[New Year’s Interview with Today Energy] BadaEnergy leads Korean offshore wind
[New Year’s Interview] BadaEnergy leads Korean
offshore wind
· BadaEnergy jointly develops
the Ulsan floating offshore wind project.· BadaEnergy aims to establish
an ecosystem for the new energy industry through technology localization.· Once the third phase of the
Ulsan floating offshore wind project is completed, it is expected to be the world’s
largest floating offshore wind farm and to reduce CO2 emissions by
approximately 2.3 million metric tons annually.[Today Energy | Lee Jeong-heon] BadaEnergy is a joint venture developed by Corio
Generation(‘Corio’), Green Investment Group (GIG)’s specialist offshore wind
business, TotalEnergies, a global multi-energy company, and leading South
Korean company SK ecoplant as one team for offshore wind businesses in Korea. BadaEnergy portfolio comprises more than 2GW of floating and fixed-bottom
offshore wind projects in the exclusive economic zone (EEZ) off Ulsan and South
Jeolla Province (Geomundo and Maenggoldo). To date, the floating offshore wind
projects off the coast of Ulsan (project name: Gray Whale I, II, and III) and
the Geomundo offshore wind project in South Jeolla Province have gained
momentum by obtaining electric business licenses (EBLs) from the Electricity
Regulatory Commission of the Ministry of Trade, Industry, and Energy. In last September, in particular, SK ecoplant newly joined the BadaEnergy
offshore wind portfolio as a joint developer, acquiring a stake in the portfolio. SK
ecoplant will take the projects from early planning through licensing,
construction to operation, leveraging its offshore engineering, procurement,
and construction (EPC) expertise in marine and harbor construction. The Ulsan floating offshore wind project, on which BadaEnergy puts a
dedicated focus, aims to
build wind farms with a total installed capacity of approximately 1.5GW off the
coast of Ulsan across three phases, targeting to complete obtaining permits and
approvals for the development of the first phase in late 2024 and begin the
first commercial operation in late 2027. The project, which is the first
floating offshore wind project in Korea granted an EBL, is expected to be the world’s largest floating offshore wind complex once
all three phases are completed. The complex is forecasted to produce sufficient electricity to supply to 1.6
million households each year and
reduce CO2 emissions by approximately
2.3 million metric tons annually.
Offshore wind is developing
high expectations to play a pivotal role in revitalizing relevant industries in
Korea as it shares so much common ground with the shipbuilding and offshore
plant industry that it is dubbed ‘the next shipbuilding industry.’ Various
technologies for building wind turbines and substructures, which are the cores
of an offshore wind generator, are very similar to the ones used in the
shipbuilding industry. Examples of European port cities, such as Hull in the
U.K. and Bremerhaven in Germany, that successfully roared back after taking a
serious downturn that came with the decline of the shipbuilding industry are
widely known in Korea as well. ◆ Choi Woo-jin, Head of Korea at CorioCorio, which has supported almost 40% of the U.K.’s current offshore
wind capacity, has jumped into the Korean offshore wind market with its
extensive experience and know-how. The company is looking forward to synergies with
the BadaEnergy team throughout the development of floating offshore wind that
takes Korea’s distinct circumstances into account. During a talk with Choi
Woo-jin, Head of Korea at Corio, we listened to his hopes and prospects for the
project. / Editor’s Note ■ Why has Corio decided to co-develop the floating offshore
wind portfolio as a team? Corio has its origins in the U.K., where
the Government established the world’s first Green Investment Bank (GIB) in
2012. GIB, which later became Green Investment Group (GIG), has supported almost
40% of the U.K.’s current offshore wind capacity and possesses extensive
experience and know-how in offshore wind development and investment. When it
comes to starting large-scale floating offshore wind development in Korea, we
believed that we needed a special partnership in light of Korea’s distinct
circumstances as well as the nature of floating offshore wind. As a traditional
oil major, TotalEnergies not only holds expertise in various floating
facilities but has in-depth understanding of Korean shipyards. SK ecoplant has
an expertise in offshore engineering and construction, maintaining a close
relationship with local supply chains. In this regard, we figured that Corio,
TotalEnergies, SK ecoplant would make an optimal partnership for developing a
floating offshore wind project. ■ What is special about offshore wind as a renewable energy
source? Offshore wind is easy to take advantage
of economies of scale compared to other renewables due to its scalability. This
is one of the factors that have made offshore wind projects in the U.K. and
Europe become bigger in scale, thereby enabling the levelized cost of electricity
(LCOE) to drop continuously. Now, offshore wind is one of the cheapest energy
sources in Europe. ■ What are the distinctive strategies of Corio? Our distinctive strategy is
‘localization.’ Since each country has its own different legal system, public
sentiment, and infrastructure base, a developer will struggle with a great deal
of difficulties or might get kicked out of the market if it carries out a
project in a certain set way without carefully taking those factors into
account. Corio and TotalEnergies are foreign-based companies; however, we are
determined to develop our portfolio by incorporating the Korean way into the
project, which is the most Korean way even when compared to Korean companies.
We will contribute to the local industry through making the most of our
partnerships with Korean companies. Also, we are planning to provide them with
opportunities to participate in our projects overseas as well. ■ There are concerns about foreign investors participating in
Korea’s offshore wind projects. What do you think of it? The fact that foreign capital investments
are involved in the early stage of offshore wind development is not necessarily
a matter of concern. In Korea, we have the Foreigner Investment Promotion Act
in place that aims to attract solid investment from foreigners. Leading players
in renewables, such as the U.K., are also striving to encourage foreign
investors' participation in offshore wind and other renewable energy projects, and
healthy competition among private investors is what makes an efficient capital
input possible. It is important to make good use of
foreign capital in the early stage of development as it is full of risks, and there
is always a possibility that the project falls through. We also have to think
about how foreign capital can create a virtuous cycle in Korea. BadaEnergy’s
project, for example, initially started with foreign capital from the U.K. and
France. However, as the project progresses, domestic investment from Korean
companies like SK ecoplant has become part of our portfolio. After finished with obtaining permits
and approvals for the project, we will carry out the project financing for
construction and operation with Korean financial institutions and pension funds
as much as possible. This will let most of interest income and dividend yield
circulate inside the country. In addition, most of the funds raised from the project
financing will also be used for construction, eventually circulating in the
domestic market. This is because Korean construction firms, shipyards, and
local supply chain of small and medium-sized companies will handle the
construction of the offshore wind farm. In other words, most of the funds will
be raised and used in Korea, and foreign capital will only act as a catalyst
for this. ■ What advice would you
give for the development of the Korean offshore wind industry?
Fostering
renewable energy and offshore wind for carbon neutrality is a global trend that
can no longer be overlooked. With the RE100 initiative rapidly spreading
globally, the transition to renewable energy has become an issue that the
entire Korean industry is faced with. I want Koreans to remember that offshore
wind can not only be a means of quickly responding to the climate crisis, but
also become positive driving force for the Korean economy. ◆ Shin Jung-won, Country Chair Korea at TotalEnergiesTotalEnergies, which is expanding its portfolio from oil and natural
gas to renewables, revealed its confidence in developing the BadaEnergy
offshore wind project. Shin Jung-won, Country Chair Korea at TotalEnergies, told
us about the company’s blueprint to lay the foundation of growth for domestic
offshore wind ecosystem. / Editor’s Note ■
Why has TotalEnergies decided to co-develop the floating offshore wind
portfolio as a team? In 2021, TotalEnergies declared a transition from an energy company
focused on oil and natural gas, which are conventional fossil fuels, to a
global multi-energy company that produces and markets renewables, biofuels, and
low-carbon electricity. The company rebranded the name from Total to
TotalEnergies to be a major player in the course of energy transition. As of 2021, we are investing more than USD 3 billion in renewables and
electricity every year. And, for the next 10 years, we plan to execute
investments of USD 60 billion or over in green energy. With this continuous
investment, TotalEnergies is committed to shifting our energy supply mix from
fossil fuels accounting for 95% of our sales in 2019 to 50% of green
electricity, 25% of low-carbon new energy including biofuels, hydrogen, and
e-fuels, and 25% of fossil fuels in 2050. ■ What are the distinctive strategies of
TotalEnergies? TotalEnergies aims to achieve carbon neutrality by 2050 in the
transition to a multi-energy company under the new name. Along with the
expertise accrued for over 100 years in the energy field, we have the
technology and manpower to manage the entire renewable energy business. In particular, we have the strength in the offshore wind field since
we can take advantage of the know-how and technology accumulated from the
existing offshore oil and gas business. Now, we are promoting fixed-bottom and
floating offshore wind projects around the world, including the U.K. and
France, in collaboration with local developers. ■
BadaEnergy’s partnership with SK ecoplant raises expectations for offshore wind
projects in Korea. What do you think of it? SK ecoplant’s joining holds great
significance in that a Korean company participates in the floating offshore
wind project as a joint developer. I expect that the combination of BadaEnergy
with SK ecoplant's broad experience in offshore development will act as a great
driving force for constructing the world's largest floating offshore wind farm
in Korea, and will serve as a cornerstone for the development of the Korean
offshore wind industry ecosystem and a virtuous cycle of capital. In particular,
I believe BadaEnergy will be able to more rapidly implement the strategy of
localizing all stages of offshore wind projects, which it has stressed. ■
What are your plans for co-prosperity with local fishermen and residents? BadaEnergy puts top priority on
residents’ acceptance for its offshore wind projects. Based on the experiences
in Europe, we will review resident participatory projects and come up with
resident support measures (injection and management of sustainable regional
development funds, etc.) within the scope permitted by relevant laws and
regulations. In order to realize such resident participatory projects, we need reform
in relevant laws and regulations. In addition, we seek to carry out the
projects in a way to promote co-prosperity with the local fishery industry
based on continuous communication with fishermen and residents. The floating
offshore wind project in Ulsan will be proceeded after a thorough review of
economic and environmental impacts on the local community, and to this end, a
professional environmental assessment will be conducted. We will also continue
communications with fishermen while working with relevant government agencies
and research institutes to study how to prosper with local fishermen. ■ What advice would you
give for the development of the Korean offshore wind industry? Korea
has great potential in offshore wind, including outstanding local capabilities,
extensive shipbuilding expertise, and ambitious research and development plans
as well as political support from the government and local municipalities to
foster future industries for continuous economic growth, revitalization of the
local economy and creation of high-quality jobs.
I hope that Korea becomes a green energy powerhouse
in the climate crisis era by leveraging offshore wind energy, and BadaEnergy
can accompany the country on the journey not just as an ordinary offshore wind
developer but as a dedicated partner for the growth of its green economy. ◆
Kim Jeong-hoon,
Executive of Net Zero and Energy at SK ecoplantSK ecoplant, which is stepping up its move to
become an environmental company after changing its name, presented the goal of
becoming a major player in the global offshore wind market through the BadaEnergy
project. Kim Jeong-hoon, Executive of Net Zero and Energy at SK ecoplant,
shared us the strategy of SK ecoplant to become more prominent in the renewable
energy sector. / Editor’s Note ■
Why has SK ecoplant decided to co-develop the floating offshore wind portfolio
as a team? Through acquiring the stake of the
BadaEnergy portfolio, SK ecoplant will be jointly developing offshore wind
projects with global energy companies. We are also expecting this opportunity
to lay the foundation for us to take a big step forward as a major player in
the global offshore wind market. SK ecoplant has completed the overall
value chain of energy business by achieving rapid growth through intensive
investments in the renewable energy sector such as offshore wind, solar, and
fuel cells, which we plan to leverage for our aim to preoccupy the global renewable
energy market and become a global top-tier energy solution firm with continuous
development of original technology and strategic investment. ■
What are the distinctive strategies of SK ecoplant? SK
ecoplant strategically aims to lay the foundation for entering the global
offshore wind market through advancing our capability on business development by
securing the overall value chain of offshore wind including project
development, licensing, construction manufacturing, EPC, and operation. We have
set a strategy to expand our business area into water electrolysis, green
hydrogen production, and support for the RE100 initiative in Korea by linking
offshore wind, a representative renewable energy source, with the hydrogen
business that we are now actively promoting both in Korea and overseas. ■ What is your outlook for the offshore
wind projects that BadaEnergy is now carrying out? Korea is surrounded by sea on three
sides and has world-class shipbuilding and offshore plant technology and infrastructure,
which gives it a considerable competitive edge in offshore wind development. Ulsan, in particular, is the best place
to construct large-scale floating offshore wind farms. The deep waters and
high-quality wind resources completely meet the conditions required for
floating offshore wind development. In addition, since the project in Ulsan is
underway in the world's largest scale, cost reduction can be expected through
economies of scale. Ulsan is also a city with all necessary
elements for offshore wind development with regard to industrial base, such as
global leading shipbuilding and offshore plant companies, professionals, and
large-scale national industrial complexes. This industrial environment will
play an important role in all stages of the floating offshore wind project,
reviving the sluggish local economy and contributing to job creation. The floating offshore wind energy
project, which BadaEnergy is promoting in Ulsan, is now undergoing
environmental impact assessments (EIAs). BadaEnergy is enhancing its own
stability as well as the stability of the project by concluding contracts with
leading Korean and global companies for project certification and front-end
engineering design (FEED). ■ Then, can we expect that you will use Korean companies'
equipment and components according to the localization strategy? Korean small and medium-sized
enterprises have the world's highest level of capabilities of manufacturing
components for offshore wind farms. Many Korean companies are already exporting
equipment and materials for offshore wind turbines to Taiwan and Europe, and
are actively engaging in business. Since Korean companies are already
competitive in many of the components for offshore wind turbines, we will
definitely consider using Korean ones first. BadaEnergy is
also examining ways to allow Korean, especially local, companies to participate
in the projects to gain experience during the operation of the facilities. This
will also serve as a springboard for the companies to join overseas projects in
the future based on the offshore wind expertise and technology they acquired
while participating in our projects. In particular, installation and
transportation account for a large part of floating offshore wind development,
so I expect the shipbuilding and offshore plant industries to play a greater
role in it. ■ What
advice would you give for the development of the Korean offshore wind industry? Although Korea has abundant assets in
offshore wind development, various difficulties still remain. We think it would
be very hard for the Korean offshore wind market to advance without the support
of the system and policy as well as economies of scale. For the sake of
boosting private sector’s technological competitiveness, SK ecoplant is
developing the K-Floater with POSCO, a world-class steel-making company, using
100 percent Korean technology to secure original technology for floating
offshore wind. We believe the Korean offshore wind
market is in dire need of a public-led support project for large-scale offshore
wind development and the One-Stop Shop policy in order to not only develop
projects in Korea at the right time but also obtain licenses and secure
resident's acceptance. For this, relevant institutions’ active cooperation is
also a must.
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