Ministry of Industry Announces Competitive Bidding Roadmap for Offshore Wind Power
Plans to Announce Bids for 7-8GW Scale Over 2 Years
Non-Price Criteria Raised to 50 Points... Separate Process for Floating Wind Turbines
Starting this year, the competitive bidding for offshore wind power generation will increase the non-price factors from the existing 40 points to 50 points. Among the non-price indicators, security and public elements will be newly evaluated. Accordingly, concerns that have been raised about the possibility of Chinese low-cost equipment dominating the domestic offshore wind power market are expected to be largely alleviated. Floating offshore wind power will be bid separately from fixed offshore wind power. If the bidding proceeds successfully, it is expected that offshore wind power projects equivalent to the capacity of eight nuclear power plants will be newly promoted over the next two years.
The Ministry of Trade, Industry and Energy held an 'Offshore Wind Industry Meeting' chaired by Vice Minister Choi Nam-ho at the Korea Chamber of Commerce and Industry in Seoul on the 8th, where it announced the 'Offshore Wind Competitive Bidding Roadmap' containing these details.
Offshore wind power, along with solar power, is gathering expectations as an important source of renewable energy in Korea. To achieve carbon neutrality by 2050, renewable energy must be significantly expanded, and since development sites on land are limited, the share of offshore wind power inevitably has to increase. According to the 11th Basic Plan for Electricity Supply and Demand, the domestic wind power installation capacity is expected to reach 18.3 GW by 2030.
The government introduced a fixed-price competitive bidding system for wind power generation for the first time in 2022. The winner and price were determined by combining price evaluation (60 points) and non-price evaluation (40 points). In the first competitive bidding, the government applied a localization regulation (LCR, Local Content Requirement) that gave additional weight if more than 50% of domestic components were used, but this system was abolished in last year’s bidding. As a result, some projects using Chinese equipment were selected in last year’s bidding. The domestic offshore wind industry has repeatedly pointed out the need for supplementary measures to protect and nurture domestic companies in the offshore wind market, which can expand into a 100 trillion won market.
Reflecting these concerns, the roadmap announced by the government on this day raised the weight of non-price evaluation from the existing 40 points to 50 points. In the non-price evaluation, new indicators for bases and maintenance to ensure timely completion and stable operation will be established, and security indicators will be reflected in accordance with the enactment of the Special Act on Resource Security. First, this year, security and public elements will be evaluated within the industrial economic effect indicators. Instead, the resident acceptance score will be lowered from the existing 8 points to 4 points, and the domestic business performance indicator will be removed.
The government stated that in the first evaluation, 120-150% of the announced volume will be selected based on non-price indicators, and in the second evaluation, price competition will be added, combining the first and second scores to finally select the highest scoring businesses. The upper price limit will be disclosed during price evaluation.
In particular, this year, separate bidding will be conducted for floating offshore wind power along with the existing fixed offshore wind power. Floating offshore wind power involves floating platforms installed far offshore with towers and generators mounted on them, and there have been no installations of this type in Korea so far. Although it has higher power generation efficiency compared to fixed offshore wind power, its disadvantage is the higher cost. The government explained that considering these differences from fixed offshore wind power, a separate bidding market will be established for floating offshore wind power. However, the decision on whether to disclose the upper price limit for floating offshore wind power will be made later.
The government also plans to strengthen the public role in line with the reform of the Renewable Portfolio Standard (RPS) system by setting a target proportion for public participation projects and establishing a separate public-led bidding market in the first half of 2025.
The government plans to conduct offshore wind power bidding for a total volume of about 7 to 8 GW over two years from the second half of this year to the first half of 2026. Considering that the generation capacity of one nuclear power plant is about 1 GW, this means offshore wind power projects equivalent to eight nuclear power plants will be launched. First, in the second half of this year, bidding will be conducted for 1 to 1.5 GW of fixed offshore wind power and 0.5 to 1 GW of floating offshore wind power. The competitive bidding announcement for wind power generation is expected to be released in October this year. In the case of floating offshore wind power, if no successful bidder emerges after this year’s bidding announcement, the volume will be carried over to the 2025 announcement.
As the scale of offshore wind power is expected to expand, the bidding schedule and cycle will also be adjusted. The wind power competitive bidding, which was held in the fourth quarter every year, will be moved forward to the second quarter, and additional announcements will be made in the fourth quarter if necessary.
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