Page 9 - AsiaElec Week 08 2021

AsiaElec RENEWABLES AsiaElec

Floating offshore set to be the

next game changer in Asia

ASIA FLOATING offshore could be the next frontier the project’s impact on the surrounding environ-
in wind power development in Asia-Pacific, said ment and ecosystem.
Wood Mackenzie, with capex costs set to fall by GIG is developing the project together with
40% to average $3mn per MW by 2025-2030. Energy Infra Asset Management, while it will be
Floating offshore wind accounts for just 6% built by Korea Hydro & Nuclear Power (KHNP),
capacity of the 26 GW of new offshore capacity OW Offshore and South Korea’s Kumyang.
anticipated in the current decade in Asia-Pacific
excluding China. Costs
However, a significant market for floating For now, the Japanese government estimates that
offshore technology is emerging in Asia. Devel- current capex costs of floating offshore can be as
opers in Japan, South Korea and Taiwan have high as $10mn per MW but could be commer-
announced plans to develop key demonstration cially feasible if brought down to $4mn per MW,
projects, although the scale of deployment is still compared with grounded offshore capex costs
limited compared to conventional fixed-bottom of $2-3mn per MW and an average Asia-Pacific
technology. onshore wind capex cost of $1.5mn per MW by
“This 1.56 GW of new floating offshore 2030.
capacity in Japan, South Korea and Taiwan will Wood Mackenzie predicts average capex
require investments of at least $8bn. If we con- costs of floating offshore wind plants in the three
sider the additional 9-GW project pipeline in pioneering markets to decline by around 40% to
early planning stages, total investment opportu- $2.6-4mn per MW by 2025-2030.
nities could be worth up to $58bn” said Wood Despite the cost challenge, governments
Mackenzie principal analyst Robert Liew. in Japan and South Korea have set out support
Maintaining power supply is a key challenge policies for the sector. In Japan, a feed-in tariff
for these markets as legacy thermal plants reach (Fit) is available for floating projects compared to
the end of their project life and opportunities for grounded offshore projects, which are moving to
new-build coal and nuclear are severely limited. price parity through auctions.
The three Northeast Asian markets face pro- A small-scale 22-MW floating wind auction
jected thermal and nuclear capacity retirements in the Goto Islands is also testing whether prices
totalling 89 GW from 2020 to 2030. can be lower than the current FiT. In South
Liew said: “Governments in these markets Korea, floating offshore projects can be awarded
are increasingly looking to renewables to fill the higher weightings of renewable energy certifi-
supply gap, but due to land constraints, scalable cates depending on the distance between inter-
options are limited. Floating offshore wind is connection facilities.
starting to gain more attention, but the high cost Liew said: “With enough government sup-
remains a major barrier to widespread adoption port, developers will be more willing to bet on
of this technology. floating wind. Building a firm pipeline of float-
“To ensure the long-term sustainability of ing projects will give the sector more forward
floating offshore wind, prices must come down visibility, which in turn will attract even more
significantly to at least be competitive with new- investors.”
build gas power.” Part of the buy-in from government is the
With a limited track record and only 21 MW long-term vision to establish a domestic float-
of operating floating demonstration units, there ing offshore wind supply chain that will benefit
is high uncertainty over project costs in Asia-Pa- the local economy. Floating offshore requires
cific markets. more vessels to install turbines compared to
One emerging project is the Ulsan floating mainstream grounded offshore projects. This is
project off South Korea. The 1.5-GW scheme attractive to governments that historically have
aims to have its first 500-MW phase completed had a large domestic maritime sector.
by 2023. “The Japanese and Korean governments are
In April 2020, its backer, Green Investment keen to establish a floating offshore supply chain
Group (GIG), said it had completed the installa- hub for the region and potential future exports to
tion of South Korea’s first floating LiDAR, which other markets. This could also contribute signifi-
will collect wind resource data and help address cantly to lowering costs,” Liew added.™

Week 08 24•February•2021 www. NEWSBASE .com P9