The plan by SK Group, which runs the country’s biggest oil refiner, is seen as an effort by the company to have a bigger presence in the carbon-free fuel sector and diversify its energy mix at a time when South Korea is aggressively pushing ahead with energy transition plans.
Under the deal, SK Holdings, the group’s holding company, and SK E&S, a natural gas subsidiary, will acquire a combined 9.9% stake in Plug Power, with the strategic investment making it the biggest shareholder, SK Holdings said in a statement.
SK Holdings and SK E&S will each contribute Won 8 billion for the stake in Plug Power, which has provided 40,000 fuel cell systems for electric vehicles and has built and operated hydrogen filling stations across North America.
“The deal is expected to be finalized in the first quarter,” a company official said. “The investment is aimed at boosting the group’s leadership in Asia’s hydrogen market,” he added.
Under the deal, the SK units and Plug Power will form a joint venture in South Korea to provide hydrogen fuel cell systems, fueling stations and electrolyzers to the Korean and broader Asian markets, such as China and Vietnam, the official said, without providing details of the timeline. Electrolyzers use electricity to break water into hydrogen and oxygen.
SK Group runs South Korea’s biggest oil refiner and major battery maker SK Innovation and SK E&S, an LNG-based private power utility and city gas provider, among others, launched a taskforce for tapping into the hydrogen sector last year.
The group aims to have a hydrogen production capacity of 30,000 mt/year in 2023 and 280,000 mt/year by 2025 and establish a value chain ranging from production to distribution and supply.
In pursuing overseas ambitions, SK Group joins Hyundai Motor, which is considering building its first overseas hydrogen fuel cell systems plant in Guangzhou, China, according to a company source.
South Korea’s biggest automaker has been betting on the hydrogen fuel cell electric vehicle, or FCEV — a rival technology to internal combustion engines — and plans to invest Won 7.6 trillion along with its local partners by 2030 in order to produce 500,000/year hydrogen-powered vehicles under its “FCEV Vision 2030.”
The corporate investments in hydrogen come as South Korea’s President Moon Jae-in declared last October that the country will achieve carbon neutrality by 2050 by replacing coal-fired power generation with renewable sources and internal combustion engine vehicles with hydrogen-powered and battery-based electric vehicles.
From setting up the biggest liquid hydrogen plant in the world to producing the carbon-free fuel as a byproduct, South Korea is fast implementing new technologies to expand the scope of hydrogen production as it bets on robust growth prospects.
The country currently imports 100% of its crude oil needs. Under its roadmap for a “hydrogen economy,” South Korea will produce 81,000 hydrogen-powered cars by 2022, which will increase to 6.2 million units by 2040, which is significant given South Korea has a total of 22 million vehicles on the road currently, using mainly gasoline, diesel and LPG as fuel.
The blueprint also calls for the country to supply 15 GW of hydrogen fuel cell capacity for electricity production by 2040, of which 8 GW will be for domestic use. The 8 GW capacity is about 7% of South Korea’s combined power generation capacity of 116 GW.