Doosan Enerbility Opens Era of 14 Trillion KRW Annual New Orders with Nuclear Power Plant Expansion

As the global energy transition accelerates, the nuclear power industry is reaching a new turning point. Interest in nuclear technology, which can simultaneously achieve carbon neutrality goals and strengthen energy security, is rapidly increasing. In this changing industrial environment, South Korea’s Doosan Enerbility (034020) is gaining attention. Based on the potential for securing the Czech nuclear power plant project and achievements in the North American gas turbine market, the company is evaluated to have laid the groundwork for realizing its ambitious goal of achieving 14 trillion KRW in annual new orders.

According to the International Energy Agency (IEA), global nuclear power generation in 2023 recorded 2,602 TWh, an increase of 2.7% compared to the previous year. Notably, the market size for new nuclear construction is expected to grow at an average annual rate of 8.2% over the next decade, reaching approximately 120 billion USD by 2033. This market expansion trend aligns with the global agenda of addressing climate change and strengthening energy security. In particular, in Europe, the perception of energy independence has heightened following the Russia-Ukraine war, leading to successive announcements of nuclear construction plans.

Doosan Enerbility is regarded as the biggest beneficiary of these market environment changes. As of 2023, the company holds about a 17% share in the global nuclear power plant equipment market, and it is recognized for its world-class technology, ranking third globally in steam generators and reactor pressure vessels. The strategic partnership with Westinghouse Electric Company in the U.S., which provides access to AP1000 nuclear technology, is a key factor enhancing the company’s competitiveness. Westinghouse, headquartered in Pennsylvania, supplies technology to about 50% of the world’s operating nuclear power plants.

The Czech nuclear power plant project is a core component of Doosan Enerbility’s growth strategy. The Czech government plans to invest approximately 17 billion USD in the construction of the Dukovany nuclear power plant Unit 5, with the nuclear equipment supply contract alone estimated to be around 6 billion USD. The company is participating in this project through a consortium with Westinghouse, and the industry highly evaluates the likelihood of a Korean-American alliance securing the order. Particularly, in a situation where the Czech government emphasizes energy security and technological reliability, the proposal combining Doosan Enerbility’s proven manufacturing capabilities with Westinghouse’s design technology is analyzed to be competitive.

Achievements and Expansion Strategy in the North American Gas Turbine Market

Alongside the nuclear sector, Doosan Enerbility’s growth is driven by achievements in the North American gas turbine market. In 2023, the company recorded orders for a total of 24 gas turbines in North America, a 60% increase compared to the previous year. With natural gas accounting for 40% of the U.S. power market and the continuous increase in demand for replacing aging power plants and backup power to complement renewable energy intermittency, the growth trend in the gas turbine market is expected to continue for some time.

In the North American gas turbine market, Doosan Enerbility competes with Germany’s Siemens Energy and the U.S.’s GE Vernova. In terms of market share, GE Vernova holds the top position with about 35%, Siemens Energy ranks second with about 28%, and Doosan Enerbility is in third place with about a 15% share. However, the company’s gas turbines are noted for their high efficiency and relatively competitive pricing, particularly showing stronger competitiveness in the medium-sized gas turbine market. The company’s 270 MW gas turbine achieves an efficiency of 63%, boasting top-tier performance in its class.

Success in the North American market is also contributing to the enhancement of Doosan Enerbility’s global brand recognition. The company operates a gas turbine service center in Georgia, USA, and has established a stable revenue base through long-term service contracts with local customers. The gas turbine aftermarket service is a high-value-added business that generates about 2-3 times the lifecycle revenue compared to initial equipment sales, playing a crucial role in improving the company’s profitability. As of 2023, the company’s gas turbine service revenue accounts for approximately 25% of total revenue, and this proportion is on a continuous upward trend.

Particularly, the U.S. government’s Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) clean energy transition policies are providing new opportunities for Doosan Enerbility. With expanded incentives for power plants applying hydrogen co-firing gas turbines and carbon capture technology, demand for the company’s next-generation gas turbine technology is increasing. The company has currently commercialized a gas turbine capable of 30% hydrogen co-firing and plans to complete the development of a 100% hydrogen combustion gas turbine by 2025.

Entry into the SMR Market and Future Growth Drivers

The most notable area in Doosan Enerbility’s mid- to long-term growth strategy is the small modular reactor (SMR) market. The global SMR market is projected to grow at an average annual rate of 22.8% until 2030, reaching approximately 18 billion USD, significantly surpassing the growth rate of the existing large nuclear power plant market (8.2% annually). SMRs are attracting high interest in developing countries and regions with small power demand due to their shorter construction periods and lower initial investment costs compared to traditional nuclear power plants.

The company is accelerating its entry into the SMR market through a strategic partnership with NuScale Power in the U.S. NuScale, headquartered in Portland, Oregon, is a specialized SMR company that received the world’s first SMR design approval from the U.S. Nuclear Regulatory Commission (NRC) in 2020. Doosan Enerbility is responsible for manufacturing NuScale’s 77 MW SMR modules, particularly supplying key components such as steam generators and reactor pressure vessels. Through this partnership, the company is expected to secure a leading position in the SMR market.

The competitive landscape in the SMR market is still in its early stages, but major players are emerging. In addition to NuScale in the U.S., TerraPower, Rolls-Royce SMR in the UK, and Rosatom in Russia are competing. China is also attempting to enter the market through the Linglong One SMR project, and France’s EDF is developing the Nuward SMR. In this competitive environment, Doosan Enerbility is securing differentiated competitiveness based on its proven manufacturing capabilities and global supply chain.

Notably, South Korea’s competitive advantage in the SMR market is evident. Korea possesses the technology and experience accumulated over 40 years of nuclear power plant construction and operation, and its strengths in manufacturing provide favorable conditions for establishing an SMR mass production system. Doosan Enerbility already has a track record of supplying over 60 nuclear power plant equipment units domestically and internationally, equipped with the quality control systems and supply chain necessary for SMR manufacturing. The company plans to establish a dedicated SMR production line by 2025 and secure the capacity to produce 24 modules annually by 2030.

From a financial perspective, Doosan Enerbility’s growth outlook is positively evaluated. The company recorded consolidated sales of 7.8 trillion KRW and an operating profit of 420 billion KRW in 2023, representing increases of 18.5% and 52.3% respectively compared to the previous year. Notably, with an order backlog of 12.3 trillion KRW, the company has secured a stable revenue base for the next 3-4 years, attracting investor interest. Analysts predict that if the Czech nuclear power plant order is confirmed, the company’s order backlog will exceed 17 trillion KRW, supporting the feasibility of achieving the annual 14 trillion KRW new order target.

However, Doosan Enerbility also faces significant challenges. The nuclear industry is characterized by long project execution periods, high initial investment costs, and potential exposure to political and regulatory risks. Particularly, the SMR market is still in the early stages of commercialization, leaving technical verification and economic feasibility as important tasks. Additionally, external factors such as global supply chain instability and rising raw material prices pose risk factors that could impact the company’s profitability.

Nonetheless, as global decarbonization policies and the trend of strengthening energy security continue, the growth of the nuclear industry is expected to persist for the time being. The International Atomic Energy Agency (IAEA) predicts that global nuclear power capacity will reach 800 GW by 2050, double the current level, providing long-term growth opportunities for nuclear power plant equipment suppliers like Doosan Enerbility. Particularly in the Asia-Pacific region, where the company has strengths, nuclear construction plans are actively underway in China, India, and Southeast Asian countries, offering additional order opportunities.

From an investment perspective, Doosan Enerbility is evaluated as a key beneficiary of the global energy transition. The company’s stock price has risen by about 85% compared to early 2023, interpreted as a reflection of the market’s positive outlook on the nuclear industry. Major securities firms have set the company’s target stock price at an average of 200,000 KRW, indicating a potential increase of about 25-30% from the current price. Particularly, if events such as the confirmation of the Czech nuclear power plant order and progress in SMR commercialization are realized, additional valuation re-rating is expected.

In conclusion, Doosan Enerbility is evaluated to have laid the foundation to achieve its ambitious goal of 14 trillion KRW in annual new orders as a key player in the era of global energy transition. The stable revenue base from achievements in the Czech nuclear power plant and North American gas turbine markets, along with securing future growth drivers through entry into the SMR market, supports the company’s long-term competitiveness. However, preparing countermeasures for the unique risks of the nuclear industry and intensifying global competition will be crucial for sustained growth.

Disclaimer: This blog is not a news media outlet, and the content reflects the author’s personal views. The responsibility for investment decisions lies with the investor, and no liability is assumed for investment losses based on the content of this article.