South Korea Accelerates Offshore Wind Power with New Public-Led Project and Roadmap

South Korea is making significant strides in developing its offshore wind energy sector. The country’s Ministry of Trade, Industry, and Energy (MOTIE) is launching key initiatives to bolster renewable energy capacity, including a public-led project and a comprehensive roadmap aimed at transforming offshore wind in South Korea. Additionally, a floating offshore wind project in Ulsan recently reached an important milestone.

In this article, we look at some of the recent developments in South Korea’s offshore wind sector, which are giving the Clarksons Korea team a sense of real optimism.

Incheon selected for the MOTIE’s Public-Led Offshore Wind Development Initiative

MOTIE selected the city of Incheon as the location for the ‘2024 Public-Led Large Scale Offshore Wind Development Support Project.’  This project aims to establish offshore wind farms with a total capacity of 2.0 GW across 554 km² in the IC1, IC2, and IC3 areas of Incheon Eungjin territorial waters and the exclusive economic zone (EEZ). The project is due to be in development until December 2026 and will require approximately KRW 8.9 billion in investment. 

EIA approved for the MunmuBaram Floating Offshore Wind Project

The MunmuBaram Floating Offshore Wind Project (based in Ulsan, South Korea) has completed the Environmental Impact Assessment (EIA). This significant milestone secures approval from both the MOTIE and the Ministry of Environment.

South Korea's Offshore Wind Power Supply Roadmap

On 8 August 2024, the MOTIE unveiled a comprehensive roadmap to accelerate the development and supply of offshore wind power in South Korea. This roadmap outlines significant changes to the country's bidding procedures, evaluation criteria, and the overall structure of offshore wind energy projects, in turn positioning South Korea to expand its renewable energy capacity efficiently.

Key features of the offshore wind power roadmap:

• Accelerated bidding procedures
  MOTIE has adjusted the bidding timeline for offshore wind power projects. From 2025, bidding will take place in Q2 with an additional round in Q4 if there is still available capacity after the first-round tender. The revised schedule will start with an initial tender in October 2024, transitioning fully by 2025.

• Tender volume
  A total of 7–8 GW of offshore wind power capacity is expected to be auctioned in three to four tender rounds between H2-2024 and H1-2026, as follows:
  • Fixed offshore wind: 4.5 to 5 GW
  • Floating offshore wind: 2.5 to 3 GW
  • Public-led projects: Details to be introduced in H1-2025

If any floating wind project fails to secure a bidder during the 2024 tender, the capacity will be carried over into the 2025 tender.

• Two-stage bid evaluation process
  MOTIE has introduced a two-stage evaluation process to increase the transparency and competitiveness of bidding for offshore wind power projects.
• Stage one – Select 120-150% of the announced project capacity based on non-price indicators.
• Stage two – Price competition among the top projects from the first round of evaluation.

This new two-stage process also requires disclosing an upper price limit for bids, though the disclosure policy for floating wind projects is still undecided.

• Public sector and floating wind projects
  2024 saw the implementation of a separate bidding system for floating offshore wind farms (OWFs). The success of these projects will be assessed in early 2025, with adjustments made to the bidding system depending on the 2024 outcomes.

• Reforms to the Renewable Portfolio Standard (RPS)
  The Renewable Portfolio Standard (RPS) orders the use of renewable energy sources in electricity generation. With an updated RPS system planned for 2025, MOTIE aims to strengthen the RPS, in turn increasing the focus on public-led projects, with the potential for additional points or preferential treatment for such initiatives.
  
  

Revised bid evaluation criteria

The bid evaluation criteria have been revised to ensure more transparent project selection and balance cost-competitiveness with long-term project viability, maintenance, and contributions to national security. The new criteria include:

• Price indicators: Price remains an important factor, but its weight has been reduced from 60 to 50 points.
• Non-price indicators: There is now more emphasis on non-price factors, with these rising from 40 to 50 points. Additional points will now be allocated to national security and public-led projects, and community acceptance and industrial economic effects have been adjusted to reflect new priorities.

Deadlines for offshore wind farm project completion

Delays caused by construction and supply chain issues have led to extended deadlines for completing offshore wind farm projects in the MOTIE roadmap. The new deadlines are as follows:

South Korea’s renewable energy future

South Korea's aggressive push toward offshore wind energy reflects its broader commitment to renewable energy and carbon neutrality. The MOTIE's roadmap for offshore wind power marks a significant step forward in South Korea's renewable energy transition. With more transparent bidding procedures, revised evaluation criteria, and extended deadlines, the country is setting the stage for a significant expansion of its offshore wind capacity. By emphasizing public-led projects and separate tenders for floating wind farms, South Korea is positioning itself as a leader in the global offshore wind industry, fostering the sustainable growth of its energy sector.

How Clarksons can support South Korea's vessel procurement needs

As South Korea continues to develop its offshore wind market, we are seeing a lack of local tonnage to adequately service its expanding needs. With our global network and expertise in vessel procurement, Clarksons is well-positioned to offer tailored support, particularly by providing vessels from Europe and other parts of the APAC region.

• Addressing the tonnage shortfall: Despite being in the early stages of growth, the South Korean offshore wind market already requires additional vessel capacity to meet demand. Currently, there are insufficient local resources, creating a gap that could potentially hinder the market's expansion. With an extensive global network, Clarksons can quickly respond to this need by sourcing vessels from Europe and across APAC, ensuring the Korean market remains competitive and efficient.
  
  
• Navigating South Korea’s complex cabotage regulations: South Korea's offshore wind industry is subject to a strict cabotage regime, aimed at regulating domestic shipping routes in order to protect local interests. International shipowners must navigate these complex rules, which could pose further challenges as new, more stringent regulations are expected in the near future. Clarksons recognises that compliance with these regulations is crucial for international players looking to enter or expand within the Korean market.
  
  
• Partnerships as a strategic solution: Partnerships and joint ventures between international and local shipowners can be an effective strategy for operating under South Korea’s cabotage regulations. Such collaborations not only help international companies comply with local regulations but also offer mutual benefits by combining local knowledge with international expertise. These partnerships can help create a more robust and sustainable offshore wind market in South Korea, benefitting both local and international stakeholders.

As South Korea’s offshore wind market evolves, Clarksons is the ideal partner to deliver vessel procurement solutions. By leveraging our global presence and industry experience, we can play a pivotal role in supporting the growth of the Korean offshore wind market.

To discuss further please get in touch with Steve Ryoo Offshore & Renewables Broker and Country Manager.