Finger on the Pulse: 3 Key Considerations to Push for Offshore Wind Projects in Asia
This edition of Finger on the Pulse dives into three key aspects that could propel the development of offshore wind projects in Asia. Finger on the Pulse is a content series from Infrastructure Asia that offers insider insights on key developments and trends shaping Asia's infrastructure landscape. This edition features insights from a roundtable discussion between offshore wind experts at the Asia Infrastructure Forum (AIF) 2024.
Asia has made significant strides in embracing renewable energy, emerging as a driving force behind global renewable energy growth. While solar power leads the region’s decarbonisation efforts and helps meet growing energy needs, wind power also holds much promise for Asia-Pacific (APAC). The region is expected to make up 61% of the world’s new wind capacity built between 2024 and 2030.
Offshore wind (OSW) is one of the region's most scalable clean energy solutions. China is already playing a dominant role in the global market and leads with over 76% of the region’s OSW installations. OSW has also achieved great success in Europe, compounded by policy and regulatory changes to ease and simplify permitting requirements. This includes efforts from the European Union to develop a series of measures to attract finance investments for new factories to be built, along with grid infrastructure. While it is still a long road ahead to meet the 2030 targets, Europe’s approach serves as a blueprint for other regions, like Asia, to expand their OSW capacity.
That said, this resource remains largely underutilised in Asia. With its extensive coastline, OSW offers a compelling opportunity for the region to augment the existing renewable energy mix. The strong and constant winds over open seas provide reliable energy output, which can complement the intermittency of solar power outputs.
OSW installations saw significant growth globally, reaching 11 GW in 2023 compared to 8.8 GW in 2022. By 2030, 122 GW of potential capacity from OSW is expected to come from APAC. To unlock OSW’s full potential in the region, what can the sector do to advance its development?
Strengthening the OSW Supply Chain
The localisation of supply chains presents both opportunities and challenges for Asia's OSW sector. According to the Institute for Energy Economics and Financial Analysis (IEEFA), 68% of OSW investments—equivalent to US$425 billion—will go towards local resources, manufacturing and services. This could significantly benefit regional shipbuilders and maritime economies, as they would sustain these fleets for decades.
However, localisation has its drawbacks. Many Asian markets have stringent requirements for sourcing parts and raw materials locally, which complicates international collaboration and affects cost-efficiency, while also increasing project complexity.
Lu Yi-Hua, Head of Asia-Pacific at Corio Generation, noted at the Winning with Offshore Wind Roundtable during AIF 2024, that Southeast Asia’s proximity to China offers a potential advantage in building a strong regional supply chain. OSW requires highly specialised infrastructure and niche skillsets from the workforce, and success will depend on finding the right balance between utilising local resources and maintaining international partnerships to ensure a reliable supply of critical components.
For example, constructing wind turbines depends on the type of vessels, which may be limited in availability in certain markets. Similarly, there can be shortages of locally produced components such as high-capacity cabling and advanced turbine parts, both crucial for large-scale projects. As more projects are developed, establishing a secure regional supply chain is critical to harness the strength of each market to reach Asia’s wind installation targets.
Singapore, with its robust resources and capabilities, is positioned to support the region's growing OSW industry. The recent Memorandum of Understanding between Enterprise Singapore, the Association of Singapore Marine & Offshore Energy Industries (ASMI) and the Global Wind Energy Council (GWEC) demonstrates the region's potential to build a comprehensive supply chain network in the region.
Favourable Policy and Regulatory Support Needed for OSW
While supply chain development is crucial, an equally important factor is the regulatory environment supporting these initiatives. Keng Lin Lee, Group CEO, Cyan Renewables, shared that understanding the market is easy but finding the balance in the industry and the needs of its supporting partners present greater challenges.
Regulators and the private sector are facing significant challenges in developing the OSW industry, given the high upfront capital needed especially for emerging economies. This necessitates strong, well-defined policies that offer clarity and security for investors and developers.
Several markets are making progress in this direction. Vietnam issued its Power Development Plan 8 (PDP8), which included a roadmap for the development of OSW projects. Meanwhile, the Philippines also issued a policy and administrative framework to define and clarify guidelines for permitting agencies to submit a complete list of necessary permits and clearances. The framework enables efficient and optimal development of the country’s OSW resources.
However, many emerging markets in the region still lack the comprehensive regulatory support needed to attract the scale of investment necessary for OSW to thrive. Investors and developers need assurance that policy changes or political uncertainties would not jeopardise their projects' long-term viability. Governments must also establish clear guidelines for environmental and social impact assessments, which are often significant barriers to OSW development due to the lengthy approval processes involved. By providing clarity on these matters, countries can attract more investors and facilitate smoother project execution.
Strong Regional Cooperation can Support the Growth of the OSW Industry
Soh Leng Wan, Assistant Managing Director, Enterprise Singapore, emphasised that while OSW offers promising renewable energy opportunities for the region, financing such projects requires sustained commitment and long-term investment before benefits can be fully realised. Besides individual country efforts, regional collaboration is needed in many large-scale infrastructure projects to address the challenges faced.
At AIF 2024, industry leaders also reached a consensus that while a one-size-fits-all approach does not exist, regional collaboration will be a key driver for advancing OSW in Asia. Collaboration is pragmatic and makes “perfect sense”, where different countries in the region can play into each other’s strengths.
For example, a collaborative framework could combine South Korea's shipbuilding expertise, Japan's capabilities in crude steel production for wind turbines and Taiwan’s proficiency in cables and electronic systems. This way, regional collaboration creates a strong foundation to power up the OSW industry. This can also be applicable to emerging markets like the Philippines and Vietnam in Southeast Asia. Vietnam and Singapore recently announced a collaboration on an OSW power project that will export electricity from Vietnam to Singapore, starting in 2030. Both countries will work together to conduct wind, marine, geological and technical surveys for the project.
Apart from its geographical location, the Philippines also has vast resources like shipbuilding, skilled labour and critical minerals – essential components to drive the sector forward. Mark Hutchinson, Director, Southeast Asia Task Force at the GWEC, commended the Philippine government’s moves to create a supportive environment for the sector, serving as a benchmark for the region. Starting in 2022 with the first Green Energy Auction Programme, the government has moved aggressively to remove bottlenecks, streamline permitting and is promising to hold the first auction for OSW by the third quarter of 2025. He further shared that the government has worked very collaboratively with industry to find and solve the pain points, building industry confidence and allowing investment to flow.
The potential impact of OSW in the region is substantial. GWEC estimates that the global OSW industry will add another 380GW of capacity across 32 markets by 2032, with nearly half of that growth predicted to come from APAC.
Infrastructure Asia is actively working to strengthen these collaborative efforts, facilitating connections between the public and private sector to bring more OSW projects to fruition. Through close partnerships between industry players from demand-side project owners to supply-side solution providers, we hope to support Asia in developing more bankable projects while enhancing knowledge sharing across the region.
For more detailed insights from the OSW roundtable and other AIF 2024 discussions, download our post-event report here.
