SPOTLIGHT | Green-light for Yellow Sea offshore wind power giant swells sails of South Korea

August 11, 2023
4 min read
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Start of construction on the 532MW Anma project next year could set template for cutting through the East Asian nation's historically complicated permitting process, writes Simon Engfred Schlichting

The first industrial-scale offshore wind power project in South Korea to successfully navigate its way through the notoriously labyrinthine permitting process, the 532MW Anma, has completed its key environmental impact assessment, clearing the way for a start to construction in the Yellow Sea next year. The news might signal a breakthrough for the East Asian nation, which is seen as one of the world’s most prospective offshore wind plays, with Seoul targeting 12GW of plant in operation by 2030, but where only 140MW is currently turning.

The Anma project (formerly known as Sea Breeze) raises the bar – and the sector’s hopes – for the region significantly. To be developed 40km off the Korean southwestern coastline in 15-25 meters of water with 14MW Siemens Gamesa turbines, the array could ultimately provide power for 1.4m people in the Yeonggwang-gun municipality. 

Partly backed by Southeast Asia renewables developer Equis, Anma plans to bid in South Korea’s upcoming auction for a fixed contract on generation and related renewable energy certificates. In the country’s first offshore wind power purchase agreement auction for wind power, held in September 2022, only 100MW was procured. 

Seoul is targeting having 14.3GW of offshore wind installed in South Korea by 2030, but even including the newly green-lighted Anma, capacity of projects that have received final permits so far only totals 1GW, due to the government’s complicated regulatory procedures. South Korea’s technical resource potential is over 700GW, with 92% in waters suitable to fixed and shallow-floating foundations.

'South Korea remains a high-potential, albeit uncertain, market with a strong need to diversify its energy mix to combat heavy dependence on fossil fuels. Offshore wind is a promising part of the solution'

Simon Engfred Schlichting
Senior Research Analyst
Aegir Insights
Headshot of Aegir Insights' Analysts, Simon Engfred Schlichting

South Korea remains a high-potential, albeit uncertain market. The government has a strong need to diversify the national energy mix to combat heavy dependence on imported fossil fuels – only 7% of electricity generation in 2021 came from renewables. Offshore wind is a promising part of the solution given a vast technical potential of 712GW flies over its waters.

International offshore wind players including BP, Equinor, Corio, Shell and RWE have been drawn not only by the rich wind resource, but also by the country’s established maritime supply chain, joining major domestic utilities in building a sizeable project pipeline, including 21.1GW with a key ‘electricity business license’ (EBL), which grants exclusive development rights for an area.

Levelized cost of energy (LCOE) adds to the attraction. For the first 60 projects that have been awarded an EBL – the majority of which are fixed-bottom being built off the southwest coast of South Jeolla – forecasts ranging from €58–120/MWh. By comparison, the brace of floating wind projects planned, including the Shell-Hexicon's 1.3GW MunmuBaram, Equinor's 800MW Firefly, and Deep Wind Offshore's unnamed 1GW project off Ulsan, would have LCOEs in the region of €81–96/MWh, according to Aegir calculations.

However, at present, very few offshore wind projects have obtained final permits, betraying that South Korea’s notoriously long and uncertain permitting process remains a systemic obstacle in a market where – before Anma – only a handful of smaller demonstrator and ‘stepping stone’ arrays had been given the greenlight.

Major regulatory overhauls for offshore wind project site allocation and support have recently been announced by Seoul that likely spell the end of its ‘open-door’ model – where developers identified sites for potential projects and apply for an EBL to build – but there is still no firm indication of a timeline for these changes and whether they would impact projects already under way.

Offshore wind project in South Korea: Map of South Korea showing the location of 60 project sites for both floating and fixed-bottom off the country.
RICH RESOURCE: For the first 60 projects that have been awarded a key electricity business licenses forecast levelized cost of energy ranges from €58–120/MWh (Illustration: Aegir Insights)

Onshore there is also the matter of South Korea’s national grid, which is recognizes as needing to be strengthened, especially in the southwest region, in order to handle huge volume of offshore wind power that will be coming ashore. A general grid plan was unveiled in 2020, but the detailed transmission strategy is not expected before mid-2025, raising the specter that South Korea’s grid might face capacity issues.

Against a backdrop that includes frictions with the shipping and fisheries sector, as well as high levels of local resistance, Aegir expects a commercial-scale offshore wind market in South Korea will take-off around 2030.

Aegir Insights recently published a new subscriber-access playbook on South Korea's offshore wind sector, covering in detail developments in the regulatory framework and current market opportunities. Reach out to us to learn more and to access our full suite of reports.

This article was first published in Aegir Insights' offshore energy intelligence newsletter, Beaufort.

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