A heat wave in South Korea, with temperatures climbing to 115°F, supplemented by the rapid growth in Korea’s economy has meant that there has been a rapid increase in the demand for energy in the country. Furthermore, there was a recent shutdown of two nuclear reactors as well as some thermal plant closures. This has widened the gap between demand and supply for power in the country.

South Korea was largely dependent on production of electricity from heavy oil up to the mid 1980s. Coal and nuclear resources became dominant after this period. Renewable resources as a source of power were not explored until 2004 but it has grown at a strong pace ever since. Coal remains the leading source of power, supplying more than 40% of the country’s energy needs. Nuclear energy supplied about 30% of the energy in South Korea in 2012 while renewable sources of power delivered a measly 1.75% of the total energy needs. However, nuclear plant closures on component safety concerns have cut supply from Korean hydro and nuclear power and may spur the country to diversify via renewable energy.

South Korea exploring alternative energy

Figure 1: South Korea’s Sources of Power

South Korea
Source: Korea Power Exchange

Wind energy is one of the most feasible alternatives for South Korea at this point. “Offshore wind energy, while expensive, may boost energy independence as an established shipbuilding industry harnesses the country’s wind resources,” says James Evans.

South Korea’s wind energy installs have lagged behind regional peers Japan and Taiwan. This is primarily because the densely populated country prioritized building nuclear reactors over finding renewable solutions to its energy issue.

The future of wind energy in South Korea

Figure 2: Wind Energy Installs in Asian Countries

South Korea
Source: Global Wind Energy Council

Furthermore, high installation costs discouraged investment in the wind power sector. South Korea has 483 megawatts of installed capacity, 99% of which is onshore wind. The government plans to boost offshore deployment by 2.5 gigawatts in the next decade via a public-private partnership to install at least 500 turbines.

South Korea produced 911,463 MWh of electricity from wind energy in 2012.

Table 1: Wind Power Capacity and Generation, 2000-2013

South Korea
Source: Korean Wind Energy Industry Association

South Korea offshore wind supply chain

“South Korea’s natural offshore wind resources combined with an established domestic shipbuilding and marine industrial complex provide a strong base for an offshore wind supply chain. Eight Korean companies are developing new turbines hardened for offshore wind conditions. Samsung Heavy and DSME plan to build 7-megawatt machines, with Doosan Heavy and STX already piloting smaller turbines off the coast of Jeju Island, with possible commercial deployments from 2014,” analyzes James Evans.

The leading company in South Korea in wind turbine production is Vestas, the Danish producer and the world’s largest seller of wind turbines, with a 58% market share in South Korea. Vestas had a leader’s edge in South Korea as it established its operations in this market as early as 1998 while the first wind power generation started in 2004.

During the past two years, local South Korean manufacturers like Hyundai, Unison and Hyosund have also gained some market share.

Table 2: Korean Wind Turbine Market Share

Source: Korean Wind Energy Industry Association
Source: Korean Wind Energy Industry Association

Further expansions of these companies are probable as South Korea enters an era of renewable energy. South Korea may begin construction of commercial offshore wind power projects by 2015 as domestic turbines become available. Several offshore projects are already planned including KIER Jeju and Doosan Weoljung. However, recent power constraints will speed up this process as government feels pressure to overcome the demand-supply gap. This will accelerate the construction, development and permitting of new projects to add new wind power capacity.