KEA (Korea Energy Agency) has announced plans to hold an offshore wind fixed-price contract bidding process in late October or early November this year, opening expectations for a large-scale submarine cable market. Attention is also focused on whether Gaon Cable, a newcomer, will enter the competition alongside LS Cable and Taihan, the existing leaders in submarine cables.
According to industry sources on October 15, the KEA plans to conduct the second-half offshore wind fixed-price contract bidding between late October and early November this year. The bidding is expected to cover a total capacity of 2 gigawatts combining fixed-bottom and floating offshore wind installations.
Submarine cables are critical infrastructure that transmit power from offshore wind farms to land. As a key infrastructure connecting to the national power grid, the importance of domestically produced products is highly valued in terms of supply chain stability and security. Most developers who have won volumes in government bidding so far have used submarine cables from domestic companies.
Market size and existing players
Accordingly, LS Cable and Taihan, the two leading domestic submarine cable manufacturers, are expected to secure large orders. Offshore wind projects are calculated at 6 billion to 9 billion won per megawatt in total project cost. A simple conversion of the announced 2 gigawatt capacity into total project cost yields approximately 12 trillion to 18 trillion won. Since submarine cables account for roughly 20 percent of total project costs, a market of 2.4 trillion to 3.6 trillion won is opening up.
LS Cable has built submarine cable production facilities in Donghae, Gangwon Province, and has participated in domestic and international offshore wind projects. Taihan has also established submarine cable production infrastructure in Dangjin, South Chungcheong Province, and is expanding related business. A key point to watch is which projects each of the two companies will secure in this bidding.
New competition from Gaon Cable
A new competitive structure is expected to form as Gaon Cable, a subsidiary of LS Cable, is pushing to enter the submarine cable market for offshore wind internal systems. Gaon Cable is focusing on developing cables for internal systems that connect offshore wind turbines and offshore substations. The parent company LS Cable handles the external system that transmits large-capacity power to land, while Gaon Cable takes on the role of targeting the internal system market.
Offshore wind developers preparing for government bidding are reportedly paying close attention to Gaon Cable products, which offer price competitiveness compared to existing LS Cable and Taihan products. This is because Gaon Cable has price competitiveness while also benefiting from the technical reliability of its parent company LS Cable.
Additionally, since this bidding includes floating offshore wind, whether dynamic cable orders will be secured is also worth noting. LS Cable is the only domestic company capable of supplying dynamic cables, making it a likely winner of such orders.
Companies qualified to participate in this year's floating offshore wind bidding include Haewoori Offshore Wind 3, East Blue Power Floating Offshore Wind, and Munmubaram Floating Offshore Wind. In particular, CIP, the Danish offshore wind developer developing Haewoori Offshore Wind 3, was selected in the government bidding for the Offshore Wind 1 project in the first half of this year and is currently in discussions with LS Cable regarding cable supply.
An industry official said, "As offshore wind generation costs continue to decline, it will be important for submarine cable companies to secure projects as early as possible and prepare for mass production."
Original Korean article: TheBell
English brief by Korea Wind Intelligence, koreawindintel.com
