Overwhelming World No.1 China... Identity of the Korean Forward Base 500km from Jeonnam Targeting Korea [Domestic Offshore Wind Power Crisis]⑤

Half of Global Cumulative Installations in China
More Than Twice the Gap with Second Place UK

Full-Scale Entry into Korean Market
Forward Base Established in Yantai City

China already dominates the global offshore wind market. Of the total cumulative installations worldwide reaching 57 gigawatts (GW) in 2021, about half, or 27.6 GW, were installed in China. It has more than twice the capacity of the second-ranked United Kingdom (12.5 GW). Germany, which is pursuing a nuclear phase-out, ranked third with 7.7 GW of offshore wind capacity.

This year, the global new wind installation capacity is expected to reach 6.8 GW, an 18% increase compared to the previous year. In the Asia region, it is widely anticipated that 10.5 GW will be newly installed, a 46.9% increase from the previous year. Although the global offshore wind market accounts for about 6% of the total wind market, it is expected to grow more than fivefold over the next decade. China's influence is expected to grow even further.

China's offshore wind competitiveness stems from its domestic market. The Chinese government has been implementing a green energy transition policy through the "Domestic Expansion Strategic Plan Outline" from 2022 to 2025. The core of this policy is the expansion of wind power generation facilities. In the first quarter of last year alone, the scale of wind power generation facilities installed across China increased by 11% compared to the same period the previous year.

The expansion of domestic offshore wind power is becoming a stepping stone for China to enter overseas markets. China is directly and indirectly challenging the business by increasing the supply of equipment used in domestic offshore wind power facilities.

According to the Korea Wind Energy Industry Association, China is concretizing plans to build 3 GW of offshore wind power in South Korea through a total of nine projects utilizing Chinese companies.

The forward base for targeting the Korean market is Yantai in Shandong Province, China. This location has a hinterland port for offshore wind power, housing more than 100 related companies, including three publicly listed marine industry companies and 59 specialized small and medium-sized enterprises. Representative wind power-related companies located here include Dajin Heavy Industry, Jutao Heavy Industry, Dongfang Electric, Shanghai Electric, Dajin Heavy Industry Blade, YCRO, and Benglai Zhongbeijinglu Shipbuilding.

This area is geographically accessible, being only about 500 km in a straight line from Jeonnam, South Korea, where the most offshore wind projects are underway. Its price competitiveness is also excellent, and it is expected that Chinese offshore wind companies will increasingly enter the Korean market after completing their domestic projects.

The greatest strength of China's offshore wind power is its completed supply chain. China accounts for 60% of the global wind market supply chain. In the turbine market, which is the core component of wind farms, six of the top ten companies are Chinese.

The Global Wind Energy Council (GWEC) predicted in its global offshore wind report published last year that North America will experience supply shortages starting in 2025, the EU in 2026, the Asia-Pacific region excluding China in 2027, and South America in 2030, as demand surpasses supply.

In contrast, it forecasted that China’s offshore wind power development will receive stable equipment supply without shortages during this period. Supply chain stability is evaluated as a key factor enabling China to maintain price competitiveness.

Experts predict that Chinese companies, which face difficulties entering overseas markets due to the US-China trade war and low brand recognition, will increase efforts to leverage South Korea’s brand power.

An industry insider in the wind power sector explained, "If Chinese companies strong in substructures and towers, such as Dajin Heavy Industry, Jutao Heavy Industry, and Dongfang Electric, enter the domestic market, there are concerns about long-term impacts on domestic specialized companies and steel companies producing thick plates. Considering the current state of China’s steel industry, which is aggressively pursuing low-price strategies in overseas markets due to declining domestic steel demand, the repercussions could be significant."