Global offshore wind power corporations are pulling out of the Korea market or halting projects one after another. They cite sharply higher project development expense due to rising raw material costs and multiple regulations that are preventing projects from moving at their intended pace.
According to the power generation industry on the 1st, Norway's state-owned energy corporation Equinor made a final decision to halt the 750-megawatt (MW) "Firefly floating (on-the-sea) offshore wind project" it had been pursuing off Ulsan since 2021. The Firefly project is the world's largest single floating complex, with total project expense estimated at 6 trillion won.
In the domestic power generation industry, with the main Firefly project running aground, there is talk that Equinor will withdraw from other projects as well. In addition to Firefly, Equinor had been pursuing the Donghae 1 offshore wind project and creating a power complex on Chuja Island in Jeju. Some suggest the company may fully withdraw from Korea.
An official at Equinor's Korea subsidiary said, "With offshore wind not delivering results, the headquarters organization is being reshaped to focus on existing energy development such as liquefied natural gas (LNG)," and added, "Offshore wind development expense is rising steeply, while profitability is declining, which also had an impact."
In Mar., the Korea subsidiary of Corio Generation (Corio), a British offshore wind company, closed. Corio is a renewable energy-focused subsidiary of global asset manager Macquarie Group. As Macquarie Group wound down its offshore wind business, it also shut its domestic operations.
Other projects Corio had been working on, such as the Busan Dadaepo offshore wind and the Ulsan floating offshore wind "Bada Energy" project, are likewise failing to gain proper momentum. The 1.3 trillion won Korea investment Corio pledged during former President Yoon Suk-yeol's state visit to the United Kingdom in 2023 has in effect become difficult to carry out.
Denmark's Vestas, the world's largest wind turbine manufacturer, has also put its plan to build a Mokpo turbine factory on indefinite hold since last year. To build a factory, there must be firm demand, but there are no large projects that have actually broken ground.
Germany's RWE is also said to have exited offshore wind projects it had been running earlier this year in places such as Taean, South Chungcheong, and Sinan, South Jeolla, and is reshuffling its portfolio. Shell, a major British energy corporation, exited the Korea market by selling its Ulsan offshore wind equity in 2024.
Offshore wind power corporations are shutting projects because procurement expense and development costs have risen sharply, making it difficult to continue. Raw material prices have surged in recent years, and while projects must raise funds through project financing (PF), high interest rates have further eroded profitability.
An industry insider said, "For offshore wind, initial installation and maintenance costs are much higher than for onshore wind, and as the Russia-Ukraine war and the U.S.-Iran war unfolded, raw material prices jumped and the cost burden surged." The person added, "For example, one offshore wind project reviewed domestically was estimated two years ago at 3 trillion won per 500 MW, but it is now 4 trillion won."
A range of domestic regulations and complex permitting processes are also cited as reasons global corporations have abandoned projects. It is known that offshore wind power projects must go through about 30 permits and approvals from agencies including the Ministry of National Defense, the Ministry of Oceans and Fisheries, and the Ministry of Climate, Energy and Environment. Until the Special Act on the Promotion of Offshore Wind Power Deployment and Industrial Development (Offshore Wind Act) took effect in Mar., companies themselves also had to resolve local acceptance issues.
In the industry, there is concern that the government's offshore wind expansion plan will be hard to push forward amid the successive exits of global corporations. The government is pursuing the Offshore Wind Infrastructure Expansion and Deployment Plan to expand to a combined 10.5 GW at the quasi-groundbreaking stage by 2030, with 3 GW completed and 7.5 GW breaking ground. Current offshore wind generation stands at only about 0.35 GW per year.
An official at the Climate Ministry said, "We will continue to receive suggestions from corporations and actively accept those that are reasonable," and added, "We will keep improving institutional support measures so offshore wind power projects can proceed smoothly."