Executive Summary
Fundamental Shifts in the Market and Policy Direction
The H1 2026 wind auction marks a critical turning point as Korea’s offshore wind market transitions from a 'regulation-centered' to a 'autonomy and competition-centered' system. A key change in this auction is the removal of the 'cut-off' rule for the first-stage non-price evaluation, alongside granting developers the flexibility to change equipment to 'equivalent or better' models after the bid. These measures are designed to enhance developers' bargaining power, break supply chain bottlenecks, and ultimately drive down LCOE by encouraging broader participation in price competition.
Historical Selection Trends and the Rise of Public-Led Projects (2022–2025)
Starting with Jeonnam Offshore Wind 1 in 2022, the cumulative offshore wind capacity selected in Korea reached 4,105 MW by 2025, demonstrating steady growth. While large-scale private projects in Jeonnam and Ulsan drove the market in 2023 and 2024, the first half of 2025 saw a 100% success rate for public-led projects (689 MW). These projects strategically utilized incentives for government-backed R&D turbine demonstrations and national security contributions. This trend suggests that alignment with government policy and public interest will remain a decisive factor in future auctions.
Key Observations and Outlook for the H1 2026 Auction
The upcoming H1 2026 auction is expected to be a record-breaking event, with a massive pipeline of over 4.1 GW—including 2.7 GW of fixed-bottom and 1.4 GW of floating offshore wind—following the removal of consecutive participation limits. As the threshold for non-price evaluation has been lowered, intense 'lowest-price' bidding competition among developers is inevitable. Furthermore, the psychological barrier to using international equipment has decreased. However, the final ceiling price, which must account for global inflation and grid connection costs, will remain the ultimate indicator of the auction's success and the timely completion of projects.
A. Auction Overview and Selection Status (2022–2025)
Evaluation Framework (Two-Stage System)
South Korea’s offshore wind auction employs a comprehensive two-stage evaluation system designed to balance economic efficiency with industrial contribution and energy security. This framework ensures that selected projects not only offer competitive pricing but also demonstrate high execution capability and positive impacts on the local supply chain. The final selection is determined by aggregating scores from both stages, with specific non-price indicators serving as tie-breakers to ensure project quality.
· Stage 1 (Non-Price, 50 pts): A qualitative and quantitative assessment of critical project factors, including local community acceptance, industrial/economic effects, national security, O&M infrastructure, project progress, and grid connectivity.
· Stage 2 (Price, 50 pts): A quantitative evaluation of price competitiveness, where bids are scored based on their proximity to the government-set ceiling price.
· Final Selection: Winners are determined by the highest combined score (100 pts max). In the event of a tie, priority is given to the developer with the higher score in the 'O&M Infrastructure' category (previously 'Industrial/Economic Effects' in 2025).
Awarded Projects 2022-2025
B. 2026 Auction Reforms and Market Outlook
Key Changes from 2025
The 2026 auction introduces significant regulatory reforms aimed at fostering a more competitive and flexible market environment. By lowering entry barriers and granting developers greater operational autonomy, these changes are expected to resolve long-standing supply chain bottlenecks and accelerate the cost-reduction curve for offshore wind projects. These strategic adjustments reflect the government’s commitment to aligning domestic procedures with global market standards while ensuring project viability.
· Abolition of Stage 1 Cut-off: The previous restriction, which limited Stage 2 price competition to only the top 120–150% of bidders from Stage 1, has been removed. This allows all qualified projects to participate in the final price evaluation, intensifying competition for lower bid prices.
· Equipment Flexibility: To address global supply chain volatility, developers are now permitted to change their initially proposed wind turbines or key components to 'equivalent or better' models after the bid, subject to committee approval. This shift significantly improves developers' negotiating leverage with OEMs.
· Removal of Consecutive Participation Limits: The regulation that previously barred H1 auction participants from entering the H2 auction in the same year has been abolished. This change maximizes bidding opportunities for developers and ensures a consistent pipeline of projects throughout the year.
Expected Projects for H1 2026
C. Strategic Implications
The revised auction rules signal a transition toward a more mature and efficiency-driven offshore wind market in Korea. As the regulatory framework shifts to prioritize cost-competitiveness and operational feasibility, developers must recalibrate their bidding strategies to balance aggressive pricing with high-quality supply chain management. These changes underscore the necessity for a sophisticated approach to project development that aligns with both global economic trends and local industrial requirements.
· Era of Intense Price Competition:
With the removal of the Stage 1 "cut-off" barrier, the 50-point price evaluation will now serve as the primary differentiator for all participating projects. Consequently, success will depend heavily on achieving a highly competitive LCOE through lean project management and optimized supply chain strategies.
· Supply Chain Rigor:
While equipment flexibility has increased, the government maintains a strict stance on the qualitative evaluation of supply chain commitments. To avoid point deductions, bidders must focus on securing credible, long-term partnerships with verified suppliers rather than presenting an exhaustive but unverified list of potential vendors.
· Ceiling Price Impact:
The industry remains highly attentive to the final ceiling price announcement expected in late March. If the price fails to adequately reflect the reality of global inflation and rising capital costs, there is a risk of lower-than-expected participation or potential delays in final investment decisions (FID).
