[The Editors' Verdict] The Shadow of 'Big Government' Looms Over Offshore Wind Power

Recently, a public forum on revitalizing the domestic offshore wind power industry was held at the National Assembly Members' Office Building. The main agenda of the event was how to respond to ensure a virtuous cycle in the offshore wind power market, which has just begun to open up, and it carries significant implications for the domestic industry.

At the seminar, experts emphasized the importance of the government's role in growing the offshore wind power market. Previously, the government changed the scoring criteria for selecting offshore wind power operators, which are concentrated in the Southwest Sea region. Based on a total score of 100 points, the price score was lowered from 60 to 50 points, while non-price factors such as economic effects were strengthened. This was because the impact on the industrial economy and maintenance was considered related to national security, leading to an increase in the score for this part.

Whether the government's evaluation method was insufficient or not, a suggestion was made at the event that the ability to respond immediately, such as repairing offshore wind turbines in case of failure, should also be included as an evaluation criterion. Due to the nature of renewable energy, maintaining a stable power grid is important, and it is necessary to include the ability to take immediate action if there is an abnormality in the equipment. Such indirect benefits are expected to act as a kind of 'home advantage' for domestic companies.

Considering the growth prospects of the offshore wind power market, it is not unreasonable that experts urge the government to make efforts. According to the 'Global Offshore Wind Report 2024' recently published by the Global Wind Energy Council (GWEC), the annual installation capacity of offshore wind turbines is expected to triple from 10.8 GW last year to 33 GW in five years, and increase to 66 GW by 2033. Given the large market opportunities, the government believes that by indirectly supporting domestic companies' project promotion and accumulating achievements, a virtuous cycle structure can be created.

However, it is questionable whether the government changing the scoring criteria once again to favor domestic companies and provide opportunities will fundamentally strengthen industrial competitiveness. Although it is merely a demand to provide opportunities to utilize developed technologies, the technological level of some items such as turbines still lags behind global competitors.

China, considered the epicenter of the domestic offshore wind power crisis, is threatening not only this sector but also almost all industries where we see competitiveness, such as electric vehicles and batteries. When our battery companies build a 5㎡ factory domestically, China's CATL, the world's number one battery maker, reportedly builds more than three 100㎡ factories in its own country. Considering economies of scale reduce costs, this is a strategy to overwhelm competitors with enormous production capacity. It is no wonder that Volkswagen, the world's second-largest automaker, decided to close its domestic factories due to the influx of low-priced Chinese cars.

If requests to the government to protect domestic industries increase, it is only a matter of time before a large government emerges. When government influence grows, the private sector's will to grow is stifled. Even if achievements are accumulated once, continuous growth is impossible without competitiveness.

Cho Ju-wan, CEO of LG Electronics, recently said at the IFA home appliance exhibition held in Germany that the Chinese surge should not be underestimated but feared. He presented a response plan to expand a premium strategy targeting the top 60% of customers. It is a bold strategy to offer all products as high-end to customers. The Chinese offensive, led by good technology and low prices, will intensify. Although difficult, there seems to be no other way than a strategy that strengthens the foundation from the roots.