S. Korean steelmakers turn to offshore wind energy industry for growth

Tamra Offshore Wind Farm in Jeju [Source : Doosan Enerbility]

South Korean steel manufacturers are tapping into the offshore wind power market by expanding steel pipe supply to overcome sluggish demand at home and abroad.

According to multiple industry sources on Sunday, steel manufacturers are enjoying a boon on the back of high demand for offshore wind energy that boosts steel pipe orders. Hyundai Electric & Energy Systems Co., an electric device and energy solution unit of Hyundai Heavy Industries Group, recently joined hands with U.S. GE Renewable Energy to launch offshore wind energy business. The company plans to localize various equipment and components that require steel pipes.

Offshore wind energy involves sending electricity generated through wind farms at sea to land. Offshore wind farms are large in scale as they require up to several hundreds of generators. Onshore wind power, on the other hand, is less economic compared with offshore wind power as it may raise issues related to limited land and residents’ consent.

Doosan Enerbility Co. also plans to set up an offshore wind energy complex in Jeju. Doosan Enerbility, which launched offshore wind power business in 2005, has 3.3 megawatt, 5.5 MW and 8 MW turbine models. The company built a factory to produce 5.5 MW models last year. It is also in preparations to create 8 MW production facility and develop next-generation model. The company has received international certification for the largest 8 MW turbine, raising hopes that more large-size wind farms will be set up in Korea.

Offshore wind power facilities usually require large-size steel pipes.

According to industry sources, about 200,000~250,000 tons of steel pipes are used in 1 gigawatt wind power farms. Korea Iron & Steel Association estimates new offshore wind power facility installments globally will reach 51 GW in 2030, which means 10.2 million~12.5 million of steel pipe per year will be needed.

Steel manufacturers like POSCO and Hyundai Steel Co. are hoping to overcome weak demand from China and lower steel prices by focusing on the offshore wind industry.

“As domestic offshore wind power business becomes more active, this will help local steelmakers to expand steel pipe supply to overseas markets like Asia, Australia and North America,” said an unnamed official from Hyundai Steel. “Korea has strengths in all areas except for wind turbines such as structure fabrication, cables, substations and dedicated installment lines, which leaves much room for growth not only in steel pipe supply but in overall heavy industries sector as well.”