Smart Grid Becoming KEPCOs Core Biz
By Kim Hyun-cheol
Staff Reporter
Korea Electric Power Corp. (KEPCO) expects smart grids to be a second pillar to prop up its growth into a global energy giant, following its success in exporting nuclear plants for the first time in 2009.
As the nation's top energy firm, KEPCO is set to look to the smart grid as its new growth engine. The company selected eight "green strategic technologies" to concentrate its research and development on this year, including a new cutting-edge system for supplying electricity.
The smart grid is a future power grid that enables customers to better manage their power consumption in a real-time two-way communication system with suppliers by integrating digital technology with the traditional power grid.
"This means that the power grid paradigm is shifting from quantity to quality, from supply to demand-side management and from centralization to decentralization," KEPCO says.
It plans to spend 2.8 trillion won ($2.4 billion) on those eco-friendly businesses, and forecasts they will take up 16.5 percent of its projected sales of $76 billion in 2020.
Commercializing efforts are already on the way. Last year, KEPCO developed the world's first convergent information technology for smart grids, which makes it possible to remotely read electricity meters by integrating high wire communication and domestic wireless technology.
In July 2009, the G8 Summit's Major Economies Forum on Energy and Climate, held in L'Aquila, Italy, has selected South Korea to lead the research, development and commercialization of smart grid technology, which has been named as one of the seven technologies that may help change the world.
South Korea, the OECD's fastest-growing carbon polluter and the world's fifth-largest oil importer, is betting on smart grids to manage electricity use more efficiently, and aims to create a nationwide smart grid within the next couple of decades for an electricity market worth 68 trillion won.
KEPCO expects the smart grid technology to have great effects on the entire industrial sector, including communication, home appliances, construction, vehicles, energy and electric power.
Considering its benefits, the smart grid is not a matter of choice, KEPCO says, but a subject to pursue completion as soon as possible. "This new type of power grid, which is environmentally-friendly, energy-effective and customer-oriented, is in the limelight as the new source of profit creation," it said in a recent statement.
KEPCO's smart grid businesses this year will include both home and foreign markets.
Late last year, the South Korean government declared its plan to boost its home industries with an aim of winning 30 percent of the global smart grid market in the future. As a pilot project, it will spend 37 billion won to test smart grid systems from eight local consortiums, including KEPCO.
The project, which will be carried out on Jeju Island, will include a "smart transportation" system aimed at power and communications for electric vehicles, as well as a "smart renewable" part to integrate solar and wind energy. It will also include two-way communications between the utility and customers to improve energy efficiency.
KEPCO is planning to build two 10-megawatt substation transformers and four power distribution lines near an area that includes 3,000 households, commercial districts and power generation facilities to test smart grid technologies on real electricity networks. The company will finish the blueprint of its 81 billion-won plan, and begin technological research starting this year.
This is part of an ambitious long-term plan to turn Korea into the first country to convert its entire electricity network to smart grids, which will contribute to energy conservation as well as job creation and new revenue.
The government ultimately wants to see the local electricity market connected to a smart grid, as it announced in July last year. That could save it some $10 billion a year in energy import costs, according to the Ministry of Knowledge Economy.
The smart grid network is aimed to be completed in 2020, and is expected to be nationwide by 2030. This technology is part of the nation's $103 billion initiative to increase its generation of green technology to 11 percent over the next two decades from the current 2.4 percent.
A project to pave the way to introduce the smart grid system will make another huge mission for KEPCO starting this year. In line with the establishing efforts for the smart grid, the company will be fully committed to supplying digital electricity meters in local households.
Starting this year, it plans to introduce an advanced metering system to homes nationwide, with a budget of 1.1 trillion won through 2020. Currently only 4 percent of Korean households are equipped with the smart metering system, lagging behind many advanced countries.
Currently some 28 percent of U.S. homes and 52 percent of French homes have a digital electricity meter. In Italy, almost all households use the technology.
The project will save the nation some 344 billion won per year in metering costs and overall energy consumption, the ministry expects.
Now, KEPCO is taking its first shots at taking its technology abroad. Last month, it announced that it had submitted a bid for a 100-billion-won pilot project to test a smart grid system over the next three years in Australia.
Implemented by the Australian government, the project aims to test core technologies for the new energy-supplying system for three years from this year before commercializing it. KEPCO formed a consortium with Samsung C&T, a Korean construction and trading company, and Australian power company Ergon Energy to vie for the deal.
Result of Bidding Due In April.
KEPCO is also planning to incorporate smart grid technology in expanding in the Philippine wind and hydro power plant projects. It has partnered with state-run Philippine National Oil Company-Renewable Co. (PNOC-RC) for investment opportunities in the renewable energy.
"In line with KEPCO's green energy leadership, KEPCO Philippines ventures into developing renewable energy projects. Together with PNOC-RC, among other prospective partners, it plans to invest in wind and hydro power plants," a KEPCO statement said.
KEPCO Philippines gave the southeast Asian country a glimpse of the smart grid as it showcased the technology at the PowerTrends 2009 Exhibit in Pasay City in September last year.