Nexen Tire (002350) announced on the 24th that it has signed a direct power purchase agreement (PPA) with SK Innovation E&S for renewable energy. A direct PPA is a system in which electricity users contract directly with renewable energy suppliers to receive power.
Under the agreement, the Yangsan plant in South Gyeongsang Province will receive approximately 4MW (megawatts) of renewable energy combining onshore wind and solar power starting in November. The annual generation capacity of about 6GWh is equivalent to the electricity consumption of roughly 1,600 three-person households for one year. Nexen Tire expects to reduce greenhouse gas emissions by approximately 2,700 tCO₂ annually through this initiative.
While sourcing renewable energy externally, the company is also expanding its on-site power generation. The Changnyeong plant in South Gyeongsang Province currently operates solar power facilities through a rooftop leasing arrangement, and plans to sequentially convert these to self-generation as contracts expire. The goal is to have solar power generation capacity of approximately 10MW or more in place by 2028.
Once the facilities are built as planned, solar power will cover about 9% of the Changnyeong plant’s total electricity consumption. The company is also reviewing plans to install and operate solar self-generation facilities at the Yangsan plant.
Carbon Reduction Demands from Global Automaker Clients Drive the Move
Nexen Tire’s push to increase the share of renewable energy in its production process is driven by carbon reduction demands from global automakers. The company supplies original equipment (OE) tires to European premium automaker brands including Mercedes-Benz, BMW, Audi, and Porsche.
As the automotive industry expands its carbon management scope beyond vehicle emissions to include greenhouse gases generated during parts production, the carbon reduction capabilities of supply chain partners have become directly tied to order competitiveness. This is why converting electricity used in tire production to renewable sources is viewed as a strategic investment to secure sustainable competitiveness in the global market.
Nexen Tire previously received approval from the Science Based Targets initiative (SBTi) and disclosed a target to reduce Scope 1 and 2 greenhouse gas emissions by 58.8% by 2034, using 2023 as the baseline. The direct PPA and expansion of on-site solar generation are being pursued as production-stage reduction measures to achieve that goal.
A Nexen Tire representative said, “The transition to renewable energy is a strategic investment to secure sustainable competitiveness in the global market, going beyond regulatory compliance,” adding, “We will progressively expand the adoption of renewable energy across our domestic and international production sites.”