Floating offshore wind projects development in South Korea without government subsidies

The South Korean government is encouraging the active participation of power generation companies in the offshore wind power project by announcing the renewable energy certificates (REC) weighting plan. However, from a long-term perspective, the offshore wind power must be able to generate profits without government support to demonstrate its business feasibility and attract the voluntary participation of power generation companies. This is because government support may be subject to change, depending on the internal and external political circumstances of the country. This report calculates the expected costs for a 495 MW floating offshore wind farm in South Korea’s market environment and examines how the feasibility of the project shifts depending on the country’s current REC weights. Furthermore, this study intends to determine whether floating offshore wind power can generate profits without the Korean government’s support by calculating the expected profit in combination with the green hydrogen project. The net present value, levelized cost of energy and internal rate of return (IRR) indexes are calculated according to the project’s specific particularities, such as power purchase agreement, REC weighting, distance from shore and sea depth. Based on this, an index-based comparison is revealed and the margin for profitability for such an investment is discussed. The calculation results revealed that with a decrease in capital expenditures and operating expenditure or an increase in the system marginal price under specific assumptions, the value of IRR increased.