Company's History

Doosan Enerbility started in 1962 as an industrial materials trading company. In 1980, it became a state-owned enterprise. In 1999, the Korean government unified power generation-related equipment companies into one, which is today's Doosan Enerbility. In 2000, the company was listed, and Doosan Group was selected as an acquirer candidate. In 2001, the company was privatized, its name was changed to Doosan Heavy Industries, and it began to aggressively expand its footprint in the power generation and plant industries.

In 2020, Doosan Group faced a liquidity crisis. As a result, the group underwent a creditor-led restructuring, during which Doosan Bobcat and Doosan Fuel Cell became Doosan Heavy Industries subsidiaries. In 2022, the restructuring was completed, and DHI changed its name to Doosan Enerbility.

Business Segments

Doosan Enerbility currently has three segments: Enerbility (power generation equipment and plant engineering), Doosan Bobcat (construction machinery; subsidiary), and Doosan Fuel Cell (fuel cells; subsidiary).

The Enerbility division operates under three business categories of: (1) nuclear power, (2) power services (including thermal and wind), and (3) plant EPC (engineering, procurement, and construction). Doosan Enerbility’s headquarters and the main factory are located in Changwon, Korea, an industrials cluster of the country.

Doosan enerbility business segments

Nuclear Power Business

Doosan Enerbility’s nuclear power business primarily offers equipment for large-scale nuclear power plants (NPP), including reactor vessels, steam generators, and reactor coolant pumps. Doosan has a track record of providing main equipment for more than 10 nuclear power projects across the world.

Other than equipment, Doosan Enerbility provides relevant systems and services for NPPs, including maintenance, upgrades, and man-machine interface system. The company also offers back-end nuclear fuel cycle solutions for safe after-processing of nuclear fuel and facilities, such as casks (container for used nuclear fuel storage) and nuclear plant decommissioning. SMR fabrication is area that could drive Doosan’s growth going forward and company is currently partnering with a number of overseas SMR developers to secure a leading position in the early phase of the market (more on it below).

Power service business

Doosan Enerbility’s power service business provides main equipment for non-nuclear power generation, including gas turbine, steam turbine, thermal power generator, and offshore wind generator. The company has supplied more than 740 units of steam turbines and generators combined globally.

Doosan Enerbility - Gas turbine history

Doosan Enerbility’s power service business also provides offshore wind generators. Doosan is currently one of the few players in Korea that has developed offshore wind generators based on its own technology. The company offers wind generators for both low- and high-wind speed regions. As of 2022, Company supplied 348MW of offshore wind generation capacity in Korea.

Plant EPC business

Doosan offers plant EPC (engineering, procurement, and construction) solutions, in which the company deals with every aspect of a plant project, including sourcing equipment for installation and construction of plant facilities. Company has already built a strong track record of executing multiple power plant EPC projects across various categories, from combined cycle power plant (CCPP) to biomass and wind. Recently, Doosan has secured multiple EPC project orders for gas power plants across Asia and the Middle East.

Power plant EPC key projects

Doosan Bobcat (subsidiary)

Doosan Bobcat provides construction and industrial machinery worldwide. While Doosan bobcat was founded as a US company, it was acquired by Doosan Infracore in 2007. Later in 2021, Doosan bobcat became a consolidated subsidiary of Doosan enerbility during the Doosan Group’s restructuring. Company currently produces construction equipment (excavators, loaders, etc), agricultural equipment (tractors, etc), industrial machineries (forklift, warehouse equipment, etc), and portable power equipment (generators, light towers, etc).

Doosan Fuel Cell (subsidiary)

Doosan Fuel Cell produces phosphoric acid fuel cells (PAFC) and solid oxide fuel cells (SOFC). DFC began as Doosan Corp’s fuel cell division upon the acquisition of Clear Edge Power in 2014. It was later spun off as a separate entity and listed in 2019. DFC currently has production capacity of 180MW/year for PAFC and 50MW/year for SOFC.

Opportunity Amid a global gas turbine shortages

Doosan Enerbility secured its first US gas turbine order for a hyperscaler this month, marking its entry into the global gas turbine market at a time when supply is severely constrained. On October 13, Doosan announced a contract with a major US company to supply two 380 MW gas turbines, with plans to export these units to the United States by the end of next year.

Procuring gas turbines has become increasingly challenging, with lead times stretching to five years from two to three years historically. The global gas turbine industry is fighting with a significant backlog as demand outpace production capacity. The three dominant suppliers — Siemens Energy, GE Vernova, and Mitsubishi Heavy Industries, control over 70% of the world’s gas turbine manufacturing capacity, yet their combined output cannot meet the surge in orders. According to Bloomberg, gas turbine orders are set to almost double to around 100GW annually in the next few years from 57GW in 2024. With current gas turbine manufacturing capacity at around 60GW, there is simply not enough capacity to meet projected future demand.

The rapid growth in gas turbine demand is fueled by several factors. Global appetite for power is increasing, driven by the explosive expansion of data centers required for artificial intelligence. At the same time, electrification of households, and manufacturing is accelerating worldwide. Many countries are transitioning from coal to natural gas as part of their decarbonization strategies, as gas-fired plants provide a more reliable, continuous power supply than intermittent renewables like solar and wind. 

Data centers are increasingly adopting on-site gas power generation to address their growing energy demands. Utilizing gas-fired power plants or generators directly connected to natural gas pipelines enables operators to circumvent grid constraints, ensuring a reliable and scalable power supply for their facilities. Several leading data center developers have already announced on-site gas power projects, with many more expected as grid limitations continue to tighten.

Large gas turbines are being installed on-site for primary power

Source: Bernstein

Historically, the lead time for a large gas turbine has ranged from two to three years. However, current supply chain constraints have caused these timelines to double to five years, meaning turbines ordered today may not be delivered until the end of the decade!! In contrast, Doosan is demonstrating exceptional capability by delivering within just one year, surpassing industry average lead time. Looking ahead, Doosan Enerbility is in active discussions with North American data center developers to supply more than 10 gas turbines by 2028. Further orders are also anticipated across the Middle East, including key markets such as Saudi Arabia, UAE, and Qatar.

Lead Time for gas turbine has doubled to 4-5 years. Doosan on the other hand, is targeting to deliver in one year

Source: company fillings

Building gas turbines is a complex and time-consuming process that demands extreme precision and expertise. The manufacturing process spans months of assembly, testing, and quality assurance. Expanding production capacity is not straightforward, as it requires not only specialized factories but also a skilled workforce and secure supply of critical materials. The historical consolidation of the industry into three major players has further limited flexibility, as these companies remain cautious about over expansion following past market downturns.

Expansion of Gas turbine manufacturing is not expected to become operational until 2027

Source: company fillings

The gas turbine market is characterized by high entry barriers. Technological challenges (as turbine needs to endure more than 1,500 degrees Celsius of heat and high pressure) and sticky relationship with utilities customers (to provide services and maintenance) have been the key hurdles for new entrants. While some efforts exist to develop domestic turbine manufacturing in countries like China, these have so far produced smaller-scale models that do not yet rival the large, efficient turbines made by Siemens, GE, and Mitsubishi.

Doosan Enerbility has invested over KRW 1 trillion in R&D dedicated to gas turbine development. With completion and delivery of the first Doosan 270 MW gas turbine in 2019, South Korea became the fifth country in the world to develop an H-class gas turbine for power generation. Securing this original gas turbine technology is now leading to new business opportunities.

In 2024, 8,000 hours of demonstration operations of Doosan Enerbility’s first 270 MW gas turbine was completed in collaboration with the Korean government to ensure the reliability of the technology at the Gimpo combined heat and power plant. In parallel to the real-world field validation at Gimpo, Doosan made rapid progress with continued technology development and received orders for their upgraded 380 MW gas turbine – designated as the DGT6- 300H.S2.

The 380MW gas turbine model developed and built by Doosan Enerbility

The “S2” features a higher “H-class” turbine inlet temperature (typically upwards of 1,600°C), higher pressure ratio (24 vs. 21) and 15% more air flow than the “S1”. The upgraded model boasts a 43% net simple cycle LHV efficiency, a significant improvement over the 40% of the “S1”. In June 2023, the first order for the “S2” was received for the Boryeong New Combined Cycle Power Plant. This was followed in January 2024 by an order for the Andong Combined Cycle Power Plant Unit 2. In July 2024, Doosan received two additional orders for the “S2” gas turbines, one to be deployed at KOMIPO’s 569 MW Haman Combined Cycle Power Plant, scheduled for 2026 commercial operation, and the other for KOEN’s Bundang Combined Cycle Power Plant, scheduled for a 2028 commercial operation date.

Source: Company

Doosan Enerbility intends to expand its annual turbine production capacity to eight units by the end of this year (up from six units) and the company is currently considering its options to increase the annual turbine production capacity to 12 units, 16 units or 20 units in the coming years due to unprecedented high demand.

Although Doosan is a relatively new player in the heavy-duty gas turbine market, it has developed technology that rivals the Big 3 in efficiency, inlet temperature, operational performance, and emissions standards, positioning the company as a strong competitor in a tightly constrained market.

Although Doosan is a relatively new player in the heavy-duty gas turbine market, it has developed technology that rivals the Big 3

Source: Bernstein

Beyond gas turbine manufacturing, Doosan Energy is also targeting the gas power services market, including maintenance, parts supply, and upgrades. Through its US subsidiary, Doosan Turbo Machinery Sensory Services (TMS), it is also promoting its entry into the North American maintenance and repair market. The lifespan of gas turbines is more than 30 years, so the maintenance and repair market is significant as the gas equipment service over time.

Key Beneficiary of the Nuclear Renaissance

Nuclear energy has generally been out of favor over the past decades, but perceptions about the long-stigmatized industry have begun to reverse. There is a growing appetite for nuclear energy around the world, as it is now increasingly being accepted as a stable, carbon-free solution. In many countries, electricity demand growth has begun to re-accelerate, reversing years of stagnant demand, given structural changes, such as electrification and the power hungry AI data centers. Existing nuclear capacity plans are insufficient to meet future demand of clean and reliable baseload power.

Source: Company

Doosan Enerbility is Korea’s sole producer of nuclear steam supply systems (NSSS) and one of a few globally companies that has qualified heavy fabrication capabilities. Doosan Enerbility has been supplying key NPP components for new-builds since 1980 and replacement equipment & services since 1995. Accordingly, the company supplied 34 reactor vessels (RVs) and 124 steam generators (SGs) globally since its operation started.

Doosan has secured a monopoly in the domestic (korean) sector, particularly with its proprietary reactor model, the APR1400. Furthermore, the company has emerged as a key supplier for significant international nuclear projects, capitalizing on the fact that many nations lack their own reactor designs and often turn to established models known for safety, cost-effectiveness, and robust execution capabilities. Given the strict quality requirement and geopolitical concerns, there are only a limited number of qualified companies that can participate in the global nuclear industry.

Doosan Enerbility's potential order pipeline in nuclear power

Nuclear power development remains highly capital-intensive, characterized by substantial upfront expenditures and lengthy construction periods. However, once operational, nuclear plants benefit from extended lifespans - typically around 50 years and relatively low operating costs. A typical 1 GW nuclear reactor requires capital investment ranging from US$2-8 billion, equating to 2,000-8,000/kW. Core components such as nuclear reactors and steam generators are produced through complex casting processes. On average, nuclear equipment accounts for approximately 50% of total capital expenditure, followed by labor at 25%, construction materials at 12%, and project management services at 10%. Within this supply chain, Doosan Enerbility holds a strategic position as a specialist manufacturer of nuclear power equipment, serving both domestic and international markets.

SMR : Small Module Reactors

Small Modular Reactor, or SMR, is a nuclear reactor technology with a power output of less than 300MW (vs. a traditional large reactor comes close to 1GW). SMRs are manufactured to be compact when compared to a conventional reactor, have modular structures allowing assembly and are fission based. Currently, there are 80-plus SMR designs and concepts worldwide and SMR developers need to rely on existing nuclear-qualified heavy industry companies, such as Doosan Enerbility. Doosan Enerbility is currently producing modules for NuScale and will be supplying other leading fourth-generation design companies, such as X-energy and TerraPower according to the company’s disclosures.

The benefit of SMRs is that they are scalable and can shorten construction time to 3 to 5 years. The smaller size and diversity of reactors can also mean they can be built in locations not traditionally suitable for nuclear power plants and close to power-intensive industries or remote communities. With SMRs typically have electrical capacities of ~300MW or less, they are particularly well-suited to match the demand of most data centers which require 24/7 power.

Industry however faces two issues: 1) Though SMRs have lower upfront capital cost per unit, their economic competitiveness is yet to be proven in practice once deployed; and 2) most SMRs are not expected to begin commercial operation until the end of this decade, with currently only a few technologies nearing commercialization. Most SMRs are still in the conceptual stage, making it difficult to assess their commercial viability without further development, testing, and deployment.

Select advanced nuclear technology designs

Thesis

Doosan Enerbility is transitioning its business mix toward high-margin nuclear and gas segments, laying the groundwork for profitability gains over the medium to long term. The company's diversified portfolio provides multiple revenue streams while nuclear and gas equipment exports offer the highest margin and growth potential.

Doosan's order backlog is a key indicator of its future revenue; a growing backlog signifies a stronger revenue stream in the mid-term, while a diminishing one can lead to revenue declines. Due to the nature of its projects, particularly in the nuclear energy sector with long lifecycles, Doosan Enerbility maintains a substantial project backlog that ensures a consistent revenue stream for future years. Current order backlog is KRW15.9tn at the end of 2024 which is significantly more than company’s 2025 revenue target of KRW6.5tn. Doosan Enerbility anticipates its order backlog to grow significantly by 2029, reaching KRW36tn.

New orders are a key driver of future revenue and backlog growth. Significant new orders, such as those for nuclear power plants or gas turbines, can substantially boost backlog and influence future earnings. With new nuclear and gas power equipment sales expected to rise, revenue is expected to also grow substantially over the next several years.

Key risks include 1) Long lead time nature of the business for nuclear power projects 2) delays in the investment decision for SMRs 3) execution risks 4) valuation at current levels

This post has been provided solely for information purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The author makes no representations as to the accuracy or completeness of any information in this post, Do your own diligence and consider this blog as just an educational piece.

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