SK eternix, which is responsible for design, procurement, and construction (EPC) of the 230 billion won Solid Oxide Fuel Cell (SOFC) power plant project 'Chungju Eco Park,' is at risk of being abandoned. SK discovery's subsidiary, SK eternix, is a renewable energy corporation.
According to the industry on the 6th, the Ministry of Trade, Industry and Energy rejected SK eternix's application for a change in construction plans for the Chungju Eco Park construction project submitted last December. This rejection was due to the insufficient readiness for actual business progress compared to SK eternix's repeated modifications and extensions of the construction plans over the past few years. Consequently, the construction project of Chungju Eco Park, aiming for commercial operation by December this year, has been temporarily suspended.
Chungju Eco Park is a project to establish a 40-megawatt (MW) SOFC power plant on a site of approximately 17,190 square meters (about 5,200 pyeong) in the Daeso Won-myeon area of Chungju, North Chungcheong Province. SK eternix and financial investors including ChamBit Group will create a special purpose corporation (SPC) to develop and operate it. The construction cost is approximately 227.7 billion won, with SK eternix holding approximately 189.1 billion won (83%) of that equity. The SOFC operates at high temperatures, generating electricity by reacting fuel (such as hydrogen, natural gas, etc.) with oxygen through an electrochemical reaction.
The Ministry of Trade, Industry and Energy is reported to have rejected SK eternix's application for a change in construction plans due to excessive delays and a failure to adhere closely to the previously submitted construction plans. According to the Ministry's 'Detailed Permit Standards for Power Generation Projects,' power generation businesses are granted a two-year construction plan approval period after receiving approval for solar and fuel cell generation with a capacity of 10 MW or more.
During this period, the business operator must start construction after undergoing related permits such as environmental impact assessments and construction plan approvals. If actual construction does not take place, the permit may be canceled according to the provisions of the Electric Utility Act.
A Ministry official stated, 'The Chungju Eco Park project, which has been pushed for several years, has already had its construction plans changed multiple times, and last December, the company applied for a change in construction plans around the expiration of the existing construction permit. After an internal assessment, it was determined that the project preparation was insufficient, leading to the rejection.'
SK eternix maintains that it has secured all necessary funds for the project and that there are no issues with proceeding with construction. In October of last year, SK eternix signed a financial agreement totaling 461 billion won to finance both the Chungju Eco Park and the Daeso Won Eco Park to be built nearby. This amount corresponds to 85% of the total investment cost for the two projects (542 billion won).
An SK eternix official noted, 'Large-scale fuel cell power generation projects generally do not proceed solely through equity and rely on project financing (PF) for funding. During the process of securing investors, factors such as project approval and long-term contracts for Renewable Energy Certificates (REC) are required. SK eternix has also pushed for PF after obtaining preliminary permits from the Ministry.' They added, 'While there have been delays due to worsening market conditions in securing long-term REC contracts, necessary procedures, including land acquisition, have been progressing.'
A Ministry official stated, 'We plan to notify the final results after reviewing the objection submitted by SK eternix.'