China, South Korea, Taiwan: my overview of opportunities

Myself and Ian Ross just led a trade mission to all three market. Big differences between them in scale, ease of business and timescales:

China: engage within certain opportunities

South Korea: engage and get ready to move quick

Taiwan: taking a breather, but still biggest prize

China

This year China hits 500GW installed onshore/offshore wind capacity; roughly half the global total. The OEMs are still pushing ever larger turbines and unique floating designs (see Mingyang Ocean X), and these companies are looking at Europe again. That will certainly bring competition and options for bringing cost down, alongside challenges for established players.

I see three buckets of opportunity:

Partnering with Chinese OEMs in their push in to Europe: Scottish companies with experience in FEED or other engineering consultancy, cable/mooring handling, quality and inspection, anything to do with vessels, training and skills; Chinese companies are seeking help. 

Floating wind in China: China has used most of the near shore sites and is pushing further offshore in deeper water. China is at the demonstration stage of FLOW; key structure design e.g. foundation design and engineering consultancy capabilities are in demand. Cost will be a critical factor so frame your product in terms of cost/time saving in the installation phase.

Operations, maintenance and re-powering: 500GW is a lot of equipment to maintain. Straight up O&M is likely sown up by local supply chain. High innovation or unique products (think ai) may have opportunity. Companies focusing on blades may also fare well. Cable failure is rampant, so cable monitoring and retrofit is in high demand.

General advice for work within China : Most companies will struggle with China, not because of any state barriers (although they do exist) but because of the pace of business and very high management resource cost: you'll need to respond to customers instantly and be putting in a lot of airmiles to service them. You will need to pick the right partners that have strategic ambitions outside of China, that way you will have much better protection (ip and from competition). That said, there is huge opportunity. Helen Chen has many years experience and can guide you.

South Korea

Probably most ambitious in the region, targeting 14.3GW to be installed by 2030. Lots of projects in the pipeline and that already have their licenses. But some big challenges with high early stage cost borne by the developers, grid connections, local support and a desire for local content. Also some huge floating projects including 1.5GW Gray Whale project. If the targets are to be achieved, there will need to be a sharp rise in activity soon.

There is a lot of experience in fabrication and a clear strategy to avoid cheaper imports from neighbours, but limited experience in offshore construction. My take is that the domestic developers/EPCs are very keen to hear from those with experience, but haven't yet made a decision on how much they want/can do locally. So I recommend keeping warm relationships for when opportunity opens up.

All the European developers are here and are likely to lean on the supply chain they used in other global projects. My recommendation is to utilise your experience with the EPCs and developers in Europe as a selling point for Korea (where procurement decision will be independent but influenced by experience).

SDI will soon have a staff member in South Korea. They will sit alongside the excellent DBT team Cindy Kim Youngran, overseen by Tony Clemson . p.s. special thanks to the British Chamber of Commerce in Korea Lucinda Walker and YOUNG-A YOON .

Taiwan

Scottish companies tend to find Taiwan very accessible and have had notable success in delivering chunks of the 2+GW already installed. There is a good pipeline, targeting 5.6GW installed by 2025. But severe headwinds with very challenging install conditions, high cost due to removal of subsidy and mandatory local content, grid etc. That adds up to a big pause, but which could allow more time to develop solid partnerships. I also heard that the wind that is operational is far exceeding the expected yields, making investors happy and probably meaning the industry will right itself soon enough.

Changes are coming to the industry, including a likely easing of local content. That combined with moving to deeper water will mean Scottish companies with products in floating wind will be very well placed for the end of the decade when floating becomes a viable proposition for Taiwan (ports not ready, gov not issued the plan for support yet); so for floating, target South Korea first.

There are no SDI staff in Taiwan, but the excellent DBT team in Karen Su and Jenny LIN , overseen by Mei Ko , will steer you right.

Other considerations

We can't speak about this region without addressing the politics. There isn't much trouble financing multi-decade wind projects in Taiwan, which should tell you something. However, there is a non-zero probability of change to the status-quo. Those in Mainland China will tell you the probability is pretty much bang on 1, those in Taiwan nearer to 0. My advice is to speak to those on both sides. You will have to make your own decision based on your risk appetite.

[Big thanks to Mairi Donald and Denise Addie for project management.]