In January this year, SK E&C BETEK CORPORATION (BETEK) signaled a fresh restart by giving itself a new name, “SK ecoplant Americas.” This renaming may seem a natural course of action for the US subsidiary of SK ecoplant, which had just completed its full transition to an environment and energy firm. However, the new name implies SK ecoplant’s vision and commitment to expanding its environment and energy business in North America. Why does SK ecoplant take so much interest in the North American market, and what visions does it seek to achieve with SK ecoplant Americas?

.

From a construction company to a fuel cell specialist!

Before the recent renaming, BETEK had operated as the US subsidiary of SK E&C, the previous name of SK ecoplant, since 1993, carrying out real estate development projects in the United States. When SK ecoplant began to reorganize itself as an environment and energy firm around 2019 and 2020, BETEK also found its way into new markets. Currently, the subsidiary leads SK ecoplant’s fuel cell business in the United States.

Fuel cell companies in the United States usually raise money by recruiting investors, install fuel cells within the premises of customers who signed power supply contracts, and distribute the profits to investors as dividends. In this process, BETEK implements fuel cell projects across the full cycle, from fuel cell engineering, procurement, and construction (EPC), financing, and power production and dividend payment.

Despite its solid capabilities in fuel cell projects, BETEK was still regarded as a construction company, at least partially due to the “E&C” (engineering and construction) in the parent company’s name. Then, by renaming itself as SK ecoplant Americas, the company clearly states its plan to consolidate its identity as a fuel cell specialist and carry out SK ecoplant’s various environment and energy projects in the North American market. In addition, using the plural “Americas” implies that SK ecoplant Americas has not just the United States but the entire American continent in its sight.

.

Why the North American Energy Market now?

SK ecoplant is paying close attention to the North American market because North America not only represents the most advanced renewable energy market in the world but also provides abundant growth opportunities for new energy business models.

The United States has had large-scale blackouts occurring at an increasing frequency in the last 20 years. Less than 24 large blackout events were observed in 2000. By 2020, however, the number exceeded 180 (2022, Wall Street Journal). The cause was the dilapidated power networks. According to Report Card for America’s Infrastructure, a 2021 report published by the American Society of Civil Engineers (ASCE), 70% of transmission and distribution lines in the country are nearly 60 years old. It means the United States still uses facilities built after World War II or even before the war.

Other factors destabilizing the US power network include the country’s vast territory, constantly changing weather, and recent adverse weather events. Most transmission/distribution lines hang high above the ground, which makes it all the more vulnerable to tornados, heat waves, forest fires, and other natural disasters.

However, the unstable environment motivated Americans to look for new ways to supply energy, leading to a new energy market. One of the prime examples is the distributed energy resource (DER). A DER allows users to produce power where needed, using fuel cells or photovoltaic facilities, without ever needing to build large power plants or lay power lines. The United States has been implementing policies to promote the use of DERs since the mid-2010s. The consulting firm Wood Mackenzie estimates that the total DEP capacity in the United States will reach 387 GW by 2025 (2020 DER Outlook). This number is more than two times higher than the installed capacity of PJM, North America’s largest regional transmission organization (184.7 GW as of the end of 2022). It goes on to show the sheer scale of demand for DER in the United States.

Despite the clear benefits of DER, ranging from easy installation to high energy efficiency, a sizable obstacle is getting in the way of its global success; its high costs. At least for now, DER devices, such as fuel cells and photovoltaic units, incur huge installation costs, restricting their profitability. The United States has been dealing with this issue by providing active institutional support. In particular, the country’s government has expanded the investment tax credits (ITCs) for new and renewable energy facilities for the last decade. In addition, the Inflation Reduction Act (IRA), which went into effect last year, drives the growth of the DER market by providing ITCs worth up to 30% of the invested amount.

.

Why does SK ecoplant Americas deserve attention?

The bright future of the US DER market is expected to increase the growth momentum of SK ecoplant Americas. Among various DERs, SK ecoplant Americas has been focusing on fuel cells. A fuel cell is one of the most suitable DER options for urban environments, as it requires only 1% of the space taken up by a photovoltaic unit to produce the same amount of power. Fuel cells (Bloom Energy’s fuel cells, in particular) are also highly durable and produce energy 24/7 as long as fuel (hydrogen) is supplied underground, even when the weather is bad, the power is out, or a forest fire breaks out. In particular, SK ecoplant Americas formed a strategic partnership with Bloom Energy, which produces SOFCs with the highest overall power generation efficiency (85%) among fuel cells in existence today.

SK ecoplant Americas has launched and implemented various projects in the United States for the last three decades, all the while building financing management capabilities optimized for the United States systems and markets. These capabilities allowed the company to build its portfolios with various customers only in three years, including data centers, Big Box Retail, hospitals, and others needing stable energy sources. SK ecoplant Americas plans to work toward carving out its presence in the US fuel cell market further by utilizing its business development capabilities in the fuel cell sector and applied technologies such as heat recovery and fuel diversification.

However, leading the American fuel cell market is only the most short-term and sure goal for SK ecoplant Americas. As mentioned earlier, the company ultimately envisions rebuilding itself into a leading environment and energy firm in all of America. As part of the efforts, SK ecoplant Americas plans to produce green hydrogen using *electrolysis, expand its fuel cell-powered charging service for electric vehicles, and look for ways to increase synergy with its North American partners, such as Ascend Elements, a US battery recycling firm of which SK ecoplant is the largest shareholder. SK ecoplant Americas is expected to propel SK ecoplant to become an environment and energy firm that expands beyond Korea to lead the North American and global markets.

* Electrolysis: a technology to produce pure hydrogen by decomposing water with electricity.