S. Korea may join offshore wind alliance to take on China
Hyeon-woo Oh and Woo-Sub Kim
Jul 08, 2024 (Gmt+09:00)
Offshore wind farm in South Korea with equipment manufactured by domestic firm Doosan Enerbility (File photo, courtesy of Doosan Enerbility) South Korea is considering teaming up with a global body formed to cope with China’s rapid expansion in the world’s wind power industry while helping local companies increase their market shares in the sector.
Korea's Ministry of Trade, Industry and Energy may join the Global Offshore Wind Alliance (GOWA) with a schedule to complete the sign-up process in the second half of 2024, according to government and energy industry sources on Sunday.
The alliance, founded by Denmark, the International Renewable Energy Agency (IRENA), and the Global Wind Energy Council (GWEC) whose members include China, was launched at COP27 in November 2022.
GOWA, which presently has 20 member states such as the US and six wind power companies, seeks to contain the dominance of China with local content requirements and subsidies for domestic companies.
“Korea has all the value chains for offshore wind power plants,” said a Korean government official. “We are expected to benefit the most from the US and Europe’s moves to exclude Chinese products.”
Offshore wind power, along with photovoltaics, is regarded as a key to decarbonization. An estimated 248 gigawatts (GW) of global wind power generation capacity is scheduled to be installed by 2030.
CHINA’S DOMINANCE
China dominates the global wind power industry with four companies — Goldwind Science & Technology Co., Envision Energy, Windey Energy Technology Group Co. and Mingyang Smart Energy Group Ltd. — among the world’s five largest original equipment manufacturer (OEM) list.
(Graphics by Dongbeom Yun) The country increased its global new wind turbine market share to 65% last year from 53% in 2021, according to the GWEC. Its market share is likely to rise further to some 70% when including components such as foundations and towers.
China's technology is also growing. The nation has applied for more than 170,000 international patents in the wind power sector since 2015, four times that of the industry’s powerhouse Denmark, according to Japan's Nihon Keizai Shimbun. Last year, China developed a16 megawatt (MW) wind turbine, the world’s largest.
“China installed offshore wind power plants totaling 77.1 GW last year alone, ten times those of the US,” said an industry source in Seoul.
TO TAKE ON CHINA TOGETHER
GOWA asked Korea to join when it was founded in 2022, as the country is among only a few capable of manufacturing not only key components such as turbines, towers and foundations but also the vessels for shipping them.
Korea had been reluctant to participate in the alliance, however, due to concerns that domestic firms could miss opportunities in China, the world’s largest wind power market.
The government is now mulling joining the alliance as Chinese players expand their presence on the peninsula, industry sources said.
Vensys Energy AG, owned by Goldwind, is poised to supply all 64 turbines to a 365 GW Korean offshore wind farm under construction with an investment of 2.5 trillion won ($1.8 billion). Heongtong Group, China’s largest power and fiber optic cable manufacturer, will provide the submarine cables for the project.
The US-China trade war expanded into the renewable energy sector, prompting Korea to join GOWA, industry sources in Seoul said.
“GOWA indicates the global wind power market will be divided to reduce Chinese influence,” said one of the sources. “The government’s decision to join the alliance signals Korea’s breakup with the Chinese market.”
TO HELP WIND POWER INDUSTRY
The potential signup is expected to nurture the Korean wind power industry and increase exports, sources said.
Danish wind turbine maker Vestas Wind Systems A/S, a private member of GOWA, relocated its Asia-Pacific headquarters from Singapore to Korea in September last year to produce core parts and materials in the Northeast Asian country.
“Through GOWA, cooperation will be elevated to a national level from a corporate level,” said Choi Deok-hwan, head of international cooperation at the Korea Wind Energy Industry Association. “Opportunities for large deals will increase.”
The country is home to major wind power component makers.
LS Cable & System Ltd. secured a 110 billion won deal this year to supply Taiwan with submarine cables used for wind power. The company also signed a 100 billion won deal in the US last week and a 282.1 billion won contract in Belgium. LS Cable installs submarine cables (File photo, courtesy of LS Cable) SK Ecoplant Co., a construction engineering and waste management firm, established a wind power components value chain with its subsidiary SK Oceanplant Co. SK Ecoplant constructs jacket-type turbine foundation parts, while SK Oceanplant manufactures offshore electrical substations.
The company has also formed an alliance with 24 local contractors.
“It was a move to secure yards to meet surging demand in Europe and North America,” said a company official.
Major shipbuilders such as HD Hyundai Heavy Industries Co., Hanwha Ocean Co. and Samsung Heavy Industries Co. are also enlarging their capabilities to build special vessels.
Demand for wind turbine installation vessels has grown as the capacity of offshore wind power generators rose to 10 MW per unit.