Only Overseas Companies Benefited from Offshore Wind Power... Domestic Production Rate of Core Components Only 34%

100 Trillion Won Project to be Promoted by 2030
High Dependence on Foreign Products, Practically 'Imported Electricity'

[Sejong=Asia Economy Reporter Kwon Haeyoung] The speed increaser is considered a key component of the wind power 'turbine,' which resembles a giant windmill. It controls the rotational speed when transmitting energy to the generator, converting low-speed rotation to high-speed rotation and maintaining a constant speed once it accelerates. This helps stabilize power generation by keeping the speed steady despite the wind's varying intensity. However, there is not a single manufacturer of this component in South Korea. As a result, if the government expands wind power generation domestically, most key components will have to be imported.

Although the government is promoting a mega offshore wind power project equivalent to the output of 17 nuclear reactors by 2030, the localization rate of major wind power technologies is only around 30%. About 95.6 trillion KRW will be invested in offshore wind power over the next decade, but concerns are rising that if the wind power sector accelerates without a properly established domestic supply chain ecosystem, it may only enrich foreign companies.

According to data submitted by the Korea Energy Agency and others to Rep. Yang Geum-hee of the People Power Party on the 5th, the localization rate of key wind power components such as blades, generators, and converters was 34%. The localization rate of turbine systems, which are also considered technology-intensive along with key components, was found to be only 50%. Only labor-intensive parts like towers, which do not require significant technological expertise, had a localization rate as high as 97%.

If the technological level of advanced countries is set at 100, domestic technology levels for key components and turbine systems were assessed at 60 and 74, respectively. For example, overseas turbines have commercialized 8-megawatt (MW) class models and are currently developing turbines over 10 MW. In contrast, South Korea has commercialized 5 MW class turbines and is now developing 8 MW turbines that have already been commercialized in advanced countries.

Due to lagging technology, price competitiveness also suffers. The turbine sales price per MW for offshore wind power dropped from 1.6 billion KRW in 2018 to 1.4 billion KRW in 2020 in the European Union (EU), and from 1.3 billion KRW to 1.1 billion KRW in China during the same period. However, in South Korea, the price remained at 1.8 billion KRW in 2020, unchanged from two years prior. This structure inevitably leads to the use of foreign products if the same product is available.

The government has also failed to properly establish a supply plan for minerals essential for turbine production, such as neodymium. Rep. Yang Geum-hee pointed out, "The government's offshore wind power plan uses domestic wind, but most equipment and raw materials rely on foreign products, making it no different from 'imported electricity.' It is necessary to accurately identify the parts and technological levels required by domestic industries during the expansion of new industries and to make efforts to increase the localization of equipment for wind turbines to be installed in the future."

This content was produced with the assistance of AI translation services.