Government policy on the wind power industry is out of step with reality, and the domestic industrial ecosystem faces collapse. With the end of the Renewable Portfolio Standard (RPS) system for renewable energy supply next year looming, a shift to a long-term fixed-price auction system has been announced. However, there are no measures to address unit price realism, the core demand from the value chain, and uncertainty across the market has reached a peak.
According to industry sources on September 29, 2026, major domestic wind power developers and related companies are expected to participate en masse in competitive auctions for offshore wind and other projects in the second half of this year. Because no substantive policy measures have been put in place to prepare for the period after the current system is abolished, this second-half auction is likely to serve as the last opportunity to gauge business profitability within a predictably manageable range.
Costs rising while unit prices fall: industry trapped in losses
The largest policy gap between power authorities and the industry stems from power generation unit costs. Development costs have soared as prices for turbine and substructure manufacturing, key materials such as power cables, and project finance (PF) borrowing rates have risen sharply. Some in the industry say it is difficult to ensure normal profitability under current price constraints and ceiling restrictions.
However, authorities are holding down auction ceiling prices citing KEPCO (Korea Electric Power Corporation)'s accumulated deficit and pressure to raise public electricity rates. Following a downward adjustment in the first-half offshore wind auction ceiling price compared to the previous year, the government has drastically lowered the 2035 target unit price to around 150 won per kilowatt-hour, forcing the industry to cut costs.
The government has said it will stabilize the market by controlling supply volumes through future auction roadmaps. However, the industry expresses concern that this is a half-measure policy that excludes cost realism. The argument is that while a long-term supply outlook is important, the price structure that inevitably accumulates losses as projects proceed must be improved realistically first.
Reduced administrative support and global developer withdrawals
The discontinuity of policy and retreat in administrative support have been identified as key factors driving the crisis. Offshore wind projects require complex coordination of multiple stakeholders due to geographical characteristics, including multi-agency licensing and securing community acceptance. This is why close public-private cooperation is required from the early stages of such massive infrastructure projects involving trillions of won in capital.
Project development speed has slowed due to unpredictable regulations and delayed administrative procedures. As a result, signs are emerging that global offshore wind developers unable to withstand unrealistic unit price calculations and administrative delays are reviewing or scaling back their withdrawal from the Korean market.
The exit of large foreign companies with world-class technology and capital is likely to act as a negative factor slowing the growth of the still-nascent domestic wind power ecosystem.
Concerns over cascading impact on cables and construction equipment: special law and grid investment urgent
The departure of major developers could trigger a cascading order cliff across the entire domestic power infrastructure value chain, beyond just a contraction in the power generation market. The submarine cable sector of the cable industry, which has made proactive large-scale investments with offshore wind as a future core growth driver, and the construction equipment industry supplying specialized offshore installation equipment are expected to face unavoidable impacts from global company withdrawals.
Concerns have also been raised that as the ecosystem's fundamental strength weakens, domestic industrial competitiveness itself could be fundamentally damaged.
The wind power industry, facing crisis, is placing its last hopes on the enactment of a Special Act on the Promotion of Offshore Wind Power Deployment and the Development of Related Industries to unify licensing channels. The aim is to indirectly reduce costs by proactively cutting sunk costs and interest burdens from project delays.
An industry official said: "It is urgent to resolve tangled licensing uncertainties at once through the enactment of a special law, but this alone cannot cover all raw material cost issues. If realizing power generation unit prices is difficult in the short term, practical government-level alternative support measures such as advance investment in shared power grid construction must be implemented in parallel to prevent the domestic wind power ecosystem from withering."
Original Korean article: ebn.co.kr
English brief by Korea Wind Intelligence, koreawindintel.com
