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For South Korea, 2005 will be remembered as the year the business of serious wind power development took off. Last year saw the country's first truly privately funded and commercially operated project get underway on the east coast, near the seaside town of Youngdeok in Gyongsangbuk province, while the first phase of what will be South Korea's largest project at 98 MW was completed in December in the mountainous north-eastern province of Gangwon.

In all, the progress of these two projects more than doubled South Korea's installed wind capacity from 51.6 MW at the end of 2004 to 119.2 MW by the end of 2005. The total will rise to 189.2 MW when the second phase of Gangwon is completed in September.

It has taken 15 years to get this far. The country's first wind project, consisting of a single 100 kW machine on Wollyung Island, is from 1991, followed in the next decade by a series of small developments in rural areas, funded in the main by local governments. The largest turbine was rated at 775 kW.

With the Seoul-Gyeonggi and the Busan-Gyeongnam provinces playing host to most of that early capacity, the new developments in 2005 signal a move to other regions. The 39.6 MW Youngdeok Wind Park has kick started what the industry hopes will be a long term private investment trend. Backed by the Danish export credit agency, Eksport Kredit Fonden, and comprising 24 Vestas 1.65 MW turbines, the project was developed by a joint venture company comprising a large Korean civil engineering firm, Unison, and Germany's Lahmeyer International. Unison, which is diversifying from road and bridge construction, recently installed the first 750 kW turbine to be made in South Korea.

Main players

Many of the same players are developing the large Gangwon facility near the town of Pyeongchang. The project marked Unison's entry into the wind industry in 2001. It has been in planning since 2002 (“uåX˜äŠÊ˜·³Ç, August 2002) and will eventually comprise 49 Vestas 2 MW turbines. Unison has a 35% stake in the development, Japanese trading company Marubeni 30% and wind developer Eurus Energy of Japan 10%. Vestas is working with Unison and Lahmeyer International as the joint contractors for the construction.

The companies involved in the two projects are the main players in South Korea's fledgling wind market. Unison has quickly taken a lead in the domestic wind market by teaming up with experienced foreign companies. It is also coordinating development of the Jeju Wind Park at Nansan on Jeju Island, for which India's Suzlon is supplying seven 2.1 MW turbines for the first phase of a planned 55 MW. Meanwhile, Japan's Eurus has established a South Korean subsidiary for future projects, and Vestas has established a branch office with the expectation of more business.

Other turbine suppliers are moving in. As well as Suzlon's entry, Spain's Acciona is supplying 23, 2 MW machines for a project in Milyang, a small town northwest of Busan. Construction is due to start shortly with completion in October. Acciona is putting $50 million into the project, 70% of its cost, while the Gyeongnam provincial government and a Korean investor, STW, are provide the remaining 30%, $22 million.

Freedom from oil

This burst of activity has been driven by the government's desire to reduce its reliance on foreign oil imports, currently near 100%, backed up by a pledge to meet 5% of the country's electricity consumption from renewable energy by 2011. At present, methane gas from landfill sites and incinerated waste make up 70% of the country's alternative energy sources, but the government's Renewable Energy R&D Basic Plan aims for 2250 MW of wind power by 2011. As well as providing electricity, it hopes South Korea can become a trader of certified emission reduction units under the Kyoto Protocol, sourced from wind power.

The price paid for electricity generated from wind farms is set under the 2002 Generating Difference Support System, designed to offset the extra cost of renewable energy. Under the regulation, state utility Korea Electric Power Corporation buys all wind power generated at a rate of KRW 107.66/kWh ($0.107/kWh). This price is fixed for the next 15 years, although there is a clause which allows for a price adjustment in October this year.

Not everyone in South Korea is pleased with last year's burst of foreign investment and activity in its wind market. Korean wind companies Hyosung, Koegy, STX, and Korea Fiber, which pioneered wind development in the country, have constructed small wind projects comprising one or two turbines of less than 1 MW only. They have yet to take on anything as ambitious as Youngdeok or Gangwon, largely because they have relied on government bodies as their sole financiers for orders. Gang Yong-hyeok of Korea Energy Technology Research Institute is concerned: "Only foreign companies will get the work to do if the government blindly supports this kind of technology import," he warns.