Power shortages in the wintertime pose a risk to the nation’s energy security, but they also create business opportunities for banks, which seek a new sources of growth as interest rates stay low.

Industry sources said South Korean banks’ top priority at year-end was to find new areas of growth amid deteriorating profitability. Korean banks, which depend heavily on the profits from loan-to-deposit interest differences, have been losing money as the protracted economic downturn has kept loan interest rates low. The low-interest trend is forecast to continue into next year, further damaging banks’ balance sheets.

Sources said that financing a power plant would appeal to banks because it offers a stable source of income while diversifying their business portfolio.

As demand exceeds supply in the power generation market, the government is expected to allow more independent power plants to be built over the next five years.

The survey on construction plans for independent power plants over the next five years until 2017, conducted by the Ministry of Knowledge Economy in October, found about 97 construction projects by state-run or private power plant builders were applied for.

“Demand for financing a power plant will also increase along with rising demand for independent power plants,” said an official from Shinhan Bank, the nation’s second-largest bank, which set up a power plant project financing team early this year.

State-run Korea Development Bank has been the market leader in power plant project financing. But the latecomers are challenging the front-runner.

The Korea Exchange Bank recently beat out KDB in a race for a project to finance the construction of a power plant on Jeju Island. Woori Bank also won a project financing the construction of an offshore wind power plant in the southwest, defeating KDB.

The race to win power plant financing projects is going global as local plant constructors rush to bid for overseas projects. The state-run Export-Import Bank of Korea announced last Tuesday that it would provide a $150 million financing loan to support the Turkey Kirikkale project, which is co-developed by Samsung Construction & Trading and Saudi Arabia’s ACWA. The project is aimed at building gas-fired combined cycle power plants with a total output of 805 megawatts in Kirikkale, near Ankara, Turkey.

By Seo Jee-yeon  (jyseo@heraldcorp.com)