South Korean ambitions for the renewable energy transition

South Korea has announced a series of renewable energy masterplans in the recent past years and indicated their goals to generate 20% of energy with renewables by 2030. In line with these goals, President Moon emphasized Korean’s ambition to increase the current 124.5 MW installed offshore wind capacity to 12 GW.

In the past months, Pondera has conducted a study on policy environment, supply chain, levelized cost of energy (LCoE) and employment effects of Korean offshore wind together with the Danish consultants  COWI A/S and Aegir Insights. Eric Arends, director of Pondera, and the consortium members presented key findings on 28th May 2021 on a side event of the 2021 P4G Seoul Summit. The full study can be downloaded here.

The P4G (Partnering for Green Growth and the Global Goals 2030) is a global initiative that seeks solutions for climate action and green economic growth through public-private partnerships and aims to deliver on the UN Sustainable Development Goals and the Paris Agreement. This year, more than 60 top government officials and heads of international organizations including Dutch PM, Mark Rutte and Danish PM, Mette Frederiksen have attended.

Strong starting position and remaining challenges

Thanks to solid fundamentals of relevant industries to offshore wind, Korea is in a relatively strong position compared to other emerging markets. The study finds that Korea has extensive experiences especially in manufacturing wind turbine components, jacket structure, submarine cable and installation of jackets and cables. With these strong capabilities, they have built two offshore wind farms (relatively small capacity) with domestic supply only. However, these projects also revealed weak points and obstacles which should be addressed to meet their ambitious goals.

Major challenges are related to the wind turbine. Domestic manufacturers are developing 8 and 10 MW offshore turbine models to close the technological gap with the major global manufacturers, but several stakeholder interviews indicated that project owners want to make certain of the turbine technology prior to utilizing it, so domestic manufacturers need to establish more track record to attract customers. In addition to wind turbines, lower capability in very large monopile manufacturing and a bottleneck of specialized installation vessels should be addressed properly.

Partnerships: Solutions for the challenges

The study suggests extensive partnerships between Korea and EU to overcome the hurdles. Global manufactures can bring proven and cutting-edge wind turbine technology and large production capacities that can boost Korean offshore wind. In a partnership Korean manufacturers can establish a track record and increase competitiveness. Also partnering in the installation of wind farms by sharing and combining vessels, crews and project management teams, will contribute to faster construction and transfer of knowledge and experience.

Partnerships are also economically attractive. Economic analysis in the study shows that the LCoE for a wind farm with floating wind turbines built solely with a Korean supply chain is 19% more expensive than a wind farm built in partnership with global suppliers. For bottom-fixed wind farms, the difference is even bigger: 22%. Pondera is already applying the partnership approach at their Seoul branch office, projects are carried out in close collaboration with Korean partner companies.