China's rapid rise as an offshore wind power is rooted in a push to move faster than rival countries. The first phase of the Jinshan offshore wind project in Shanghai is a case in point. The project, which installs 36 large 8.5-megawatt turbines in China's Hangzhou Bay, won approval in June 2024, two years after the competitive allocation of sites to developers was finalized in 2022, and achieved grid connection in September 2025. The winning power price was 0.302 yuan (about 60 won) per kilowatt-hour, below Shanghai's coal power benchmark at the time of 0.4155 yuan (about 82 won).
South Korea has moved more slowly. The U.S.-based Institute for Energy Economics and Financial Analysis (IEEFA), an energy policy think tank, said in a recent report that the Ministry of Climate, Energy and Environment's plan to tender 55 gigawatts of offshore wind capacity over the next decade would be "challenging" given the physical time and resources such projects require. The target is twice the offshore wind capacity Europe installed in total over the past decade. The institute also questioned whether the policy goals were set too aggressively, noting that the government wants to localize the supply chain and cut generation costs at the same time — both burdens for developers.
Voices at home argue that if the government is to meet its renewable energy expansion goals, it needs to concentrate more policy effort on improving the economics of individual projects. The Ministry of Climate, Energy and Environment said on the 16th that it aims to lower the cost of offshore wind power, now estimated at about 330 won per kilowatt-hour, to 250 won by 2030 and 150 won by 2035. The government says the target is achievable once related infrastructure is in place and tender volumes increase.
The industry, by contrast, says the government's price is hard to reach. Even accounting for measures the government is pursuing, such as shared grid connection lines between neighboring complexes, developers say it will be difficult to push costs below 190 won per kilowatt-hour for some time. The Korea Energy Economics Institute, citing data from BloombergNEF, puts Korea's levelized cost of electricity (LCOE) for offshore wind in 2035 at 174 won per kilowatt-hour, also above the government target. LCOE is a measure of generation cost that accounts not only for variable costs such as fuel but for the total cost of building and operating a plant.
A sharp global increase in offshore wind construction costs is adding to the strain. Steel prices are rising, and the buildout of power grids around the world has made it harder to secure cables on schedule. Turbines, the core equipment in wind generation, have also become difficult to procure as orders surge. BloombergNEF said in a report in February that supply chain bottlenecks drove up costs at offshore wind projects worldwide by 12% last year. In the United Kingdom in particular, costs for recently financed offshore wind projects were 69% higher than five years earlier, and the trend will continue through 2030, the firm forecast.
Permitting — including military operational assessments and environmental impact reviews — and negotiations with local residents are also holding projects back. At the Nakwol offshore wind project in Yeonggwang County, South Jeolla Province, which is targeting completion this year, construction itself began in March 2024 and will take about two years and nine months through the end of this year, but securing the various permits took five years and two months. "In China, developers typically take about a year to prepare for construction after being selected and then finish the project in two to three years," an industry official said. "In Korea, it takes six to seven years just to start construction, and project costs keep swelling."
That has prompted calls to set rates at a reasonable level that can ensure projects are viable. "If bid prices are forced down every year just to meet a target, developers will eventually walk away," an industry official said. "It would help to add a range of premiums based on distance from shore or the share of domestically made components." IEEFA likewise advised that bid price caps "should reflect market realities" and be calculated flexibly to track raw material price swings and inflation.
Extending the term of fixed-price contracts is another option. The government has typically set the term for renewable energy fixed-price contracts at 20 years. Stretching that to 25 or 30 years would lengthen the period over which developers recover their capital, creating an incentive to participate even at lower rates. The Shinan Ui offshore wind project, the first project backed by the National Growth Fund, is understood to have improved its economics by extending its fixed-price contract from 20 years to 25. "Guaranteeing prices higher than other generation sources for too long becomes a burden," a government official said, "but considering the need to expand renewable energy, extending contract terms is worth considering."
Measures the government has signaled, such as designated generation districts and a single window for permitting consultations, also need to be pursued more boldly. "Isn't housing supplied faster when the Korea Land & Housing Corporation (LH) develops the site rather than private builders preparing land themselves?" said Yoo Seung-hoon, a professor of future energy convergence at Seoul National University of Science and Technology. "The government needs to be more active in identifying generation districts." The professor also said participation by state-run power companies should increase, noting that most offshore wind developers lack a track record in plant projects and struggle to raise financing. "State-run generators can raise funds relatively cheaply in the bond market," the professor said. "Expanding their involvement so that the public and private sectors push ahead together would speed things up."