As power demand is expected to surge in the future, so-called "pumped storage" hydropower is emerging as one of the main countermeasures. "Pumped storage" refers to a form of hydropower that uses surplus electricity to pump water to an upper reservoir, and then releases it to a lower reservoir to generate electricity when power demand increases. It can be seen as a large-scale energy storage system (ESS). The construction industry sees the government's initiative to establish "pumped storage power plants" as a new opportunity. The bidding for the Hongcheon pumped storage plant, which will take place in August, is expected to draw big four construction companies: Hyundai E&C, Samsung C&T, Daewoo E&C, and POSCO.
According to the Ministry of Trade, Industry and Energy's 11th Basic Power Supply and Demand Plan (2024-2038), announced last March, the total power supply capacity at the end of 2023 is projected to be 144 gigawatts (GW), an increase of 51 GW from 93 GW a decade ago. In terms of energy sources, natural gas accounts for 30%, coal 27%, renewable sources 22%, and nuclear 17%. In particular, the government anticipates a surge in power demand from data centers due to the spread of artificial intelligence (AI).
Pumped storage is considered a non-carbon alternative to aging coal-fired power plants in the medium to long term. According to Korea Hydro & Nuclear Power, 16 power generation facilities are currently operating across seven locations in the country, storing energy equivalent to 4,700 megawatts (MW). Pumped storage involves transferring water from the lower reservoir to the upper reservoir for storage.
Korea Hydro & Nuclear Power has been pursuing additional pumped storage construction plans since last year. The plan is to establish power plants with a total capacity of 7.0 GW at 11 locations nationwide, with a total project cost of 16.9 trillion won. Last year, the construction contract for the Yeongdong pumped storage was awarded to the DL E&C consortium (DL E&C 87%, Jiphyeon Construction 13%). The total project cost for this power plant is 1.2 trillion won.
The bidding for the Hongcheon pumped storage project is scheduled for August 11. Evaluations will be conducted until the 13th, with the results announced on the 14th. Currently, top-tier construction companies such as Hyundai E&C, Samsung C&T, Daewoo E&C, and POSCO are competing for this project. Eligible bidders must have completed a hydropower plant or pumped storage plant within the last 20 years and have dam completion records, meaning only companies of a certain size will be able to meet the qualifications.
The Hongcheon pumped storage project is valued at 1.5 trillion won. The construction to be awarded this time is civil engineering work, worth about 650 billion won, while the remaining equipment work will be awarded separately. To secure the civil engineering contract, Hyundai E&C (60% equity) has formed a consortium with Hyosung Heavy Industries (25%) and Shinhwa Construction (15%). Samsung C&T (60%) will team up with Kumho Engineering & Construction (30%) and SG Construction (10%), while Daewoo E&C (60%) will form a consortium with DL E&C (30%) and Hyosung (10%) to bid. POSCO E&C (60%) has partnered with Dongbu Corporation (25%) and Daemyung Construction (15%).
The construction industry believes that the awarding of the Hongcheon pumped storage civil engineering contract will be a factor that could influence future civil engineering achievements. This is due to the large scale of the project cost, as well as additional bids planned for several more times. A representative from a major construction company noted, "Winning the Hongcheon pumped storage bid could determine the civil engineering results for the second half of the year," adding that "the four construction companies will engage in fierce competition for additional contracts."
Jeon Young-hwan, a professor in the Department of Electrical and Electronic Engineering at Hongik University, stated, "Pumped storage has already been technically validated and its economic viability secured. The pumped storage plants in our country can be built to operate continuously for 8 hours, making them a far superior power generation method compared to storing electricity in batteries."