Peak Energy, Hyundai Motor back rooftop solar for suppliers

Peak Energy and Hyundai Motor Securities have launched a joint venture to expand rooftop solar across South Korea's automotive supply chain, targeting 100MW of deployment at supplier sites within two years.

The new business will focus on domestic original equipment manufacturer suppliers, particularly energy-intensive manufacturers facing rising electricity costs and pressure to cut emissions. It will develop, finance, build and operate renewable energy projects for suppliers, using power purchase agreements to give manufacturers longer-term visibility on electricity prices.

At launch, the venture has secured five projects with Tier 1 suppliers to Hyundai Motor. The projects involve companies producing key components for domestic carmakers and are intended to provide fixed or more predictable power prices at manufacturing sites.

The move comes as industrial energy costs remain a pressing issue in South Korea. The country is considering cuts of up to 10% to industrial electricity prices in some regions to ease pressure on manufacturers, while exporters also face trade uncertainty and tighter margins.

For automotive suppliers, electricity has become a more significant cost as production remains energy intensive and supply chains face greater scrutiny over emissions. Rooftop solar is drawing interest as a way for factories to reduce exposure to grid price swings while lowering supply chain emissions linked to vehicle production.

Initial pipeline

The first five projects provide an operational base for a wider rollout across several hundred supplier sites nationwide. The companies estimate the longer-term 100MW pipeline would avoid about 55,000 tonnes of carbon dioxide emissions a year, or more than 1 million tonnes over the assets' lifetime.

The strategy also aligns with growing pressure on carmakers to address Scope 3 emissions, which cover indirect emissions generated across the value chain. In practice, emissions from suppliers have become a larger part of automotive decarbonisation efforts, especially where parts production requires large and continuous electricity demand.

Peak Energy already has a sizeable presence in the region. The Singapore-headquartered renewable energy developer has more than 300MW of operating assets across Asia-Pacific, including more than 200MW in Korea that is operating or nearing operation.

The company is backed by Stonepeak, an infrastructure investment firm with about $93 billion in assets under management. That backing gives Peak Energy access to long-term capital at a time when funding structures are becoming more important in distributed energy projects, particularly those serving industrial customers through long-term contracts.

Cost focus

The joint venture reflects the growing use of third-party financed rooftop solar in manufacturing. Rather than requiring suppliers to fund installations directly, power purchase agreements allow a developer and financial backer to build and run the system while the customer buys electricity under a long-term contract.

Such arrangements can appeal to manufacturers seeking lower or more stable power costs without diverting capital from core operations. In South Korea, where large industrial groups rely on extensive supplier networks, the model could spread beyond the first group of automotive parts makers if the initial projects perform as expected.

Gavin Adda, Chief Executive Officer of Peak Energy, said: "Industrial competitiveness is now increasingly tied to the price of electricity. Hyundai Motor Securities recognized this early and moved quickly. This joint venture offers Korea's OEM suppliers a clear path to gaining long-term visibility into power costs through solar PPAs, while advancing the decarbonization of the supply chain. The fact that five projects are already set to be signed shows that this model is moving into concrete execution on the ground. For Peak Energy, this partnership is both a strong vote of confidence from a world-class industrial supply chain and recognition of the track record we've built across Korea and Asia."

Hyundai Motor Securities is participating through the Vencore Rooftop Equity Fund and its Infrastructure Investment Division. Its role centres on financing structures for the projects, alongside Peak Energy's development and execution work.

A representative of Hyundai Motor Securities' Infrastructure Investment Division said: "This collaboration marks an important first step toward supporting the automotive supply chain's practical transition to renewable energy. Through our joint venture with Peak Energy, Hyundai Motor Securities plans to combine competitive financing structures with strong project execution capabilities, enabling domestic suppliers to adopt solar PPAs in a reliable and sustainable manner. We will continue to expand the initiative, contributing to carbon emissions reductions across the supply chain and supporting its long-term sustainable growth."