Korea's Offshore Wind Costs Triple Those in Major Countries... "Address Bottlenecks First"

Joint seminar by the Korea Wind Energy Industry Association and Energy Transition Forum
"Improving financing costs and other factors could cut power generation costs by 35%"
"Infrastructure bottlenecks in installation vessels, dedicated ports and grid connections must be addressed first"

Participants pose for a commemorative photo at the seminar “Is Offshore Wind Power in Korea Really Expensive?” jointly hosted by the Korea Wind Energy Industry Association and the Energy Transition Forum at FKI Tower on the 19th. Energy Transition Forum

The cost of generating offshore wind power in Korea was found to be about three times higher than in major countries such as China, the Netherlands, the United Kingdom and Germany. Experts said the high cost stems from structural bottlenecks, including a shortage of installation vessels and dedicated ports, delays in grid connections, and high financing costs due to uncertainty over permits. They argued that these bottlenecks should be addressed first, rather than artificially lowering bid prices.

Hong Jong-ho, a professor at Seoul National University Graduate School of Environmental Studies, presented data from the International Renewable Energy Agency (IRENA) at a seminar titled “Is Offshore Wind Power in Korea Really Expensive?” jointly hosted by the Korea Wind Energy Industry Association and the Energy Transition Forum at FKI Tower in Yeouido, Seoul, on October 19. He said Korea’s levelized cost of energy (LCOE) for offshore wind was $179 per MWh, based on 2025 figures, about three times the cost in China ($56), the Netherlands ($66), the United Kingdom ($59), Germany ($69) and Denmark ($53).

Professor Hong said the largest gap with China was in installation costs, while the largest gap with European countries was in capacity factor, the ratio of actual power generation to installed capacity. He noted that output curtailment was a major contributor to the capacity-factor gap, calling it “an issue the government needs to resolve quickly.”

Professor Hong estimated that if financing costs were lowered by 1 percentage point, installation costs were brought down to the level in the United Kingdom, and capacity factors improved to the level in China, the cost of power generation would fall by 35% to $116.

Source: Seoul National University Graduate School of Environmental Studies

In in-depth interviews with companies and financial institutions, a Seoul National University research team identified five key factors that structurally drive up costs: site selection and basic design; ports and installation vessels; project development and permitting; grid connections and power sales; and supply chains and financing.

“If the public sector reduces risks it can control, it can also reduce to some extent factors that raise power-generation costs, such as interest expenses tied to financial risks,” Professor Hong said. “The government should set a clear direction and eliminate uncertainty, but it should not weaken market participation through excessive restrictions.”

Park Eojin, South Korea deputy representative of offshore wind technology consultancy OWC, said that, based on a hypothetical 495-MW project, fixed-bottom projects are already approaching the current bid benchmark price of about 370 to 400 won per kWh for developers to achieve their target returns. This leaves them with less room to absorb risks such as rising costs.

“It is too early to consider Korea a mature market,” Park said. “Until we reach a certain scale, lowering the price cap itself is something that requires caution.”

Choi Deok-hwan, head of external relations at the Korea Wind Energy Industry Association, said that of the 20 offshore wind projects awarded so far, totaling 5.9 GW, only three have begun construction. He added that, taking into account projects that have withdrawn, the actual volume delivered could be reduced by more than 1 GW.

Choi cited Japan, where all project rights were returned after low-price bids, halting deployment for four years and ultimately forcing the benchmark price to be raised again from 18 yen to the 30-yen range per kWh. “If prices do not keep pace with costs, developers will not participate in bids,” he said. “Failed bids inevitably delay deployment and can also undermine confidence in the government.”

Yoon Soon-jin, standing co-chair of the Energy Transition Forum, said, “I question whether it is really effective to demand cost reductions when the necessary infrastructure is not in place. Uncertainty is what companies find most difficult.” She also stressed that “investment in infrastructure needed for the energy transition, including ports and grid connections, should be given higher priority.”

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