European offshore wind companies push into Asia to beat Chinese rivals

European companies are leading a push in the East Asian offshore wind market as they look to gain a foothold in the region, while Western turbine builders still enjoy a technological advantage over their Chinese competitors.

South Korea, Taiwan and Japan have all committed to increasing their share of renewables as part of ambitious government net-zero targets, while electronics companies, including TSMC, SK Group and Samsung Electronics, have pledged to achieve 100 percent renewable energy by 2050. electricity in their worldwide operations .

Jesper Krarup Holst, a partner at property developer Copenhagen Offshore Partners and head of the company’s Seoul office, said European companies had been lured by a “fundamental shift” in renewable energy demand in Asia, driven in part by US tech giants that supply suppliers. to meet renewable energy targets.

“The competition is heating up,” said Holst. “Now we see a boost not only from large companies, but also from consumers and governments, while the war in Ukraine has given a huge boost to energy security.”

According to the International Renewable Energy Agency (Irena), there were 5 gigawatts of installed offshore wind capacity across Asia in 2019, compared to 19 gigawatts in Europe. But according to Irena, Asia is projected to overtake Europe by the end of the decade, accounting for 60 percent of global offshore wind capacity by 2050.

Knud Bjarne Hansen, a Danish industry veteran and the co-chief executive of CS Wind, said that “China may have a five to 10 year window to catch up with Europeans’ turbine technology, so Europeans need to get a foothold on the land in Asia before that happens.”

South Korea has a national target of achieving 12 gigawatts of offshore wind capacity by 2030, compared to just 142.1 megawatts today. Most of the existing capacity comes from government pilots.

But the process is cumbersome: currently developers must obtain 29 permits from nine different ministries in a process that takes an average of seven years. “The process needs to be streamlined,” said Eunbyeol Jo, a researcher for Solutions For Our Climate, an advocacy group in Seoul.

A director of the Korean wind industry said the permitting process had given too much power to local politicians, who often grant permits only in return for promises of local employment and the inclusion of locally produced components. That has fueled inefficiencies and pushed up the price of renewable energy, which in turn has suppressed demand.

One way for foreign turbine manufacturers to overcome some of these hurdles has been to form partnerships and joint ventures with local companies. Danish company Vestas has formed a joint venture with Korean wind turbine company CS Wind, while GE Renewable Energy signed a memorandum of understanding with Hyundai Electric in February.

Holst said the waters off Korea’s east coast are a perfect testing ground for the next generation of floating wind towers, which, unlike the fixed-bottom towers common in Europe, can be installed in waters more than 50-60 meters deep.

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“It unlocks enormous potential,” Holst said, adding that the presence of Korea’s leading shipbuilding industry was an asset in developing and building the massive floating towers.

Meanwhile, Taiwan, which is faster than South Korea and Japan to reform its energy market to encourage offshore wind projects, entered its third round of auctions last month, for land rent totaling 3GW.

In 2020, chipmaker TSMC signed a corporate power purchase agreement, the world’s largest such renewable energy agreement, with Ørsted. The 20-year fixed-price contract gives TSMC all 920MW generated by Ørsted’s Greater Changhua 2b & 4 offshore wind farm.

Japan, which uses an auction model, targets 10 gigawatts of offshore wind by 2030 and 45 gigawatts by the end of the next decade. Renewables will make up between 36 and 38 percent of the electricity production mix by 2030, up from 20 percent in 2020, according to the latest energy plan.

But the country’s first major auction in December ended in controversy after a consortium led by trading house Mitsubishi won all three bids with bids much lower than their competitors.

The Japanese authorities abruptly halted the process for the second major auction in March this year. People involved in the project said the suspension was in response to concerns that a single player would dominate all of Japan’s biggest projects.

“The Japanese energy market is now likely to be seen as being at unusually high risk of regulatory change,” said Sumiko Takeuchi, senior fellow at the International Environment and Economy Institute in Tokyo.

Kohei Amakusa, head of market development in Japan at Ørsted, which participated in the first auction, believes that Japan remains an attractive market among its peers in Asia because of its huge electricity market.

Because the Chinese market remains inaccessible to foreign players, companies are currently focusing on the other countries in the region.

“Wind conditions are just as good around Japan and Korea as they are off the west coast of Denmark,” Hansen said. “The question is there: No one can exclude themselves from the push of renewable energy.”


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