Asia Pacific (APAC) offshore wind is on everyone’s lips these days. But what does it take for established offshore outsiders to achieve success in the APAC offshore wind business? Where are the opportunities – and the potential pitfalls?

For the next five to ten years, China is key to offshore wind growth in the APAC region. Smaller scale growth is also expected in South Korea, Taiwan, Japan and India. Emerging markets in South-East Asia and the Pacific are, however, starting to make themselves increasingly important as they move, for example, to reduce reliance on imported fossil fuels or avoid nuclear energy.

In total, the region is expected to add some 221 GW of new onshore and offshore wind capacity before 2020 – a fact that’s making Europe’s highly experienced offshore wind supply chain view this distant part of the world with keen interest.

Offshore wind power in the region is being spurred along by fastgrowing political and consumer-level awareness of the need to focus on renewable energy. And it’s being enabled by high energy demands, extensive onshore wind experience and the proximity to coastal load centers.

Foreign investment is, for the most part, welcome, although long-term policies are, perhaps unsurprisingly, often unclear. The more established onshore markets such as China, India, South Korea, Australia, Taiwan and Japan have designed or are working on incentive mechanisms, and increasing their stated renewable energy targets at regular intervals.

Jack Giles, who leads DNV GL’s APAC offshore wind team in Shanghai, is well acquainted with the demands of these markets:

“Generally speaking, the twenty years of European offshore wind experience and lessons learned can be of great value to new starters such as those found in Asia. However, there are key differences that must be considered in parallel within these regions. For example, in Europe we are not faced with inter-tidal sites, extreme typhoon events, or very weak soils. This means the key to success for these markets is likely to be the combination of European project experience and detailed local knowledge.”

The cultural aspect is another side of things that must be considered when European companies conduct business in Asia – whether it manifests itself simply as a language barrier, different project development time expectations, different risk profiles or local installation practices.

But even for the most experienced investor, design house or installation contractor, t he APAC offshore wind market presents a wide variety of challenges.

For reasons that vary from country to country, there’s a need to improve grid infrastructure to receive offshore wind power. For some, it’s a lack of capacity, in others it’s simply a need to manage and coordinate available grid infrastructure more appropriately. In China alone, almost 10 percent of wind power delivery was curtailed during three quarters of 2013, apparently for this very reason.

According to Jack Giles, such infrastructure challenges are important to overcome if these markets are to flourish. And action is being taken. For example, some governments have begun implementing compulsory renewable energy usage quotas for utilities, and have boosted grid investments to make the most of wind.

For outsiders looking to capture a share of the action, there are plenty of stumbling blocks. Competition from local investors and supply chain participants is strengthening – and they already know how best to do business in their home markets. For example, industrial heavyweights such as Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co., the world’s three largest shipyards, appear serious about making and installing turbines to serve the region.

Local innovation is also well under way. For example, it seems likely that floating turbines may be deployed commercially in APAC waters well before other, more established offshore wind geographies.

In addition, almost all the large Asian wind turbine manufacturers are actively developing offshore wind models with larger MW capacity, and a number are undertaking this task in collaboration with European companies.

There’s plenty of business to be gained, however, with developments primarily focused in China, South Korea, Japan and Taiwan. China alone, already the world’s third-largest offshore wind power installer after the UK and Denmark, plans to develop 30 GW of offshore wind power by 2020. And annual additions of energy powered by renewables now exceed additions powered by fossil fuels and nuclear sources in China.

Jack Giles explains:

“Given the number of countries now actively pursuing offshore wind in the APAC region, it seems clear that the launch pad for this industry is set. Offshore wind collaboration between Europe and the East is no longer an opportunity for the future, as the major European players are already here working with local companies. Opportunities exist for experienced European companies to build upon these existing relationships for mutual benefit.”

 

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