Challenging site conditions and a young supply chain make for an expensive start to South Korea’s offshore wind ambitions. However, Aegir Insights expects fixed-bottom and floating prices in South Korea to fall 35% and 50% respectively until 2035.
Several international companies are gearing up to enter the offshore wind market in South Korea following positive signals from the government, which has recently taken big steps towards reaching the national target of 12 GW by 2030. Aegir Insights has previously forecasted that reaching the target is possible with the right interventions by the pro-offshore government, making South Korea a market to watch.
While prices will initially be higher than in Northern Europe, companies and investors should expect substantial cost reductions as the industry matures:
- Fixed-bottom prices for South Korean projects are forecast to go from 76 to 49 EUR/MWh between 2023 and 2035, equal to a 35% reduction in cost as the domestic market develops
- By 2035 fixed-bottom prices will be at a ~16 EUR premium compared to Northwestern European projects
- The main cost differentiators are lower wind speeds, trickier seabed conditions, and a less developed local supply chain than in Northern Europe. However, the supply chain should improve quickly
- Floating prices for South Korean projects are forecast to go from 127 to 62 EUR/MWh between 2025 and 2040, equal to a ~50% reduction, on account of a maturing supply chain and scaling of the technology
- By 2035 South Korean floating prices at a 18 EUR premium compared to Northwestern European projects
- The two main drivers for higher costs in South Korea relative to floating projects in North Europe are lower wind speeds and a less developed local supply chain, with the last driver expected to improve quickly