European offshore wind corporations push into Asia to beat Chinese rivals

European companies are leading a push into the offshore wind sector in east Asia as they look to establish a presence there while western turbine manufacturers continue to have a technological edge over their Chinese rivals. As part of ambitious government web zero goals, South Korea, Taiwan, and Japan have all committed to increasing their share of renewable energy, and electronics companies like TSMC, SK Group, and Samsung Electronics have committed to using only renewable energy for their global operations by the year 2050.

Jesper Krarup Holst, an associate at project developer Copenhagen Offshore Partners and the head of the company’s Seoul office, claimed that a “fundamental shift” in demand for renewables in Asia, driven in part by US technology giants requiring suppliers to meet renewable energy targets, had drawn European businesses. Holst said, “The competition is getting hotter.” “Now we are seeing a push for energy security that is coming not just from big enterprises but also from consumers and governments,”

According to the International Renewable Energy Agency, Asia has installed 5 gigawatts of offshore wind capacity in 2019, compared to 19 gigawatts in Europe (Irena). According to Irena, however, Asia is expected to surpass Europe by the end of the current decade and represent 60% of the world’s offshore wind capacity by 2050. Danish trade veteran and co-chief executive of CS Wind Knud Bjarne Hansen stated that “China has possibly a five-to-ten-year window to catch up with the Europeans’ turbine technology, so the Europeans need to acquire a footing in Asia before that happens.”

By 2030, South Korea wants to increase its current capacity of 142.1 megawatts to 12 gigawatts of offshore wind power. The majority of the current capabilities comes from government pilot programs. However, the process is cumbersome; currently, it takes builders a median of seven years to obtain 29 permissions from nine different ministries. Eunbyeol Jo, a researcher with the Seoul-based advocacy organization Solutions for Our Climate, stated that “the procedure needs to be simplified.”

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A Korean wind industry ministry claimed that the licensing process had given local politicians too much power, as they often only provide permits in exchange for promises of local employment and the use of locally created components. This has increased renewable energy prices and fueled inefficiencies, which in turn has decreased demand. Forming alliances and joint ventures with local businesses has proven to be one strategy used by worldwide turbine manufacturers to overcome some of these obstacles. While GE Renewable Energy inked a memorandum of understanding with Hyundai Electric in February, Vestas of Denmark has formed a three-way agreement with the Korean wind tower company CS Wind.

In contrast to the mounted bottom towers common in Europe, floating wind towers of the next generation can be installed in waters as deep as 50 to 60 meters, according to Holst, making the waters off the east coast of Korea an excellent testing ground. Holst said, “It unlocks great possibilities,” adding that the presence of Korea’s top-ranked shipbuilding industry was helpful in designing and building the enormous floating towers.

Taiwan, which has reformed its power market more quickly than South Korea or Japan to support offshore wind ventures, began its third round of auctions for online leases totaling 3GW last month. The largest such renewables agreement in the world was inked between chipmaker TSMC and rsted in 2020. The full 920MW generated by rsted’s Greater Changhua 2b & 4 offshore wind farm would be provided to TSMC under the 20-year mounted value contract.

With a public sale model in place, Japan is focusing on installing 10 gigawatts of offshore wind by 2030 and 45 gigawatts by the end of the following decade. According to its most recent power plan, renewables will make up between 36 and 38 percent of its total energy generation by 2030, up from 20 percent in that year. However, the nation’s first significant public auction in December was marred by controversy after a consortium led by Mitsubishi-led purchasing and selling property won all three tenders with offers that were significantly lower than those of any of their competitors.

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In March of this year, the Japanese government abruptly halted the procedure for the second large-scale public sale. People involved in the mission claimed that concerns that one person would control all of Japan’s major efforts were the reason for the suspension. According to Sumiko Takeuchi, a senior fellow at the International Environment and Economy Institute in Tokyo, “the Japanese energy market is now likely to be seen as having an abnormally high risk of regulatory change.”

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