Asia Pacific offshore wind power outlook

Trusted Power and Renewables Intelligence woodmac.com

Asia-Pacific Offshore Wind Power Outlook

AsiaWEA 5th Asia Offshore Wind Day, Tokyo

Robert Liew | 24 January 2019

http://www.woodmac.com/


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AsiaWEA 5th Asia Offshore Wind Day, Tokyo woodmac.com

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Transmission Distribution End CustomersDispatchable Generation

The Power Market of the PastA top-down, flow from supply to demand

Tomorrow’s Decarbonized and Decentralized Power MarketA bi-directional energy network with outside market responses and actors at

every node reshaping power market planning and operations

Intermittent Generation

Energy Storage

Advanced Metering Infrastructure

Distributed Generation

Electric Vehicles

Connected Devices

Demand Side Management

Market evolutions and technology revolutions have disrupted legacy business models, creating a new energy landscape

Transmission Distribution End CustomersDispatchable Generation



3


Contents

1. Asia Pacific (APAC) offshore wind overview 4

2. China offshore wind outlook 10

3. Taiwan offshore wind outlook 13

4. Japan offshore wind outlook 16

5. South Korea offshore wind outlook 19

6. Emerging offshore markets 22

7. Contact us 24


Asia Pacific (APAC) offshore wind overview

10-year outlook (2017 to 2027)

1.

5



Offshore wind capacity in APAC will reach upwards of 45GW by 2027

Despite a slow start, large-scale growth post-2020 will average 5GW of new annual added capacity

APAC offshore wind power outlook, 2017-2027e

7

0

6

1

4

2

3

5

0

10

20

30

40

50

2021e 2026e2022e

(GW) (GW)

2017 2027e2018e 2019e 2020e 2023e 2024e 2025e

JapanSouth KoreaCumulative (APAC) India Taiwan China

China ramps up scale of nearshore

projects but non-China markets are

focused on demonstration units and

initial small scale projects to test

local capabilties

5.7GW of awarded projects in Taiwan begin large scale

construction in addition to port projects in Japan and

developers in S.Korea expanding existing projects

Sustained development across key

markets under auction regime


6


Note: Projects in India are not included as auction bids have not yet started and been disclosed. Single demonstration floating units in Japan are also not included as they are not utility-scale

Diverse range of offshore projects in APAC due to varying marine conditions

Majority of projects in the pipeline focus on grounded nearshore projects to build up market share

0

10

20

30

40

50

60

70

0 5 10 15 20 25 30 35 40 45 50 55 60

Maximum water

depth (m)

Distance to shore (km)

Project size (500MW)Australia

VietnamTaiwan

Japan

South Korea

China


Site specifications of planned offshore wind projects in APAC

Nearshore


7


Note: (%) represents project probability


Almost half of all proposed offshore projects in APAC will be realized in ten years

Developers are increasingly ambitious with plans for over 40GW of non-China offshore projects post-2020

Status of APAC offshore wind pipeline by YE/2018

5 500 25 3010 10515 20 35 40 6545 55 60 9070 75 80 85 95 100

Under

Construction

(91-100%)

(GW)

TOTAL

Operational

Planned

(31-90%)

Proposed

(11-30%)

Pre-project

(0-10%)

China Taiwan AustraliaJapan South Korea Vietnam

APAC cumulative

offshore capacity by

end of 2027e


8


Note: (%) values reflect the weighting for the category. Permitted pipeline only includes approved projects.


East Asian markets remain the most attractive for offshore development in APAC

Key markets are underpinned by supportive policy environment and backed by detailed offshore wind

assessments resulting in strong interest by power developers

Markets

(%)

National

offshore target

(10%)

Permitted

pipeline

(25%)

Offshore wind

assessment

(10%)

Offshore policy

environment

(20%)

Marine

capability

(10%)

Power

demand

(15%)

Wind supply

chain

(10%)

Overall

condition

China

Taiwan

Japan

South

Korea

India

Australia

Vietnam

Weakest Strongest

E.

Asia

S.

Asia

Pa

cific

SE

.Asia

Conditions for offshore wind power in APeC markets Key markets


9


Source: Wood Mackenzie, IEA

Awarded offshore wind prices are increasingly competitive with thermal prices

Global offshore wind tariffs versus APAC offshore wind tariffs

Auction results

Commissioned/proposed projects

2000 2012 2016 2020 202420082004

100

200

(USD/MWh)

0

300

APAC

thermal

cost range

Japan offshore FIT

Taiwan II offshore (auction round)

China offshore FIT

Taiwan I offshore (allocation round)

150

250

50

Vietnam offshore FIT

Offshore tariffs


Longyuan Rudong, ChinaPhoto source: internet

2. China offshore wind outlook


11



Offshore will comprise upwards of 15% of all new added wind capacity in China

China offshore wind power outlook with key underlying drivers and barriers, 2018e to 2027e

+118%

3.0

0.0

0.5

1.010

1.5

2.5

2.0

303.5

20

4.0

5

0

15

25

35

2022e

(GW) (GW)

2018e 2019e 2020e 2021e 2023e 2024e 2025e 2026e 2027e

Cumulative New-added Weaker Stronger

Feed-in tariff

National target

Wind auctions

Technology

ProfitabilityBa

rrie

rsD

rive

rs


12


Note: Province pipeline is by end of 2018. Developer pipeline is by end of 1H/2018.


Guangdong and Jiangsu province comprise 53% of all offshore pipeline in China

State-owned developers dominate offshore project pipeline with Three Gorges and China Energy Investment

Corporation (CHN Energy) leading the charge

0 102 1884 6 1412 16 20 22 24

3. Zhejiang

9. Tianjin

1. Guangdong(GW)

2. Jiangsu

4. Liaoning

5. Fujian

7. Hainan

6. Shandong

11. Hong Kong

8. Hebei

10. Shanghai

Operational Under construction Pre-projectPlanned Proposed

China offshore project pipeline by province, and selected developers

1

2

3

4

5

6

7

89

10

11

112 50 1 43 6 7 8 9 10 12 13 14

(GW)

Yudean

Three Gorges

CHN Energy

CGN

Huaneng

CR Power

SPIC

Fujian Energy

Huadian

FIDG

Others

5%

10%

14%

32%

40%

62.8GW


3. Taiwan offshore wind outlook


Formosa Phase 1 demonstration, TaiwanPhoto source: internet

14



5.7GW of pipeline projects in Taiwan ensures it will be the second largest market

Taiwan offshore wind power outlook with key underlying drivers and barriers, 2018e to 2027e

Ba

rrie

rsD

rive

rs

Transmission

+118%

Support for

renewables

Coal

reduction

Supply chain

constraints

Political

risks

0

500

1,000

1,500

2,000

0

2

8

6

4

10

(MW) (GW)

2018e 2019e 2022e2020e 2021e 2023e 2024e 2025e 2026e 2027e



15


Note: Pipeline includes awarded and non-awarded projects as the latter may be resubmitted in future auction rounds. Northland Power (NPI) Macquarie (Macq) Copenhagen Infrastructure Partners (CIP)


More than 70% of offshore wind applications are for projects in Changhua county

Foreign developers dominate the offshore project pipeline, with most local developers entering into consortiums

with foreign companies but political risk is a growing concern.

60 102 84

1. Changhua

2. Taichung

(GW)

3. Yunlin

4. Miaoli

5. Hsinchu

6. Taoyuan

2.51.50.0 0.5 1.0 2.0

Swancor/Macq/Orsted

(GW)

Orsted

WPD

NPI/Yushan/Mitsui

CIP

Taipower

CIP/China Steel

Swancor/Macq

42%

41%

16%0.1%

2%

12.9GW

Operational Planned ProposedUnder construction Pre-project

1

2

3

4

5

6

Taiwan offshore project pipeline by county and selected developers


4.

Fukushima floating demonstrator, JapanPhoto source: internet

Japan offshore wind outlook


17


Note: Environmental Impact Assessment (EIA)


Early port/harbor projects will give way to large-scale nearshore projects

Japan offshore wind power outlook with key underlying drivers and barriers, 2018e to 2027e

Ba

rrie

rsD

rive

rs

Transmission

National

energy plan

Power market

liberalization

EIA approval

Fisheries

approval

0

100

200

300

400

500

0.5

1.5

0.0

1.0

2.0

2.5

2025e2018e

(MW) (GW)

2019e 2022e2020e 2021e 2023e 2024e 2026e 2027e

+47%



18


Note: The pipeline only includes projects with a defined location. Japan Wind Development (JWD), Japan Renewable Energy (JRE), Green Power Investment (GPI), Aomori Wind Development (AWD)


Despite over 5GW of pipeline, majority of projects are still undergoing EIA

The pace of commercialization remains slow due to long EIA process but new regulations governing general

sea areas will help reduce project risk and encourage more investment

0 500 1,000 1,500 2,000 2,500 3,000

(MW)

Aomori

Akita

Fukuoka

Nagasaki

Yamaguchi

Ibaraki

Hokkaido

Saga

Others

0 200 400 600 800 1,000 1,200

(MW)

Renova

AWD/JWD

JWD

Obayashi

Hitachi

Zosen

GPI

JRE

Others

8%

89%

1%

0.1%

2%

5.4GW

12

3

4

5

6

7

8

9

1011

12

Japan offshore project pipeline by prefectures and selected developers

ProposedOperational Under construction Planned Pre-project


5. South Korea offshore wind outlook

Tamra offshore wind farm, South KoreaPhoto source: internet


20



Slow ramp up but strong potential due to aggressive offshore plans and targets

South Korea offshore wind power outlook with key underlying drivers and barriers, 2018e to 2027e

Ba

rrie

rsD

rive

rs

Transmission

Coal

retirements

National wind

strategy

Supply chain

constraints

Insufficient

policy support

0

100

200

300

400

500

600

0.0

1.0

2.0

0.5

1.5

2.5

(MW) (GW)

2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e

+59%



21


Note: Saemangeum Development and Investment Agency (SDIA), Korea Hydro & Nuclear Power (KHNP), Korea Offshore Wind Power (KOWP)


National level projects are key to attract investments and drive economies of scale

The government plans to scale up offshore wind capacity through national level projects and capitalizing on

potential floating offshore technology by leveraging a mature shipbuilding industry.

0 1 2 3 4

1. North

Jeolla

2. North

Gyeongsang

(GW)

3. Ulsan

4. Jeju

5. Busan

6. South

Jeolla

Operational Proposed Pre-projectUnder construction Planned

1.50.0 2.50.5 1.0 2.0

EWP

KOWP

(GW)

SDIA/KHNP

Macquarie /

Gyeongbuk Wind

GWindSky

KOEN

JEC

21.5%

48.3%

28.7%

0.5%

0.9%

7.0GW

6

1

4

South Korea offshore project pipeline by provinces and selected developers

2

3

5


Bac Lieu wind farm, VietnamPhoto source: internet

6. Emerging offshore markets


23



Strong potential for new offshore markets but price expectations are a concern

Project pipeline and tariff price comparisons for offshore wind in emerging APAC markets

▪ Vietnam: Government has

approved higher FIT rates for

offshore wind power in

contrast to other markets

▪ India: Will require financial

government support as initial

offshore wind tariffs are

unlikely to match current

onshore wind prices of

around 40 USD/MWh

▪ Australia: Open market will

put pressure on offshore wind

prices to be around 40-50

USD/MWh to be competitive

against onshore wind prices

10.7

0

1

2

3

4

5

6

7

8

9

10

11

(GW)

India Australia Vietnam TOTAL

0

10

20

30

40

50

60

70

80

90

100

Australia

(USD/MWh)

India Vietnam

Plans for 5GW of

auction over next

three years with

1GW planned to be

auctioned first in

2019

Onshore

Offshore 2018 average

power tariff

Average Taiwan offshore

auction round rate


Contact us

25


Robert Liew

Senior Analyst, Commercial Leader for Wind Markets, Power and Renewables Research

Biography


Connect with Robert

Robert has over 10 years of analyst experience, having worked in research functions in New

Zealand, Thailand, China, and Singapore. He has expertise in market intelligence, strategy

planning, analysis, and forecasting in the wind power sector in Asia Pacific.

He is responsible for regional Asia Pacific reports, offshore wind, emerging markets, and has

completed numerous projects for supply chain companies, private equity, and IPP/utilities with a

focus on Asia Pacific markets. His opinions have been quoted by leading newspapers and trade

publications – Bloomberg, Financial Times, Nikkei Asian Review, The Economic Times, Recharge,

Windpower Monthly, etc.

Robert has a master’s degree in public policy from Tsinghua University specializing in renewable

energy. He has spent over 35 years in Asia Pacific living in Taiwan, Singapore, New Zealand,

Thailand, and China where he has spent the last eight years working at MAKE, a leading Danish

wind consultancy before merging with Wood Mackenzie.

Robert works out of our office in Singapore.

+65 6518 0806

[email protected]



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WOOD MACKENZIE is a trademark of Wood Mackenzie Limited and is the subject of trademark registrations and/orapplications in the European Community, the USA and other countries around the world.


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