[Energy-topia] Chasing Three Goals in Offshore Wind Power

Policy Ambition Outpaces Readiness, Industry Concerns Grow
Severe Shortages of Ports and Installation Vessels
Expansion, Supply Chain Development, Cost Reduction
Policy Priorities Must Reflect Real-World Constraints

"There is plenty of enthusiasm, but nothing is actually prepared."

This was the lament of a senior official in the domestic wind power industry when asked recently about the outlook for offshore wind power.

On November 11, the government finalized the Nationally Determined Contribution (NDC) for 2035 at a Cabinet meeting. The power sector must reduce greenhouse gas emissions by 68.8% to 75.3% compared to 2018 levels. This leaves no choice but to accelerate the adoption of renewable energy.

The plan is to expand renewable energy generation capacity from 34GW as of the end of last year to 100GW by 2030, and to more than 150GW by 2035. Offshore wind power, which enables the construction of power plants with capacities of several hundred megawatts at a time, is a key means for this energy transition.

The reality is far from easy. The total projected generation capacity of offshore wind projects selected through tenders held from 2023 to this year amounts to 4GW. Of these, only one project has actually begun construction so far: the Nakwol Offshore Wind Power Project in Yeonggwang, South Jeolla Province.

Until now, the most frequently cited obstacle for offshore wind power has been the complex permitting process. However, even after being selected as a project developer through tenders, there are other reasons why projects have failed to get off the ground. After visiting the Nakwol Offshore Wind Power site recently, I was able to get a sense of these reasons.

The offshore wind industry involves complex stages, such as producing, storing, transporting, and assembling each component, including substructures, towers, turbines, and blades. Each stage must work in tandem for an offshore wind farm to be successfully built. Securing project financing (PF) from financial institutions is the final hurdle. The most important factor determining whether PF is successful is the project's profitability.

What is the situation in Korea? In reality, Mokpo New Port is the only rear port available for storing the parts and equipment needed for offshore wind power. If there is no space at Mokpo New Port, it is impossible to build other offshore wind farms. Currently, the port is said to be packed with equipment for the ongoing Nakwol Offshore Wind Power Project.

It is said that 40 to 50 vessels are needed during the peak construction phase of offshore wind power projects. Multiple types of vessels are required, including wind turbine installation vessels (WTIVs), crew transfer vessels (CTVs), and barges for transporting equipment. Currently, there are only two WTIVs in Korea, both of which are deployed for the Nakwol Offshore Wind Power Project. Nakwol even had to borrow fishing boats due to a shortage of support vessels.

Looking at infrastructure such as rear ports and installation vessels alone, it is physically impossible to simultaneously develop large-scale offshore wind farms across the country. Even if additional rear ports are developed and new installation vessels are built starting now, it will take several years. How much offshore wind power can the Lee Jaemyung administration realistically expand during its term?

Localization of turbines, a key component, has also emerged as a challenge. The government has announced plans to foster domestic companies by establishing a separate public-led tender market. However, there is subtle pressure to use domestic turbines even in general tenders where the public sector is not involved. Power generation companies are saying that using 100% domestically produced equipment is realistically difficult if they are to secure profitability.

The government says it will rapidly expand renewable energy to supply the electricity needed for artificial intelligence (AI). It speaks of grand ambitions to foster domestic industry and lower electricity rates through offshore wind power. But when looking at the reality, it is questionable whether all of this can actually be achieved.

There is something I hear every time I meet wind power experts: "You cannot catch all three rabbits-offshore wind power expansion, lowering generation costs, and fostering the domestic supply chain. At this point, there must be a clear signal as to what the priority is."

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