SK Energy & Service, a local provider of city gas and electricity, said Thursday it began the construction of a steam power generation plant in Gimcheon, South Gyeongsang Province, together with Kolon Engineering & Construction.

The SK E&S and Kolon will jointly invest 250 billion won ($220 million) for the plant which has a capacity to produce 1.5 million tons of steam a year, the firm said. 

The facility will provide nine firms in the Gimcheon industrial complex, including Kolon Industries, with steam, and sell 470,000 megawatt hours of electricity to Korea Power Exchange, according to SK E&S.

The firm expected that the new plant will be able to help save energy costs for businesses in the Gimcheon complex, which have previously been producing their own energy needs, while becoming a stable regional electricity supplier.

Meanwhile, the joint-venture, half of whose stake SK E&S and Kolon each hold, could become a successful business model where both firms receive benefits, SK E&S officials said.

“The project will be an opportunity for SK E&S to go beyond just a regional city gas provider to a leading player in the energy market,” an SK E&S official said. “We are building steam or LNG supply and power generation plants in 10 cities nationwide.”

By Koh Young-aah (youngaah@heraldcorp.com)