FROM: Daesung Group

[February 21, 2013] Daesung Group, an advanced energy and clean technology company in Korea, will sign a concession agreement with the Municipality of Daegu on February 22, 2013 to invest in a  KRW 179.6 billion refuse derived fuel (RDF) project, which will recycle household wastes to generate energy.  

The project was first proposed in November 2008 by a consortium including Daesung Energy, a key subsidiary of Daesung Group, Daesung Holdings and GS Engineering & Construction. After feasibility studies and the value for money (VFM) reviews by the Public and Private Infrastructure Investment Management Center (PIMAC) under the Korea Development Institute, the project received final approval from the Private Investment Review Committee for the Ministry of Strategy and Finance in December 2012, allowing Daegu to name the project operator and enter into a concession agreement. 

The project worth a total of W179.6 billion breaks down into W65.4 billion (36.4%) in public investments and 114.2 billion won (63.6%) in private investments. The consortium consists of five companies -- Daesung Energy (construction share: 18%), Daesung Holdings (10%), GS Engineering & Construction (40%, lead company) and Hwasung Industry (17%), Daelim Industry (15%). The participating companies are set to create a joint equity venture or a special purpose company, tentatively named Daegu Green Energy. The RDF facilities are scheduled for groundbreaking in the first half of 2013 and for completion by the end of 2015. Upon the completion, Daegu Green Energy will run facilities for 15 years and Daesung Energy will represent the consortium as a concessionaire operator. 

The RDF facilities will be located on a site measuring 50,132m2 at the tip of Bangcheonri Landfill in Daegu and have a daily treatment capacity of 600 tons for household waste. Combustible components extracted from household wastes are compressed into solid fuels, which are fed into a RDF-generator and boiler to generate heat and electricity. Considered to be an innovative, RDF technologies, which convert urban trash into energy resources, have been widely commercialized in Europe, Japan and other advanced markets for the past 10 years.  

Household wastes in pay-as-you-throw trash bags have been disposed at landfill sites or burned in high temperature furnace. However, the RDF facilities enable the recycling of household wastes as a new energy resource, extend the service life of the landfill and reduce environmental hazards such as landfill gas and leachate. 

Moreover, heat and electricity generation by RDF facilities will reduce annual crude oil imports by 25.1 billion won. The RDF project is expected to create new revenue streams such as the trading of renewable energy credits (RECs) and Certified Emissions Reduction (CER) credits under the Clean Development Mechanism (CDM) of the United Nations Framework Convention on Climate Change (UNFCC).

Daesung Group has developed leading technologies and expertise in the waste-to-energy market through various green energy projects including the Bangcheonri Landfill Gas (LFG) project, the CNG bus fuel business, which uses biogas from food waste treatment center, and the RDF project in Daegu. In addition, Daesung Group has supplied wind-solar hybrid power generation systems around the world in locations such as Central Asia, East Asia, Latin America and Africa. Daesung Group is the first Korean company to build a tower-type solar-thermal power system with its proprietary technologies. 

Chairman Younghoon David Kim of Daesung Group noted, “The RDF project is significant in that it realizes the potential of waste as a high-efficient energy source at this critical juncture to secure future energy resources” and added “Daesung Group will seek to reinvent the Bangcheonri Landfill as an eco-friendly green energy park through a series of waste-to-energy projects and actively work with the Daegu to make it, the host city of the World Energy Congress 2013, a global green city with a smaller carbon footprint.”