Hanwha Ocean, another Korean shipbuilder win $951 million WTIV deals

Hanwha Ocean Co. and another major South Korean shipbuilder have won deals worth a combined 1.4 trillion won ($951 million) to build a wind turbine installation vessel (WTIV) each for unidentified domestic firms.

A WTIV is a vessel specifically designed to install offshore wind turbines. It is priced between 700 billion won and 800 billion won.

Hanwha and the unidentified Korean shipbuilder have agreed to build a combined two WTIVs – one for an energy company and the other for a construction firm, people familiar with the matter said on Monday.

The companies are currently fine-tuning details, including construction conditions, according to sources.

Analysts said the deals are seen as a crucial step in safeguarding Korea’s offshore wind turbine construction market, which is at risk of being dominated by Chinese and European companies.

Korea plans to expand its offshore wind power generation capacity to 14.3 GW by 2030 from the current 0.13 GW, requiring an addition of 2 GW capacity annually.

LACK OF LARGE WTIVs

However, a lack of large WTIVs has left the domestic wind turbine market vulnerable to competition from European and Chinese firms.

“Once the two large WTIVs are up and running, Korea will have a competitive edge in the nation’s offshore wind turbine construction market,” said a local shipbuilding industry official.

With global warming driving attention to renewable energy sources like offshore wind power, demand for large offshore WTIVs is steadily increasing.

Korea is a major in the emerging WTIV market with Hanwha Ocean building four such vessels and Samsung Heavy Industries Co. three, mainly for overseas clients so far.

Korean shipbuilders also compete to lead the global wind farm industry, an emerging game-changer in the renewable energy sector, which generates power through offshore floating facilities.

In Korea, there’s only one WTIV that can build smaller turbines with 5 to 10 MW capacity.

With the larger 15 MW turbines becoming the industry standard, Korean firms could lose the wind turbine market without sufficient WTIV capabilities, industry officials said.

Korean shipbuilders specialize in building large WTIVs capable of installing 15 MW turbines, bringing their annual installation capacities to 700–800 MW per vessel.

GREATER CLOUT IN WIND POWER MARKET

Industry officials said the latest WTIV contracts would lay the foundation for Korean shipbuilders to expand their clout in the domestic offshore wind power market.

Korea’s wind power market is forecast to grow to 14.3 GW worth some 100 trillion won by 2030 and 26.7 GW worth 182 trillion won by 2036, according to government data.

WTIV charter fees from overseas ship owners have increased by 24% over the past year.

Industry officials said installing offshore wind turbines involves surveying seabed conditions, which raises national security concerns.
Source: The Korea Economic Daily Global