![A Giant Power Generation Public Enterprise Emerges After 25 Years…Is a ‘K-Orsted’ Possible? [Digging Energy]](https://www.europesays.com/dk/wp-content/uploads/2026/07/1784159118_2026071414481245614_1784008092.png)
Specialist Report
Closure of Coal Power Plants Spurs Crisis and Management Inefficiency
Five Power Generation Companies Expected to Merge Into One
Transformation from State-Owned Oil Company to Renewable Energy
Denmark’s Orsted: A Representative Success Story
Single-Business Model Is Risky…Diversification Needed
“Clear Principles and Vision Needed from the Perspective of Public Benefit”
Aerial view of Korea Midland Power Boryeong Power Plant Headquarters
Korea Midland Power, Korea Western Power, Korea East-West Power, Korea Southern Power, and Korea South-East Power. While these five companies may sound unfamiliar to the general public, they are core public power generation companies responsible for producing about one-third of South Korea’s electricity. At one time, they accounted for 60 percent of the nation’s power generation, making them central players in the domestic electricity sector.
There is currently an ongoing process to integrate these five companies, each 100% owned by Korea Electric Power Corporation, into a single entity. This would create a giant energy public enterprise with KRW 30 trillion in total revenue and a workforce of 13,000 employees. The energy industry is forecasting that this will bring about a seismic shift for the first time in 25 years since the power sector reforms in 2001.
With the advent of this megasized energy public enterprise, some are expressing high expectations, believing that it will accelerate large-scale projects such as offshore wind, which require substantial capital investment. The move is being benchmarked against the transformation of Denmark’s state-owned energy company Dong Energy into Orsted, now a global leader in offshore wind energy.
On the other hand, there are significant concerns. Critics point out that the synergies of integrating the power generation companies have not been clearly defined, and the specific benefits for the public remain vague. The local governments that host the five companies’ headquarters are already worried about local economic shocks, such as decreases in tax revenue and job losses. Others note that the integration of the five companies does not automatically guarantee success in offshore wind energy.
Thermal Power Plants Shutting Down…Integration is Inevitable
On June 18, 2026, the Ministry of Climate, Energy, and Environment held an interim briefing for its study on “The New Role of Public Power Enterprises in the Energy Transition Era.” During this session, Samil PwC, the consulting firm commissioned for the research, announced a preliminary result recommending a “single company integration plan.” The Ministry plans to release its restructuring and reorganization plan for power generation companies by July, after further gathering feedback.
In 2001, the government split Korea Electric Power Corporation’s power generation business into six subsidiaries, citing the introduction of competition in the electricity market as the reason. Five companies focused on coal-fired and liquefied natural gas (LNG) power, as well as Korea Hydro & Nuclear Power specializing in nuclear and pumped storage, were established at this time. Back then, the government also intended to privatize and separate KEPCO’s transmission, distribution, and sales arms, but the restructuring fizzled out due to labor union opposition.
For 25 years after this incomplete restructuring, the public power generation companies have played a central role in stably supplying electricity. However, given the changing times, integration of these companies is now becoming an unavoidable destiny.
In line with the government’s policy to shut down coal-fired power plants by 2040, the power generation companies—whose business structures are centered around thermal power—are losing their roles. The government is replacing shuttered coal plants with LNG plants. Yet LNG is not free from greenhouse gas emissions, and its role is expected to decrease in the long term.
The power generation companies are seeking to fill this void with renewable energy. Solar, wind, and other renewable energy projects are being pursued nationwide, regardless of location. The former five-company system built around coal-fired power is no longer effective. With the closure of coal power, workforce conversion and redeployment are necessary, but the fragmented structure of the five companies makes rapid transition difficult.
This is not the only issue. The power generation companies have often faced criticism for redundant business structures. They have frequently conducted similar research and development (R&D) projects, and their organizations have grown bloated. According to Samil PwC, each executive in these companies oversees an average of 700 employees, which is much higher than at Korea Electric Power Corporation (3,300 employees per executive) and Korea Hydro & Nuclear Power (2,134 employees per executive).
![A Giant Power Generation Public Enterprise Emerges After 25 Years…Is a ‘K-Orsted’ Possible? [Digging Energy]](https://www.asiae.co.kr/news/img_view.htm?img=2026071414545045631_1784008489.jpg)
Splitting into five companies did not bring only negative effects. Internal competition helped lower fuel procurement costs for LNG and imported coal. There has also been visible success in overseas ventures.
Integration for Renewable Energy (?):
The government’s expectations for the integrated power generation company lie elsewhere: it intends for the company to become the main driver of expanding renewable energy. At a meeting with the CEOs of the five generation companies on July 14, Minister Kim Seonghwan of the Ministry of Climate, Energy, and Environment said, “The restructuring of the power generation companies is not just about integration but a fundamental redesign of what role public enterprises should play in the era of energy transition. Based on the capabilities and infrastructure built up by the five companies, we must lead the energy transformation with renewables at the center.”
Under the Renewable Portfolio Standard (RPS), power generation companies must supply a certain minimum share (15% as of 2026) of total thermal generation from renewables. Until now, instead of direct investment, they have mostly relied on purchasing Renewable Energy Certificates (REC) to meet this quota.
In 2024, self-generation of renewables as a share of total renewables was as follows: Korea Western Power at 37%, Korea Southern Power at 34%, Korea South-East Power at 20%, and Korea Midland Power at 10%. Korea East-West Power’s share was just 3%, with the remainder met by REC purchases. The original intent of the RPS was to incentivize direct investment in renewables by large generators, but this has not materialized in practice.
![A Giant Power Generation Public Enterprise Emerges After 25 Years…Is a ‘K-Orsted’ Possible? [Digging Energy]](https://www.asiae.co.kr/news/img_view.htm?img=2026071414481245614_1784008092.png)
Power generation companies have concentrated their investments on LNG power facilities, which ensure secure capacity but pose less risk, rather than high-risk, large-scale investments in renewables. According to data from the October 2025 National Assembly audit, all 17 new power facilities approved and promoted by the five companies since 2020 were LNG-fired combined or cogeneration plants, with total investment exceeding KRW 12 trillion. In the same period, there were zero new renewable projects—no solar, wind, hydrogen, or energy storage system (ESS) investments at all.
The government wants public power generators not to stop at simply complying with the RPS but to evolve into genuine developers of renewable energy. The planned integration of these companies also centers on expanding renewables. The government aims to grow renewable energy capacity to 100GW by 2030. Achieving this will require large-scale capital investment, driven by the state.
The most representative example is offshore wind. A separate state-led bidding process is already taking place for offshore wind projects with fixed purchase prices. Under the Offshore Wind Power Special Act, public entities with more than 200MW of coal-fired capacity receive preferential status when selected as offshore wind operators.
There is already lively discussion about the integrated power company’s role in offshore wind. At the 8th Marine Energy Industry Forum & 55th Electricity Forum held on July 10, Kim Yunseong, co-chair of the Marine Energy Industry Forum, stressed, “The integrated power generation company, by sharing development risk with private developers and long-term plans with domestic supply chain companies, can drive growth across the industry as a whole.”
Nam Taeseop, senior vice-chairperson of the National Power Industry Labor Union Federation, explained, “An integrated power company can kick-start projects delayed or stalled due to financial or permitting issues,” and noted the employment-boosting effect of hiring personnel for operation and maintenance of offshore wind farms. The idea is that jobs lost in coal-fired power can be absorbed by offshore wind.
‘Role Model’ Orsted Is Restructuring…
The case most frequently cited by those advocating integration of public power generators in Korea is the Danish renewables company Orsted. At a forum last month, Professor Cho Youngsang of Yonsei University’s Department of Industrial Engineering said, “In the long term, the integrated public power company should become a dedicated renewables enterprise. Surplus profits from coal and LNG generation should be reinvested in renewables, and manpower should be put through a virtuous cycle.”
Orsted’s origins lie in DONG (Danish Oil and Natural Gas), a state company that developed oil and gas in the North Sea. In 2006, it merged with five other Danish energy firms to become Dong Energy. Even at the time of the merger, more than 85 percent of its power generation came from fossil fuels.
![A Giant Power Generation Public Enterprise Emerges After 25 Years…Is a ‘K-Orsted’ Possible? [Digging Energy]](https://www.asiae.co.kr/news/img_view.htm?img=2026071415203945697_1784010039.jpg)
Dong Energy subsequently declared its transformation into a renewables company and made large-scale investments in offshore wind. In 2017, Dong Energy sold off all oil and gas businesses and rebranded itself as Orsted. Today, Orsted is the world’s largest operator of offshore wind farms outside China.
However, Orsted has been criticized for the risks of concentrating solely on offshore wind. After the start of the second Trump administration in the US, Orsted’s US wind projects ran into trouble, and global inflation severely impacted profitability. Its share price plummeted, and in October 2025, Orsted announced plans to lay off 2,000 employees worldwide—one quarter of its total workforce of 8,000.
Germany’s RWE spun off its thermal and renewables businesses (Innogy) in 2016, but Innogy lacked the resources to invest independently and was eventually merged back into RWE. Samil PwC stated in its interim report, “Global cases show that even when integration occurs, extreme focus on a particular business may increase efficiency, but it also concentrates risks and creates structural limits in times of crisis.” Orsted is now diversifying beyond offshore wind into renewables more broadly.
Industry insiders believe that, for the integrated public power company to be competitive in renewables, job transitions must be prioritized. Many point out the lack of discussion on how to enhance competitiveness in new areas like renewables; emphasis so far has been only on a “just transition” during coal plant closures. One offshore wind industry source said, “It is true that public power company employees currently lack the experience and competitiveness of those in the private sector in renewables. The inflexibility of public-sector labor practices may make job transitions challenging.”
What Benefits Are There for the Public?
Some also criticize the fact that the creation of a mega power generation company is overly focused on renewable energy expansion. They argue that the government must offer clear principles and a vision for delivering concrete benefits to citizens—only then can it win public consent and navigate conflicts that may arise in the integration process.
Hot Picks Today
“I Might End Up Paying My Entire Salary Just for Interest”… Annual Per-Person Interest Could Reach 6.73 Million Won, ‘Yeongkeul-jok’ Lament
Ha Yunhee, professor at Korea University, said, “The slow expansion of renewables isn’t due to a lack of effort by the power generation companies, but rather because of regulatory and institutional shortcomings,” raising doubts about whether the new public enterprise system can flexibly compete with global firms. Professor Kim Changhwan of Chung-Ang University’s College of Engineering added, “The public needs to know what concrete benefits they will receive from integration, and what achievable goals exist after integration, in order to support the plan.”
This content was produced with the assistance of AI translation services.
© The Asia Business Daily. All rights reserved. Unauthorized AI training and use prohibited.