Domestic offshore wind power facilities that entered operation over the past 10 years totalled approximately 365MW. This falls short of even one-tenth of the 4GW that the government has said it will supply annually going forward.
As permit system reforms and large-scale auctions align, the market's centre of gravity is shifting from project discovery to actual construction. Analysts say that if long-term policy consistency is secured, new markets will open for domestic shipbuilding, cable, and power equipment industries.
The Institute for Energy Economics and Financial Analysis (IEEFA) said in a report released on June 9 titled "Public-Private Cooperation Is Needed for South Korea's Offshore Wind Success" that South Korea intends to expand offshore wind at a pace over the next 10 to 15 years that would be unprecedented globally.
If the plan materializes, demand can spread across domestic manufacturing as a whole, including wind turbines, subsea cables, substructures, power equipment, and installation vessels.
The government's mid- to long-term offshore wind supply plan released in June calls for securing a business foundation of 55GW by 2035 and conducting auctions for approximately 4GW annually from 2026 onwards. The plan envisions starting construction on 10.5GW by 2030 and moving 25GW to the actual supply phase by 2035.
In content from the 12th Basic Plan on Long-term Electricity Supply and Demand released two months later, the 2040 offshore wind target was set at 45GW. The schedule for new capacity was also adjusted to supply 4 to 4.4GW annually from 2029 onwards. Compared with the earlier plan, the final target was reduced by about 20 percent and the achievement timeline was pushed back by five years.
IEEFA assessed that both plans are premised on new supply of around 4GW annually, so the direction of offshore wind expansion is clear.
However, the institute noted that different targets presented within just seven weeks could create confusion for developers and equipment suppliers in deciding the scale and timing of capital investment. This means that predictable procurement schedules are as important as target figures in drawing supply chain investment.
Gap between policy targets and actual results
In reality, the domestic offshore wind market shows a large gap between policy targets and business results. Over the past 10 years, facilities that entered commercial operation totalled only about 365MW, and developers had to find sites themselves and negotiate compensation with fishermen while going through as many as 42 individual licences.
Initial work to survey wind resources, seabed topography, and geology also requires years of time and tens of millions of dollars, according to analysis.
Permit system reform as a turning point
The Special Act on the Promotion of Offshore Wind Power Deployment and the Development of Related Industries is identified as a turning point to reduce complex business procedures.
The system has shifted from the existing private-led site discovery method to one where the government selects development zones, and scattered permits from multiple ministries are now processed through a single window. A consultative body is also established in which stakeholders affected by the project, such as fishing industry workers, comprise more than half the participants.
When the government actively takes on site selection and conflict resolution, developers can concentrate their capabilities on design, procurement, construction, and financing.
Along with institutional reform, pipeline volumes have begun to accumulate. In June, the government selected approximately 1.8GW of offshore wind auction capacity across five project groups.
The 390MW Sinan Ui offshore wind project, assessed as the first large-scale project with domestic capital investment, has also entered the construction start phase. As construction experience accumulates through these projects, domestic standards for calculating equipment prices, construction periods, and financing costs are expected to become more concrete.
Supply chain investment acceleration
If annual 4GW supply continues, the fields expected to see demand growth first are subsea cables and power equipment. To transmit power generated at sea to land, not only ultra-high-voltage subsea cables are needed but also offshore substations (OSS), transformers, switchgear, and control systems.
LS Cable has secured supply experience in European and Taiwan offshore wind markets and is supplying a total of 210 kilometres of subsea cables to two 1.4GW projects being pursued by Tennet, the Dutch state-owned transmission system operator.
In the turbine and installation vessel sectors, preemptive investment is underway. Doosan Enerbility has commercialized an 8MW offshore wind turbine suited to the domestic low-wind environment and has accumulated large-scale technology expertise.
Hanwha Ocean received an order in February for one wind turbine installation vessel (WTIV) worth 768.7 billion won. This vessel, scheduled for delivery in the first half of 2028, can transport and install four 15MW turbines at once, and its deployment in domestic offshore wind projects such as Sinan Ui is under review.
As turbines grow to 15 to 20MW, the importance of specialized vessels equipped with large cranes and dynamic positioning systems increases. This is why domestic shipbuilders have growing room to enter the installation and support vessel market. Ports near offshore wind farms will need component assembly, storage, loading, and maintenance functions, so related investment could lead to regional job creation and port development.
However, for supply chain investment to take off in earnest, sustained procurement must provide backing.
Since turbine and subsea cable factories and installation vessels require large initial capital investment, companies need long-term recurring demand rather than one or two projects.
IEEFA predicted that if annual 4GW projects actually lead to procurement and construction, global suppliers will be more likely to position production facilities near South Korea to reduce logistics costs. This means localization can proceed naturally as the market expands rather than remaining an administrative obligation.
Price pressure and policy consistency
Conversely, rapidly lowering the levelized cost of electricity before the supply chain is established could weaken project momentum. The domestic offshore wind auction price ceiling fell from 209 won per kWh in the first half of 2024 to 171.2 won in the second half of this year.
The government has set a target to reduce the levelized cost of electricity by an additional 50 percent by 2035, but global offshore wind costs rose 30 to 50 percent from 2022 to 2024 due to raw material prices and rising interest rates. The report judges that price reductions that do not reflect market changes could lead to fewer auction participants or delayed construction starts.
IEEFA therefore recommended that the government complete baseline surveys of wind resources, seabed topography, and environmental and navigation conditions before auctions and provide the related information to developers. The report also suggested extending power purchase agreement (PPA) terms to 25 to 30 years to spread financing costs and flexibly reflecting changes in raw material prices and interest rates in auction prices. It also argued that localization ratios should be raised in stages as procurement volumes accumulate rather than being applied uniformly from the outset.
South Korea's offshore wind target requires supplying annually approximately 11 times the total capacity built over the past 10 years. Given the large implementation burden, the market scale returning to domestic industry is also substantial. If policy targets and auction schedules are maintained over the long term, the manufacturing capabilities held by shipbuilding, steel, cable, and power equipment sectors can be linked to expanding domestic markets and fostering export industries.
IEEFA said in its report that "if government and the private sector cooperate, South Korea's offshore wind programme can grow into a platform for technology, investment, and innovation and another global competitive industry leveraging South Korea's strengths."
Original Korean article: asiaa.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
