Seoul Energy Corp. Launches Phase 2 District Heating Project — EPC Tender Opens Monday

Seoul Energy Corp. announced that its Seonam District Energy Facility Phase 2 Construction Project — also known as Magok ENS — has completed all major preliminary steps and is now entering the execution phase, aimed at securing a stable district heating supply for the Gangseo and Magok areas.

Seoul Energy Corp. and Korea South-East Power (KOEN) will issue a tender notice Monday for the selection of an EPC (engineering, procurement and construction) contractor for the project. The Phase 2 project, which underwent lengthy discussions over its business structure and government consultations, will formally begin the process of selecting an EPC contractor to build the power plant.

The Phase 2 project is essential to meet rapidly growing heat demand in the Gangseo and Magok areas, but has faced delays due to ongoing discussions over the company's financial conditions and project structure.

Options including an outright sale or a simple consortium arrangement were considered, but the final decision was to adopt a special purpose company (SPC) structure in which Seoul Energy Corp. participates as the lead entity and shares investment burdens and project risks with a public power company. The choice was made to preserve the project's public character while securing operational leadership and execution capacity.

The SPC structure was confirmed in September 2025, and KOEN was selected as the preferred negotiating partner in October of that year. In December, the two companies signed a basic agreement to jointly advance the project.

Proactive response to global gas turbine supply shortage — production slot secured, government investment approval complete

Seoul Energy Corp. moved early to secure gas turbines — the project's core equipment — in line with the 2032 target completion date. With global competition for gas turbine production slots intensifying amid rising worldwide power demand, the company partnered with KOEN in April to sign an advance purchase agreement with US-based GE, locking in a production slot to ensure timely construction.

The government investment approval process has also been completed. Seoul Energy Corp. and KOEN held ongoing consultations with relevant agencies, and on Aug. 24 the Ministry of Economy and Finance approved KOEN's investment, clearing the way for subsequent steps including SPC establishment and EPC contractor selection.

Ahead of the EPC tender, the companies held a briefing in June for major domestic power plant construction firms, outlining the project scope, key equipment and bidding direction. Major construction companies with power plant experience attended and showed strong interest.

285MW cogeneration plant — heat supply base for about 74,000 households

The Seonam District Energy Facility Phase 2 project involves constructing one 285MW LNG combined heat and power (CHP) unit, one 68 Gcal/h peak-load boiler (PLB), a thermal storage tank and other major heat and power supply facilities. Total heat production capacity will reach 258 Gcal/h, and the total project cost is 700 billion won ($523 million).

The project's economic viability has been confirmed through financial analyses by external specialist institutions and financial advisers. A feasibility study conducted by the Local Public Enterprise Evaluation Institute in December 2025 yielded a benefit-cost ratio of 1.003 and a project internal rate of return of 4.63 percent, both meeting the economic viability benchmarks of a B/C ratio above 1.0 and an IRR above 4.5 percent.

A financial model review by Hana Bank, the SPC's financial adviser, in August 2026 reflecting current project conditions also met the economic viability benchmarks. Seoul Energy Corp. plans to proceed without delay with subsequent steps including SPC establishment and financing.

Cogeneration is a high-efficiency power generation method that simultaneously produces electricity and heat from a single fuel source, utilizing the heat generated during power production for district heating to maximize energy efficiency.

The Magok district and the broader Gangseo area have seen continuous growth in district heating demand as residential, commercial and office development expands. Once completed, the project is expected to provide stable district heating to approximately 74,000 households and 428 commercial and public facilities, significantly strengthening heat supply reliability across southwestern Seoul, including the Gangseo and Magok areas.

EPC contractor selection — comprehensive evaluation of technical capability, performance and project execution

Starting with Monday's tender notice, Seoul Energy Corp. and KOEN plan to conduct qualification screening, a site briefing, and bid submission and evaluation to select an EPC contractor with the highest level of technical expertise and project execution capability.

The EPC tender will be conducted as a restricted competitive bid, open to contractors — individually or as a joint venture — that meet specified construction performance records and credit rating requirements. The EPC contractor will be selected through a two-stage evaluation process that comprehensively assesses both technical merit and economic competitiveness.

The first stage will evaluate technical aspects including power facility performance, equipment delivery and installation schedules, and technical specifications. The second stage will comprehensively assess bid price, overall plant efficiency and unit energy production cost.

Following Monday's tender notice, bid qualification document submissions and screening will take place, with a site briefing scheduled for October. Bid submissions will then be received, followed by a comprehensive technical and economic evaluation and price opening to select a preferred negotiating partner.

The cogeneration plant is targeted for final completion in 2032. The PLB and thermal storage tank will be brought online first to address near-term heat demand, with the cogeneration equipment added subsequently to meet the medium- and long-term heat needs of southwestern Seoul.

Seoul Energy Corp. President Hwangbo Yeon said the company would work closely with KOEN to select an EPC contractor with outstanding technical capability and construction experience. "As a responsible lead entity, Seoul Energy Corp. will successfully advance the Phase 2 project and build a reliable heat supply foundation on schedule, giving residents of the Gangseo and Magok areas peace of mind," he said.