[Exclusive] Government Bets 300 Billion Won in China-Dominated Market... To Use National Growth Fund

Final Decision on Support to Be Made at July Investment Review
300 Billion Won in Loans and Equity Investments Under Consideration

First Commercial Use of Doosan’s 8 MW Turbine
Full-scale Development of Domestic Wind Power Ecosystem Begins

The government will invest in the Yeonggwang Yahwol Offshore Wind Power Project in Jeollanam-do, the largest domestically led wind power project, through the National Growth Fund. The investment amount is expected to be around 300 billion won. By expanding the use of domestic turbines and equipment in the offshore wind power market—which is currently heavily reliant on European and Chinese imports—the government aims to foster the domestic wind power ecosystem and, in the long term, support entry into global supply chains.

According to financial industry sources and the financial authorities on June 10, the Financial Services Commission is strongly considering the Yahwol Offshore Wind Power Project, with a total project cost of 774.9 billion won, as an investment target for the National Growth Fund. This would mark the second project in the renewable energy sector for the fund, following its first investment in the Shinan Ui Offshore Wind Power Project.

The Financial Services Commission plans to convene an Investment Deliberation Committee as early as July to make a final decision on the amount and the approval of support from the National Growth Fund. The investment size being discussed is roughly 300 billion won, with both loans and equity investment being reviewed as possible methods.

The Yahwol Offshore Wind Power Project involves installing thirteen 8 MW-class wind turbines in the waters off Yeomsan-myeon, Yeonggwang-gun, Jeollanam-do, to create a 104 MW offshore wind power complex. The project is led by Doosan Geo Solution, a subsidiary of Doosan Enerbility, and will use the domestically developed 8 MW-class offshore wind turbine from Doosan Enerbility. This model is being installed in a commercial offshore wind power complex for the first time. Groundbreaking is scheduled for next month, with commercial operations planned for a 25-year period following completion in 2029 until 2054.

The project's shareholding structure comprises 40% by Korea Southern Power, 40% by Doosan Geo Solution, and 20% by financial investors. Korea Southern Power and Doosan Geo Solution are each expected to contribute approximately 62 billion won. The remaining 650 billion won of project costs will be raised through project financing. Hana Bank and IBK Industrial Bank of Korea have been appointed as lead arrangers and have confirmed loan support for the project.

The main reason the government is focusing on the Yahwol Offshore Wind Power Project is its potential to foster a domestic wind power industry ecosystem. Currently, the global offshore wind power market is dominated by supply chains from Europe and China. This has made the expansion of domestic renewable energy supply dependent on imported offshore wind power equipment, hindering the development of a domestic supply chain. The Yahwol Offshore Wind Power Project will use domestic turbines and key equipment. The government believes that this project will help domestic companies gain valuable experience in supplying wind power equipment, thereby nurturing the local wind industry ecosystem.

The Yahwol Offshore Wind Power Project has also secured a future revenue base by signing a Renewable Energy Certificate (REC) sales contract with Korea Southern Power. However, the offshore wind power business requires substantial long-term investment, and even after permitting, delays can occur due to construction and grid connection issues. In fact, after receiving its power generation business license in 2016, the Yahwol Offshore Wind Power Project took nearly 10 years to obtain construction plan approval at the end of last year. The National Growth Fund is expected to share the long-term risks that are difficult for private capital to bear alone, thereby incentivizing more private sector investment.

The high growth potential of the wind power market itself is another positive factor. The global offshore wind power market is projected to expand more than fivefold, from an accumulated installed capacity of 83 GW in 2024 to 441 GW in 2034. However, according to the Korea Institute of Energy Technology Evaluation and Planning, Korea's wind technology level is still only between 72.5% and 85% of Europe's, the world's top technology holder. If domestic equipment is supplied through the Yahwol Offshore Wind Power Project, it is expected to help narrow this technology gap and expand exports.

Lee Sangil, Professor at the Department of Wind Power Engineering at Kunsan National University, said, "Even just over a decade ago, China lacked competitiveness in wind power equipment, but secured price and technological competitiveness through large-scale adoption. Korea should increase the use of domestic turbines, blades, towers, and power cables in offshore wind farms, to achieve economies of scale and build up the supply chain." He added, "Reducing reliance on imported equipment will also strengthen energy security and offer import substitution benefits in the long term."

This content was produced with the assistance of AI translation services.