December 19, 2024

1,9 GW capacity awarded in South-Korea

Ørjan Rist, Project Manager Facilities for Equinor's Bandibuli project, together with NOWs Arne Vatnøy during Norway Korea Offshore Wind Forum in November.

by Arne Vatnøy

Communication manager

Equinor was awarded with their floating wind farm Bandibuli, which becomes the largest floating project globally to secure an offtake agreement.

The results of Korea's Q4 2024 Offtake Auction were released this week. The winners are:

Floating:
Firefly - Bandibuli (750 MW) Equinor

Fixed-Bottom:

Anma 1+2 (308 MW, 224 MW) Anma Offshore Wind
Taean (500 MW) Vena Energy
Yawol (104 MW) Daehan Green Power

Total 1886 MW (386 MW over the 1.5 GW target)

-This auction provides excellent opportunities for supply chain companies targeting this emerging market. South Korea is dependent on expertise from other markets, and the Norwegian capabilities within the floating segment will be complimentary, says Business Development Manager in Norwegian Offshore Wind, Astrid Green.

Important milestone for floating wind

Equinor signed an MoU with Ulsan city in May 2019 for the development of an 750MW floating wind farm offshore Ulsan. The Firefly/Bandibuli wind farm comprises two 75 km2 areas, 70 km off the coast of Ulsan.

Equinor's Press spoke person Magnus Frantzen Eidsvold comments:

-We will now work through the details of the offtake contract with Korean authorities with the ambition of signing a final contract. We will not take on significant financial commitments or make a Final Investment Decision until we are confident the project can deliver competitive returns within our guided range.

Analyst for the Asia Pacific Region in 4C Offshore, Benjamin Swarbrick, describes this auction as a monumental development for floating wind.

-Equinor's Firefly becomes the largest floating project globally to secure an offtake agreement, surpassing the UK's Green Volt. It is likely that Equinor bid for the ceiling price of 176 KRW/kWh (117 EUR/MWh), comments Swarbrick.

This sits far below the strike price secured for Green Volt (213 EUR/MWh), but well above France's Pennavel (86.45 EUR/MWh).

-However, South Korea does offer an added incentive of Renewable Energy Certificates that allows a project to gain additional revenue to support viability. This auction was oversubscribed in both floating and fixed-bottom, and both have had more capacity awarded than was on offer.

According to Reuters, the offer, including a multiplication factor to reflect technology and location of projects, for floating wind was around 500,000 won, roughly $350/MWh, a source familiar with the conditions said.

Norwegian Offshore Wind signed an MOU with Korea Wind Energy Industry Association in October.

Korea is on schedule

Korea stayed on schedule with this auction despite the political issues, indicating its desire to become a driving force in offshore wind in the Asia Pacific.

According to 4C Offshore, this auction is the first in South Korea's new Competitive Bidding Roadmap for 2024-26. The next round is scheduled for Q2 2025, with details of the auction being given in Q1.

The total capacity for this Competitive Bidding Roadmap is around 7-8 GW.

-I would like to congratulate Equinor with this exciting Bandibuli project. We see a bright future for South Korea, where foreign capabilities in offshore wind are welcomed. Of course there are regulatory challenges we need to overcome, but there is a lot to gain for Norwegian companies by establishing strong partnerships with local suppliers, says Hans Hansen, who heads up the Working Group for South Korea in Norwegian Offshore Wind.