[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 Corio

Corio, 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 TotalEnergies

TotalEnergies, 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 ecoplant

SK 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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