Expectations on potential growth of South Korea’s offshore wind power market are growing as global offshore wind power companies have announced their plans to enter the market one after the other. This can also be a great opportunity to increase supply of offshore wind power in South Korea and delivery of domestic materials and equipment. It is also expected that competitive edge of these domestic materials and equipment will rise during this process.
According to the industry on Monday, there are two companies so far that announced their plans to enter South Korea’s offshore wind power market and they are Denmark-based Orsted, which is the world’s top offshore wind power developer, and OW based in Spain.
Orsted and OW are preparing to build 1.6 GW and 1.5 GW offshore wind farms in Incheon and Ulsan respectively. Considering the fact that the South Korean Government is planning to increase generation capacity of offshore wind power up to 12 GW by 2030, their offshore wind farms will account for 26% of the government’s goal.
Orsted already obtained an authorization from Ongjin-gun to use public waters. It is reported that the company is currently installing a wind environment measurement system and is conducting analysis on project feasibility. It is reported that OW is also installing a wind environment measurement system in an exclusive economic zone (EEZ) that spans about 72 kilometers and is located in the coaster waters of Ulsan and is looking into project feasibility.
Development of wind power farms generally goes through a series of processes such as public competition and authorization for power generation business and development. Orsted and OW will carry forward their projects if there is not any particular issue.
The two companies are expected to have huge impact on South Korea’s offshore wind power market as they have to use South Korean materials and equipment to build large-scale offshore wind power farms due to various reasons such as limited transportation of goods from overseas. In fact, Orsted already exchanged business agreements with Hyundai Steel, SamKang M&T, LS Cable & System, POSCO, CS Wind, and Hyosung regarding delivery of their products.
OW is expected to be even more active than Orsted when it comes to utilizing South Korean goods as it will be working with Korea Hydro & Nuclear Power (KHNP), which is a subsidiary of Korea Electric Power Corporation, to build offshore wind power farms. Due to the nature of a public agency, KHNP will encourage OW to use South Korean goods.
Orsted and OW are also expected to make contributions towards establishing a groundwork for South Korea’s offshore wind power market as they are able to raise astronomical amounts of investments. In case of Orsted, the company plans to invest $7.29 billion (8 trillion KRW) in building offshore wind power farms. OW is also expected to invest a similar amount in building offshore wind power farms in the coaster waters of Ulsan.
“Because offshore wind power is a huge industry, it requires certain amount of financial strength.” said one official from the offshore wind power industry. “Because Orsted and OW already have many experiences in operating offshore wind power farms throughout the world, they will be able to make great contributions towards raising competitive edge of South Korea’s offshore wind power market early on.”
The companies also can have positive impact on improving competitive edge of South Korean technologies in offshore wind power as competition between South Korean companies will be inevitable as they will look to become suppliers of the two companies. In particular, the companies will accelerate development of wind turbine that is a key device to generating offshore wind power. Building larger wind turbines is the trend within the global offshore wind power industry. For example, an offshore wind power company will build one 6 MW wind turbine rather than two 3 MW wind turbines if it were to build 6 MW offshore wind power farms. Although Doosan Heavy Industries & Construction is working on 8 MW wind turbine, there is a considerable amount of gap between Doosan and top foreign companies that are currently testing 10 to 12 MW wind turbines. There is a great chance that Orsted and OW will accelerate technology development in order for South Korean companies to obtain large orders for wind turbines.
However, some are concerned about residents accepting construction of offshore wind power farms near their homes and having South Korea’s energy market being opened to foreign companies.
Regarding these concerns, an official from the Ministry of Trade, Industry and Energy said that economic effects caused by foreign offshore wind power companies entering the South Korean market is overwhelmingly great and that the companies will also cause bigger supply of offshore wind power to the people in South Korea.
Staff Reporter Ryu, Taewoong | bigheroryu@etnews.com