RE-Talk South Korea:
Wind Webinar - Landscape
Vice President Sales Asia-Pacific
Equinor South Korea
Background of wind market in South Korea:
Draft 9th Basic Plan for Electricity Demand and Supply:
Renewables: 2019: 15.8GW; 2034: 78.1GW (+62.3GW) (40% share of total electricity generation in 2034) Under RE3020 policy, wind power expected to grow 16.5GW by 2030.
LNG: 2019: 39.7GW; 2034: 60.6GW (+20.9GW) (replace some of the old retiring nuclear power plants, and the government is pushing nuclear to phase out)
Coal and nuclear will decrease 7.8GW and 3.9GW of total capacity from 2019 to 2034.
Offshore wind market:
Offshore wind capacity is expected to reach 8GW by 2030, where 84% of total capacity is expected to be installed after 2023.
a. For near-term offshore wind projects, many complex permitting is not well addressed at the moment. Many projects are suffering from community acceptance issues.
b. The lack of clarity RPS mechanism can put some of offshore wind projects’ financing at the delay.
Onshore wind market:
Med to Low wind speeds: most of sites <7.5m/s avg wind speeds (class III)
South Korea is still pending on large number of projects by 2023:
REC and SMP Price:
Required REC price could reach parity with the government’s draft guidance on REC bid price in 2023 - 24, putting offshore wind projects in the money.
REC market is currently oversupplied as the pace of new renewable deployment exceeds the RPS target.
Three important factors to influence SMP price:
1. Power demand: Earlier power demand will stay low through the year. In the long run, power demand will grow 1% every year.
2. Energy mix: In the long run, the government push out nuclear from power dispatch. And Gas fire power will be relatively more expensive. And this will push up SMP. In addition, some new nuclear and coal plants which are under construction will come online for next four years.
3.Gas price: Wholesale gas price for power generators will rise in the long-term (put upward pressure on the SMP).
Other important knowledges:
Current regulations are not allowed to operate in both power generation and power sales at the same time, so corporate PPA is not a viable option at this moment.
Plan to Introduce third party PPA: KEPCO is a third party between power generators and power consumers. The legal amendments for running third-party PPA will be introduced by 2021.
Regulations on local content requirement: In South Korea, technically there is no local content requirement. As for the company, you are not required to use domestic content or technology. However, the current government is priority in fostering domestic industry and job creation. In many cases you will actually see some invisible barriers during the procurement process. (You need to make a closer relationship with many key players, like KEPCO)
Key opportunities of offshore wind market in South Korea:
Large business potential in floating offshore wind in Southeast coast (Near shore: Average wind speed is 6-7m/s; Far from the shore: Average wind speed is 8-9m/s)
1. Potential CAPEX savings from using existing gas infrastructure
2. T&D infrastructure in Southeast region
3. Local EPC experience in offshore engineering