POSCO group, and on top of that, its executives and staff members are committed to the mission of creating energy sources for mankind’s future. POSCO Power also has a competitive edge with technological power in such next-generation energy fields as fuel cells, enabling us to become a total energy provider by collaborating with RIST and POSTECH on top of the experiences we have accumulated in the course of the construction and operation of power plants,’ he said. The following are excerpts of a written interview between NewsWorld and the POSCO Power president and CEO, who has unveiled his company’s corporate vision and future plans to secure growth engines for the future.

Question: Will you tell our readers about your company’s energy business portfolio?
Answer: POSCO Power is doing its utmost to grow into a world-class energy provider after declaring its goal to be the world’s best green energy company.
We are devoting ourselves to building a total value chain of up-stream and down-stream businesses in our top four core business areas － power generation, new & renewable energy, fuel cell, and new fuel and resources exploration. This strategy is based on POSCO Power’s commitment to creating a better, brighter world by providing cleaner energy sources in a more efficient way.
In the power business area, its mainstay portfolio, POSCO Power is endeavoring to focus on the expansion of power plants and the diversification of energy sources in South Korea while trying to expand its business environs to overseas markets like Vietnam and Indonesia. In the new and renewable energy area, its sub-core business sector, POSCO Power plans to build and operate 1GW-class power plants utilizing photovoltaic power, onshore/offshore wind power, hydro power and bio by 2020 while pursuing collaboration with POSCO in the areas of new fuels and resources exploration.

Q: What’s your assessment of POSCO Power’s competitive edge and values, which serve as growth engines?
A: POSCO Power is armed with an entrepreneurship and corporate culture as a “creator’ as well as having accumulated experiences and technological power as the nation’s first private independent power provider. POSCO Power is confident as an affiliate of the POSCO group, and on top of that, its executives and staff members are committed to the mission of creating energy sources for mankind’s future. POSCO Power also has a competitive edge with technological power in such next-generation energy fields as fuel cells, enabling us to become a total energy provider by collaborating with RIST and POSTECH on top of the experiences we have accumulated in the course of the construction and operation of power plants.
We’re devoting ourselves to translating into action the value of ultimately contributing to mankind’s prosperity by creating environmentally-friendly energies for the future and demonstrating an affirmative leadership to initiate a shift in the global energy paradigm.

Q: How does your company communicate with neighborhood residents about the construction of the replacements to the existing combined power cycles Nos. 1&2?
A: POSCO Power is charged with ensuring a stable supply of electricity to the Seoul metropolitan area as a total energy provider.
In 2006, POSCO Power once considered a plan to construct combined power cycles Nos. 7&8 to make up for a shortage of electricity, caused by the recovery of the national economy and a rise in the demand of cooling and heating apparatuses, but POSCO Power chose a plan to build the replacements to the existing combined power cycles Nos. 1&2 due to circumstantial changes in the surroundings, including the development of the planned Cheolla International City, part of the Incheon Free Economic Zone. The projected replacement for Nos. 1&2 will introduce environmentally-friendly equipment to lower NOx, the emissions from the liquefied natural gas-fired power units.
Emission equipment will be integrated to improve the surrounding environs and a park will be built within the precincts of the power units to create a place for residents to take a rest. POSCO Power twice held a session explaining to the residents the construction of the replacement for Nos. 1&2, and will continue to communicate with residents and inform them of in-depth information about the construction of environmentally-friendly equipment and landscape improvement plans. POSCO Power strives to explore solutions by continually collecting residents’ demands and responding to their complaints. In this context, POSCO Power will ensure open management for communicating with and co-existence with residents by making public its eco-friendly activities and strengthening volunteering activities while redoubling efforts to contribute to the development of the regional community in western Incheon as a power provider for the Seoul metropolitan area.


POSCO Fuel Cell Power System No. 5 installed at POSCO Power? fuel cell plant in Pohang.


Q: Will you explain the current status and future plans for overseas business?
A: In principle, POSCO Power plans to penetrate the private independent power producer (IPP) markets in such Southeast Asian countries as Indonesia and Vietnam in a package of deals with POSCO’s steelmaking business. POSCO Power is seeking to build and operate power plants in Indonesia where POSCO has launched a project to build a steelworks plant.
In reality, steelmaking is an energy-consuming process, so there are many technologies related to the spillover from steelmaking. We are seeking to embrace such technologies as power generation, energy conservation and energy utilization in the energy business field. In particular, POSCO Pohang and Gwangyang steelworks have power production facilities with a capacity of 1,100MW and 1,400MW, respectively, as well as have accumulated technologies for power production and energy management. The technologies are expected to lay a solid foundation for POSCO Power’s executing of the IPP business, new & renewable energy and fuel cell projects as well as resources exploration projects in foreign countries.
POSCO Power is striving to make a leap forward as a total energy provider of the POSCO group by exploring its potential capabilities comprehensively. The company also plans to change its name from POSCO Power to POSCO Energy, with a vision of growing into a world-class energy provider.
POSCO Power is paying keen interest in the new and renewable energy field in which the United States, European countries and other advanced countries have strengthened their presence. For instance, the company landed a project to build a 300MW-class photovoltaic power plant in Boulder, Nevada, in collaboration with the U.S. photovoltaic power developer SECP, last December. POSCO Power and SECP will establish a locally incorporated joint venture to complete the project by 2014.
POSCO Power plans to make inroads into the private independent power plant business. The company plans to construct a 1,200MW-class Mong Duong II Thermal Power Plant in Quang Ninh, Vietnam, which is slated to be put into commercial operation by 2015.

Q: What has your company achieved in the fuel cell power generation system segment?
A: POSCO Power has supplied and operated 16 fuel cell power generation systems with a combined capacity of about 40MW of power. The fuel cell power generation systems are installed within power plants, factories and sewage treatment plants, not just in densely populated urban areas.
Since 2007, POSCO Power has pushed ahead with projects to localize maintenance, installation/construction and balance of plant (BOP) of the fuel cell power generation system segment in that order. The company inaugurated a fuel cell stack plant in Yeongil Bay in Pohang on March 31 to mass produce finished fuel cell products on its own.
On May 7, POSCO Power signed an MOU to implement a joint project with Korea Hydro Nuclear Power Co. (KHNP) and Samchuly, Gyeonggi Provincial Government and Hwaseong Municipal Government to construct a fuel cell power plant with a capacity of 60MW of power, making it the world’s largest, within the Balan Industrial Complex in Hwaseong, Gyeonggi Province, by 2013.
Each fuel cell power system is comprised of about 4,200 components and parts, so the segment is a composite industrial field with spillover effects and greater job creation. POSCO Power is working on research for the lowering of production costs, standardizing and system stabilization of the molten carbonate fuel cell (MCFC), which has been already commercialized, with a view to achieving grid parity.

Q: Will you tell us about the 2011 plan and mid- and long-term prospects of the fuel cell power system business?
A: We’re now focusing on securing our own technology for producing fuel cell power systems. Currently, electrical balance of plant (EBOP), a fully localized system, is manufactured, while mechanical balance of plant (MBOP), now mostly localized, is in supply. POSCO Power also produces and supplies stacks at its plant on its own. The company seeks to complete the localization of all the components and parts of fuel cell power systems by 2015. To this end, POSCO Power turns to a win-win strategy to jointly push ahead with the localization of the components and parts by creating a technology development network with Korean materials and parts makers.

Q: What’s your forecast for the Korean and foreign fuel cell power system market?
A: Globally, the fuel cell power system segment has just entered the commercialization stage. The United States, Japan and European countries have developed technology on a state level, and major companies have participated due to time- and cost-consuming technology development.
The government’s green energy roadmap indicates that the value of global fuel cell power system market is predicted to stand at approximately 2 trillion won in 2015 and grow at an annual rate of of some 35 percent after the year. The market is forecast to swell to somewhere between 18 trillion won and 41 trillion won in 2030 with the construction of MW-class fuel cell power systems.
The International Maritime Organization (IMO)’s regulating of NOx and CO2 emissions in 2016 and shipping efficiency will likely make it obligatory for large ships to be fitted with auxiliary fuel cell power systems. Given the standing of the Korean shipping industry, the combined capacity of the Korean fuel cell power system field is projected to be 4GW.
The United States, Japan and other advanced countries have already funneled tens of trillions of won into the solid oxide fuel cell (SOFC), an electrochemical conversion device that produces electricity directly by oxidizing fuel, and are in full swing with technology development for commercialization. The European community, which has been working on the technology development of the MCFC and SOFC segments since 2000, has already secured basic technologies on MCFC and SOFC systems.
POSCO Power, which has already secured original core technologies by localizing MCFC and commercializing SOFC, plans to take the lead in the global market by developing fuel cell power systems for shipping, industrial backup for power outage and commercial building use.


POSCO Power President Cho Sung-sik gestures while holding an interview with NewsWorld President-Publisher Elizabeth M. Oh.


Q: Will you specify the short-term plans of the major businesses?
A: In the power generation facility segment, POSCO Power will dedicate a 1,200MW-class LNG combined cycle power plant in Incheon in June, which together with the existing power facilities, will supply some 17.6 percent of electricity consumption of the Seoul metropolitan area.
In October, POSCO Power will launch a project to build a 290MW-class off-gas combined cycle power plant (145MWxtwo units), utilizing the off-gas from POSCO’s steelmaking, with completion slated for September 2013.
POSCO Power also plans to embark on photovoltaic power and wind power projects in South Korea within this year while striving to make inroads into the new and renewable energy segments in Indonesia and other Southeast Asian countries afterward.

Q: Will you comment on the suggestions for the development of the energy industry?
A: The reality is that the world will be facing energy supply limits, including the depletion of fossil fuels. As a result, the new and renewable energy sector is forecast to take a considerable share of the global economy in the years to come. Last October, the government released a report that the value of the sector is projected to surge to approximately $1 trillion in 2020, almost equivalent to that of the global automobile industry. It is natural for us to show an interest in and tap the new and renewable energy field.
We should focus on nourishing the field as the future’s growth engines, rather than immediate profit taking and pursue it in a way that will give confidence to stakeholders, interested parties and customers alike.
Internally and externally, low-carbon, green growth for lowering greenhouse gas emissions in reaction to climate change amid ever-increasing energy consumption emerges as a task we have to cope with for our survival. As the saying “A crisis is an opportunity” goes, if we join forces and collaborate wisely, we can secure new value-added growth engines in the energy industries. nw

Photos on Courtesy of POSCO Power