[Insight & Opinion] Expectations for Offshore Wind Power in the Era of Renewable Energy

There is a renewable energy development boom in every country. Alternative energy projects that consider the environment among Environmental, Social, and Governance (ESG) factors are no longer unfamiliar. While there have been many successful cases, government-led overinvestment without considering overall conditions is also evident. In our case, the solar power project, which focused on distribution performance without proper consideration of transmission and distribution infrastructure, serves as a lesson.

The Ministry of Trade, Industry and Energy forcibly suspended solar power generation after April due to supply exceeding electricity demand. This is because excessive power production in some regions exceeded the capacity limits of the transmission and distribution network, which could cause large-scale blackouts. Since solar power generation was concentrated in the Honam and Gyeongnam regions, oversupply occurred there, but the power grid expansion to connect to the consumer area, the Seoul metropolitan area, was insufficient. Considering that it is difficult to expand transmission and distribution infrastructure in a short period and it takes a long time, such forced shutdowns are expected to increase in the future. The problem arose because the government aggressively pushed forward projects that should have been led by the private sector, even providing incentives.

There are also promising business areas ahead. One is power generation using offshore wind. Offshore wind is free from site restrictions compared to onshore wind, which faces obstacles such as private land compensation, by utilizing the open sea. As wind speeds remain consistently high moving away from the coast, power generation is stable, allowing for the creation of large-scale complexes. Although initial costs are high, once constructed, offshore wind farms have the advantage of a long lifespan. According to the International Energy Agency (IEA), the capacity factor of offshore wind power is around 40-50%, which is significantly higher than the 17% of solar power.

In Europe, as of last May, Germany, Denmark, the Netherlands, and Belgium signed an agreement on offshore wind power and green hydrogen, aiming for 65GW of offshore wind capacity by 2030 and 150GW by 2050 along the North Sea coast. Japan’s largest power company, JERA, is currently acquiring the Belgian offshore wind company Parkwind. For South Korea, surrounded by sea on three sides, offshore wind is also expected to have high utilization.

Leading the offshore wind sector domestically is SK Ocean Plant. This company mass-produces and supplies key foundational structures for offshore wind power. In 2020, it became the first in Korea to export substructures to Belgium. Earlier this month, the author visited Goseong to attend the Korean Economic Association International Conference held in Yeosu, and was impressed by SK Ocean Plant’s Goliath crane, which was visible at a glance. According to officials, once the new 1.6 million m² factory under construction is completed, production capacity will increase to about 650,000 tons annually, enabling the domestic manufacture and supply of large quantities of major products needed for wind power, from fixed substructures to floating bodies. Considering offshore transportation, it is appropriate for such offshore wind structure factories to be located close to the coast, which also contributes greatly to local economic revitalization through job creation and the development of commercial districts.

Renewable energy development is a direction all countries must strive for in the future. However, government-led overinvestment can cause side effects. Although various attempts are being made indiscriminately, only projects that consider all infrastructure and regional economic development will survive.

Kyuil Kim, Professor at Michigan State University