"Finding Localization Measures and Simplifying Approval Procedures" [Domestic Offshore Wind Power Crisis]⑧

Experts suggest that to foster the domestic offshore wind power industry, it is necessary to carefully establish localization provisions without violating international trade regulations by referring to overseas cases such as Japan and the United Kingdom.

Seulgi Lee, a senior researcher at the Korea Institute for Industrial Economics and Trade, said on the 5th, "Explicitly specifying localization ratios raises concerns about trade disputes," adding, "Even if difficult, it is necessary to strengthen the industrial economic effect criteria and indirectly encourage localization by awarding extra points to companies using domestic key components."

While it would be beneficial to reapply the localization ratio (LCR) to nurture our industry, he believes that due to the characteristics of the economic structure, it will be difficult for the government to take an active role. The researcher emphasized, "Besides direct LCR methods, efforts should be made to strengthen local content (LC) through indirect strategies such as introducing LC elements into auction systems and domestic wind power-related standards and certification systems to support equipment localization."

Offshore wind turbine.
Photo by Asia Economy DB

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There was also advice that since major countries are explicitly or indirectly introducing domestic component requirements, we too need to follow this trend to some extent. Jongho Hong, a professor at Seoul National University’s Graduate School of Environmental Studies, explained, "We should not take a submissive stance out of fear of trade disputes," adding, "Using the rationale of energy security and the climate crisis, it is possible to somewhat avoid WTO violation risks."

An anonymous wind power industry official said, "If auctions or bidding focus solely on economic logic, it results in handing over the nation's core industries to other countries," emphasizing, "Other countries minimize foreign companies' market entry by maintaining domestic factories, creating jobs, and establishing maintenance plans, so our government must also create a virtuous cycle through direct and indirect support." He added, "Measures to protect the domestic offshore wind ecosystem, such as improving the current bidding system that induces price competition and placing some restrictions on the use of foreign equipment for localization, must be proactively implemented."

There was also a call to strategically consider how to foster the offshore wind power industry and establish a supply chain construction plan. Seungmoon Lee, a researcher at the Korea Energy Economics Institute, said, "Many countries regard offshore wind power as a key policy and growth engine, contemplating deployment and industrial supply chain linkage, but we lack government policy consistency and clarity, making investment difficult," adding, "As tens of gigawatts (GW) of offshore wind power are planned in Northeast Asia, the government must establish clear policy signals and goals on how to handle installation vessels and build supply chains."

Voices were also raised about the need to restore consistency and trust in government energy policies. It was suggested that institutional support such as shortening the permit period through the establishment of a single window that can review offshore wind power permits at once is necessary.

As a solution to accelerate offshore wind power deployment, a "government-led planned site system" and the unification of permit windows were proposed. The planned site system for offshore wind power refers to the government selecting suitable zones for power generation and directly conducting environmental ecology, fisheries activities, economic feasibility analysis, and stakeholder consultations. Compared to the current system where power companies must carry out these procedures themselves, this approach is expected to speed up project progress.

Yebin Yang, a researcher at Climate Solution, said, "The current offshore wind power permit structure is inefficient and uncertain because permits must be obtained separately," adding, "Although permit periods were long when industrial complexes were developed in the past, the government introduced regulatory improvement measures and simplified related procedures through special laws in response to demands from many companies and local governments, so such cases should be introduced to offshore wind power as soon as possible."

Yang also mentioned, "There was an atmosphere that a special law related to offshore wind power would be enacted since the end of last year, but it has not passed," adding, "There are still challenges such as preparing support measures for operators who have already secured projects, so since the ultimate goal is to expand offshore wind power deployment, related laws must be promptly passed to introduce the planned site system and simplify permit procedures."

Since wind power projects require massive initial investments, advice has been raised that support such as tax benefits and subsidies is necessary. Another industry official said, "To attract domestic and foreign capital, securing numerous achievements is important, but domestic achievements are still lacking compared to wind power powerhouse countries," adding, "Financial institutions are lending funds for research and development (R&D) and facility investments, so systems that can alleviate financial burdens need to be established."

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