Doosan Heavy Industries Eyeing Eco Businesses
By Kim Hyun-cheol
The third quarter obviously wasn't the most fruitful period for Doosan Heavy Industry & Construction. In spite of the setback, however, the nation's largest power plant and equipment maker is confident of the future in the belief that its steady investment in eco-friendly businesses will pay off.
In the July-to-September period, the company posted 80.5 billion won ($69.4 million), a 31.1-percent contraction from a year ago. While overall sales grew 3.8 percent to 1.54 trillion won, net income turned negative to a 277.1 billion won loss.
Doosan Heavy, however, says business will pick up over the long-term in its shift into alternative energy in an effort to make up for dwindling orders for traditional power plants.
Earlier this month, the company announced plans to additionally inject 700 billion won by 2013 to develop technologies for power generation without emitting carbon gas. It invested 300 billion won on research and development for clean energy over the past five years.
Doosan said the augmented investment will be used to develop wind turbines, renewable batteries and biogas turbines, as well as other environmental technologies that will help reduce carbon gas emissions from current atomic and thermal power plants.
By 2015, sales for those eco-friendly energies will produce 1 trillion won for the company, making up 10 percent of its profit in the power generation business, Doosan Heavy expects.
As the government moves into encouraging the business according to its ``Low Carbon, Green Growth'' agenda, demand for renewable energy is likely to surge after 2012, when the nation introduces a new set of standards that would mandates power firms to produce up to 11 percent of electricity from renewable sources by 2030.
Wind power generation and carbon storage are expected to be the two pillars of the company's growth engine in the coming years.
In July, Doosan Heavy completed the final test of a step-up gearbox for wind turbines that will be installed in its latest 3-megawatt WinDS 3000 wind power generation system. It aims to commercialize WinDS 3000 next year. In another ongoing state-backed project, it is developing develop a 300-kilowatt molten carbonate fuel cell.
The $55.6-million project, in collaboration with the Korean Institute of Science and Technology, the Korea Institute of Energy Research and Korea Midland Power Company, is projected to start commercial production in 2012.
The company is also one of the frontrunners in carbon capture and storage (CCS), which is regarded as a must in thermal plants of the future under strengthened environmental regulations.
CCS is a means of mitigating fossil fuel emissions by capturing carbon dioxide and storing it away from the atmosphere by different means. The technology to do so is categorized in three groups according to the period of fuel combustion ― pre-combustion, oxy-fuel (during combustion) and post-combustion capture.
The industry forecasts low-carbon power generator technology will create a global market of 50 to 60 trillion won after 2013, when the post-Kyoto Protocol era commences.
In July, Doosan became the first to develop technology that will enable coal power plants to generate electricity without emitting carbon dioxide. Doosan Babcock, Doosan Heavy's U.K. subsidiary, demonstrated its ``OxyCoal'' clean combustion system on a 40-megawatt burner at its research facility in Renfrew, Scotland.
The system captures and stores the carbon dioxide emitted from burning coal as power is generated. Coal power plants generally produce 500 to 800 megawatts of electricity, using steam turbines.
At plants using the OxyCoal system, the coal is fired with oxygen, rather than with an injection of oxygen and nitrogen as is done at most coal power plants, thus producing only concentrated carbon dioxide and water from the gas emitted.
Last year, Doosan Heavy also secured core post-combustion capture technology investing in HTC, a Canadian-based company that specializes in carbon capture.
Most recently, it paved the way for tapping into bigger power-generating markets such as the United States and the European Union by taking over Skoda Holding in September.
This acquisition will add to Doosan Heavy's capabilities in the core technologies for boilers, turbines, and generators ― the three key components of power plants ― positioning the company as a leader in the global power plant equipment industry, the company expected.
``We expect synergy from the Skoda Power acquisition to generate an additional $4.26 billion in annual revenue by 2020. In the coming years, Skoda Power and Doosan Babcock will spearhead our progressive expansion in Europe, the United States and other developed markets,'' Doosan Heavy President and CEO Park Gee-won said in a statement.
The company retains positive outlook on its original turf. Even though the power equipment industry has seen the global economic slump delay, and even suspend, several huge projects lately, it expects the market to hit back in new orders from the second quarter of next year, mainly due to growing demand from emerging markets.
Its aggressive global stance over the last couple of years is also in line with such a viewpoint. And some appear to be recognizing such efforts: A.T. Kearney included Doosan Heavy in its 2009 Global Champions Report, fourth on the year's list of top global 40 companies, as it has ``shown both foresight and agility in buying new technologies, while maintaining a consistent corporate culture that emphasizes high performance.''