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South Korea goes full steam ahead on offshore wind
Chaebols team up with global banks and energy players to achieve 14.3GW of offshore wind capacity by 2030
Jayde Cheung 5 Jun 2024

Asia is expected to become the largest producer of offshore wind power by 2050, according to the International Renewable Energy Agency, with South Korea exponentially expanding its presence in the sector.

The North Asian country has set an ambitious target to achieve 14.3 gigawatts of offshore wind production by 2030, aiming to surpass neighbouring countries such as Japan and Taiwan, which are also prominent players in the segment.

However, its current offshore wind installed capacity stands at only about 150 megawatts, as reported by the Global Wind Energy Council (GWEC). The huge gap serves as a wake-up call for the country to ramp up efforts in offshore wind development.

Spurred by government support, various stakeholders including affluent local families and international companies are actively investing in the sector.

Last year, heavy industry giants including LG Chem, SK Ecoplant, Posco and Hyundai Engineering forged two joint ventures with Norwegian state-owned energy company Equinor. The ventures aim to install 1.5GW of offshore wind power generators in a remote island chain in South Korea.

Meanwhile, SK Group and Hyundai Group took part in the 99MW Jeonnam offshore wind project. This is the first time that both local and international banks participated in a project financing, amounting to US$480 million, in the country’s offshore wind sector.  The engagement of foreign financiers enables local projects to diversify risks, while providing global exposure to the domestic renewable energy market.

South Korean corporations are also pushing for overseas offshore wind partnerships. In May, Hyundai Group, through its asset management arm, reached an agreement with Singapore’s Cyan Renewables to establish an offshore vessel supply chain. The collaboration seeks to provide necessary transportation for offshore facility assessment and construction, and is responsible for procedures including seabed preparation and cable laying, according to The American Clean Power Association.

Last year HD Hyundai, the group’s heavy industry arm, announced plans to explore ocean-associated energies as part of its “Ocean Transformation” strategy to address the twin challenges of energy crisis and climate risk. The company has since initiated a series of collaborations aimed at boosting local exposure to the offshore wind market, including an agreement earlier this year with Scottish government agencies to build a floating offshore wind farm in the country.

Growing appetite

Several family-run conglomerates, or chaebol, have also set up independent units to capitalize on the growing appetite for offshore wind projects. SK Group, for example, established SK Oceanplant last year to tap opportunities in the sector. The subsidiary recently signed an agreement with London-based Corio Generation, a portfolio company of Macquarie Asset Management, to cooperate on offshore wind projects totalling 6.8GW across Europe and Asia.

Such initiatives by prominent conglomerates have encouraged keen participation from local and foreign parties. These efforts are essential to position South Korea in the global market with quality project management.

The thriving offshore wind market not only helps accelerate the country’s transition to net zero but also creates much value for the economy. According to GWEC estimates, South Korea’s efforts to increase offshore wind capacity will create more than 770,000 domestic job opportunities and attract 87 trillion won (US$63 billion) of investment by 2030.

To fully realize the country’s offshore wind ambitions, market participants need to acknowledge the current hurdles facing the sector, including the lack of supportive grid infrastructure to transmit power and lengthy procedures in project approvals.

“It is a crucial moment for both the private sector and the government to quickly implement systematic processes for cultivating specialized professionals, employment plans, infrastructure, and systems,” comments Solution for Our Climate, a non-profit organization focused on the country’s energy transition.

“This will not only lead to job creation, expanding local employment and generating socio-economic benefits, but will also enable a transition of employment from traditional industries at the national level.”

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