"South Korea's wind energy industry is still at an early stage but it boasts ample growth potential with a bright outlook on global and domestic markets," said Kim Kyeong-sup, an analyst at Goodmorning Shinhan Securities Co.

Kyeong-sup added that domestic manufacturers of wind turbine power plants, in particular, are expected to see business improving in the coming years, driven by the global demand for their products. They include manufacturers such as Taewoong Co., PSM Inc., Hyunjin Materials Co., and Dongkuk S&C, which are supplying parts to global wind power companies such as Vestas and GE Wind.

"The wind power industry shows the fastest pace of growth among alternative energy industries. Stocks of KR Co., in particular, could rise further as the company is landing big scale contracts overseas," said Kim Hee-sung of Hanyang Securities Co. Unison, STX Engine, and Hyosung are also expected to see their bottom line improve as they are building or are soon to start building, wind turbine power plants across the country. Doosan Heavy Industries & Construction Co. is also drawing investor interest after it recently announced a plan to enter the wind industry.

Last week, the nation's largest wind power farm began operation on the chilly ridges of the Taegwanryong area in Kangwon Province. Each of 49 wind turbines is capable of producing 2 megawatts of electricity.

"The wind farm will produce electricity that can power some 50,000 homes," the energy ministry said in a release. "It is also estimated that it will reduce the amount of carbon dioxide generated by power plants by 150,000 tons every year."

A private company named Unison set up the wind farm at a cost of South Korean Won (SKW) 158 billion [US$ 168 million]. The government loaned it SKW 40 billion [US$ 42 million] and promised to purchase the electricity for SKW 107.29 [US$ 0.11] per kilowatt-hour -- a generous contract considering the buyback price is around SKW 50 [US$ 0.05] for ordinary coal and oil power plants.

"It's very difficult to do such a business without subsidies from the government," said Lee Hyun-seung, chief of GE Energy Korea, which produces wind turbines and solar modules. "It's not unique to South Korea. Every country has the same problem."

The world's seventh largest oil consumer, South Korea still depends on fossil fuels for a large part of its energy supply -- importing more than 97% of its energy sources from overseas. To prepare for the Kyoto Protocol system, the Ministry of Commerce, Industry and Energy is trying to raise the portion of renewable energy in Korea's total power supply by offering subsidies.

Over the past two decades, the development of renewable energy sources has been put on the back burner as industrial development goals have taken priority. The South Korean government's focus on increased economic growth by increasing energy imports (South Korea is now the world's fourth-largest energy importer) has been at the expense of research devoted to renewable energy and energy efficiency. With approximately 90% of increased renewable supply attributable to the capturing of waste heat, the development of potential renewable source -- such as solar, wind and tidal energy -- has not been actively pursued.

However, South Korea's financial crises in 1997 and 1998 focused attention on the country's near-total dependence on imported energy sources and resulted in an increased awareness of renewable energy possibilities. The 1997-1998 financial crises, combined with the devaluation of the country's currency (the won), led to a doubling of energy prices, highlighting the need for South Korea not only to improve its energy efficiency programs, but also to seek to develop domestic renewable energy sources.

The country's current goal is to have solar, wind and tidal power provide approximately 5% of total power generation by 2011, up from 2.2% used today.

Building on this momentum, the South Korean government held a State Energy Committee Meeting last week to discuss the long-term national energy policy plan known as "Energy Vision 2030." According to the proposed plan, renewable energy, such as wind power, tidal energy and solar energy would increase from 2% to 9%.