Episode 3 – Supply Chain Developments & UK’s Next Leasing Round – WindLogix Offshore Wind Podcast

Bahzad Ayoub   0:011
Welcome to episode 3 of Westwood Global Energy Group’s Wind Logix Offshore Wind Podcast. I’m your host, Bahzad Ayoub, offshore wind manager at Westwood. And as always, I’m joined by our two offshore wind senior analysts, Peter Lloyd Williams and Hui Min Foong. Hello to you both.

Peter Lloyd-Williams   0:28
Hi, everyone.

Hui Min Foong   0:29
Hello, everyone.

Bahzad Ayoub   0:32
Now, in this episode, we have got several exciting topics that we’ll be discussing. On the supply chain side of things, we’ll be covering the news regarding the UK government’s decision with Mingyang’s offshore wind turbines. We’ll be looking at Vesta’s potential factory in the UK, as well as a detailed look at an insight produced by Hui Min analysing the increasing role of Chinese foundation manufacturers winning work outside of mainland China. We’ll then be moving on to the topic of auctions, where we’ll be covering the latest updates on South Korea’s next offtake round, as well as France’s AO10 mega auction. Finally, we’ll round off in the UK to discuss the announcement about the country’s next leasing round. So let’s jump into the first topic. Now, Hui Min, why don’t you start by telling us about the news regarding Mingyang in the UK?

Hui Min Foong   1:23
Thanks, Baz. One of the headlines this month was regarding the UK government confirming that it will not support the use of Mingyang turbines in domestic UK offshore wind projects. They cited security concerns as the main reason behind the decision.

For context, Mingyang Smart Energy is a turbine manufacturer that is based in mainland China and is currently one of the largest turbine manufacturers in the world. In October last year, Mingyang announced plans to build a turbine factory in Scotland, which marked a landmark shift toward the European market. However, this latest decision from the UK government essentially blocks Mingyangs’s plans, although the company continues to state that its long-term ambitions in the UK market remain unchanged.

Now, the use of Chinese manufactured offshore wind turbines has long been a strongly contested issue in the UK. So, this latest development is essentially accumulation of a long-standing discussion to put down an official line saying that the UK government will not support the use of Minyang turbines. Meanwhile, the Scottish government has criticised the decision, citing impact to local jobs as well as the clean energy industry as a whole, and also highlighting the amount of time that it took for the UK government to reach its decision.

 

Overall, this sends a clear signal regarding the growing political sensitivity or resistance to the use of Chinese made turbines in the UK. And the impact of this is that project developers essentially will only have two choices when it comes to offshore wind turbine suppliers, either Vestas or Siemens Gamesa, which is fairly limited compared to the range of options available in, for example, mainland China.

Bahzad Ayoub   3:23
Thank you for that overview, Hui Min. Now Peter, what are your thoughts on this decision and the potential impacts it may have on future developments?

Peter Lloyd-Williams   3:31
Thanks, Bahzad. So there are two offshore projects in the UK that have been linked to Min Young at the moment. The first is the 32MW twin hub demonstrator, whose developer, Hexicon, had selected Mingyang as its preferred turbine supplier back in 2022 and actually received a contract for difference in the same year.
It’s worth noting that that’s a bit of an unusual project. It’s A floating wind twin turbine design, which used to be based off the southwest coast of England, and it was intended to connect to a former wave energy export point. So utilising some already existing infrastructure, not really conventional in any sense of the word.
The developer, Hexicon, had already recorded an 11 million euro impairment on the project back in January this year before deciding in April to cancel its CfD following the Mingyang news just a few weeks ago. It’s not clear what impact the Mingyang announcement may have had on that cancellation decision itself.

The other project is Flotation Energy’s 560MW Green Volt project off the East Coast of Scotland, which picked up a lease in the INTOG licencing round in 2023 and got a CfD the year after that in 2024. Green Vault had been linked to Mingyang in the media, but nothing official had been confirmed.

I think it’s notable that both of these are floating wind projects. We heard that developers of floating wind projects have faced difficulties when engaging with Western turbine OEMs, with the perception being that the sort of the volumes on offer in terms of the turbines, but mostly talking about small sites, don’t justify the effort from the OEMs to integrate their turbines into these novel foundation types, given the limited production bandwidth that they have at the moment. And presumably the Chinese OEMs interested in getting market share have been more open to this challenge.

Bahzad Ayoub   5:28
Thank you for that, Peter. Now, moving on from the news regarding Mingyang, there was also an announcement for investors that they may be establishing a nacelle and hub factory in Scotland. Now, Peter, why didn’t you give us a rundown of this news and what it may mean both for UK as well as European projects?

Peter Lloyd-Williams   5:47
Yeah, thanks, Baz. On the 25th of March, Vestas announced plans to establish a €250 nacelle and hub factory, supplying their V236 15MW flagship design. And this plan is subject to Vesta securing sufficient orders in AR7 and AR8 with production potentially starting up in 2029 slash 2030. Now, this news came out in the morning of the 25th, with the Mingyang news from the UK government coming out in the afternoon, which one imagines probably isn’t a coincidence. The facility that Vestas is proposing would be smaller than the proposed Mingyang factory, so we’re talking about a €250 million euro development versus a £1.5 billion development, and it’s also conditional on further orders from the UK materializing. Now, sort of one of the ongoing complaints from the UK Wind lobby has been that the offshore wind investment that the country has been undertaking over the past couple of years has yielded relatively little domestic value in terms of heavy industry capacity, with mostly service companies and tier two and three supply chains from the UK who have mostly got involved in domestic projects. So this would probably be a meaningful contribution on that front in terms of bringing greater heavy industrial capability in the offshore wind supply chain to the UK. And I also believe it would be the UK’s first nacelle production facility onshore or offshore.

Bahzad Ayoub   7:22
Thank you, Peter. So yeah, there’s been lots of, I guess, news and potential movements regarding turbine facilities within the UK. Sticking to the topic on the supply chain, Hui Min, you have written a great insight on Chinese foundation suppliers increasing their market share within projects outside of their home market.
So why don’t you tell us about some of the key findings from your insight?

Hui Min Foong   7:46
Yeah, thanks, Baz. So, we’ve talked about how Chinese-made turbines themselves are facing a lot of scrutiny in international markets. And often when discussing offshore wind, naturally there tends to be a lot of focus on the turbines themselves, which are really the most visible or iconic component of an offshore wind farm. However, the turbine foundations are another massive offshore structure that is critical to anchoring those turbines to the ocean floor.

 

What we have been seeing in the global offshore wind foundation supply chain is a significant shift toward mainland Chinese suppliers for both monopiles as well as jackets. To illustrate, in 2020, virtually none of the projects outside of mainland China itself installed foundations from Chinese manufacturers. But by 2025, Chinese manufacturers actually supplied 26% of offshore wind foundations installed globally. That’s more than a quarter of total installations worldwide and that does not include projects within mainland China itself, which, if included, actually brings the figure up to a majority share of 51%.

Some of the key reasons why mainland Chinese manufacturers have emerged as a major global supplier include large manufacturing capacity, cost advantages and improvements in quality over the years. As adoption of these turbine foundations grows, this has major impacts on supply chain availability and cost, both of which are critical challenges currently faced by the offshore wind industry.

This is an incredibly interesting trend and I could continue going. However, this insight is actually publicly available. So I will stop myself here and do look it up if you’re interested to learn more.

Bahzad Ayoub   9:43
Thank you for that summary, Hui Min. And yes, do please have a look for that insight. You can do so on our website, which is westwoodglobalenergy.com, or have a look around LinkedIn as well. You’ll find it there too.

 

Now, going from supply chain, we’ll be moving on to the topic of auctions. Now, in the last episode, we discussed South Korea, and since then, the bidding rules have been released for their next offtake auction. So, Hui Min, please can you provide a rundown of these rules and what’s expected from the next auction?

Hui Min Foong   10:17
Yeah, this is a big topic, and I’ll try and give an overview of what is happening. South Korea has recently launched its 1.8GW offshore wind auction for the first half of 2026. In fact, around the same time, Taiwan also launched its round 3.3 auction. But we did discuss Taiwan’s auction and it changes to its scoring framework in the previous episode, so we will focus on South Korea today. Interestingly, in this round of auctions, South Korea has reintroduced floating wind as a bidding category, which was not included in the previous auction last year.

The total 1.8GW allocation is split between 1.4GW of fixed bottom capacity and 400MW of floating wind capacity. Within that fixed bottom category, this is further divided into approximately 1GW for general private led bidding, with the remaining 400MW allocated for public bidding. This is similar to what we saw in the previous auction last year, where South Korea first introduced the public led category, and eventually only projects in that public led category secured awards. This time around, we see that the split between the public and private led pots is more skewed toward the private led side, with more capacity allocated towards these private led projects, likely in an attempt to make up for that shortfall we saw last year.

 

With regard to floating wind, it is encouraging to see that the bidding category has been reintroduced, and at a target capacity of 400MW, this scale would likely accommodate one single floating wind project.

Floating wind in South Korea has been facing some challenges, although of course this is not specific to just South Korea, but to floating wind in general as a nascent global industry. For example, Bada Energy reportedly withdrew from its Grey Whale floating project. And meanwhile, the Firefly project led by Equinor has been barred from entering auctions for two years. Although notably, this penalty is less severe than the original proposal of a ban of up to five years.

In spite of setbacks to those specific projects, other floating wind projects are pressing a hit, such as the Haewoori, MunmuBaram and KF Wind projects, which have secured EIAs or transmission agreements and are eligible to participate in this year’s auction. In terms of pricing, bid ceiling prices have decreased slightly from last year’s rate to about 11 or 12 US cents per kilowatt hour, with a slightly higher price for floating wind. While this is a push from the government to lower power generation costs, it does place additional pressure on developers, especially as they look to include more domestic suppliers in their supply chain to demonstrate stronger local industrial or economic impact, which is one of the key evaluation factors in this auction.

Bahzad Ayoub   13:29
Thank you, Hui Min. Now Peter, what are your thoughts on these auction rules?

Peter Lloyd-Williams   13:35
Yeah, so I think it comes back to the old question of how do you get your best fit between your auction rules, your broader policy goals, your desired outcomes for the round, and the broader market environment you’re operating in. It’s a tricky question, and the more you tweak the rules, the less familiarity developers have with the system they’re participating in, which really brings its own challenges, and there are actually plans to reform the wider RPS system in South Korea going through the National Assembly at the moment. So this could potentially be the last year that developers have the opportunity to secure support for their projects under the system they’ll have had visibility of while they were developing them.

Bahzad Ayoub   14:18
Thank you Peter. Now we’ve round off South Korea and we’ll be moving on to France, who have announced that it’ll be merging its upcoming AO9 and AO10 offshore wind lease rounds into a single procedure. So Peter, what’s included in this tender?

Peter Lloyd-Williams   14:36
Thanks, Baz. So these are the French government’s plans for the next offshore wind leasing round, and they reflect the new French multi-annual Energy Program, the PPE, as it’s called, which was finalised back in February of this year. And the PPE is essentially the country’s 10-year energy plan which gets updated periodically and sets the policy direction. We’re currently on PPE 3 as it happens. And as you mentioned, the government’s implementation of PPE 3 essentially involves collapsing AO9, which is the currently ongoing leasing round into AO10, which is the next planned leasing round and amending some of the zones that will be offered. But the end result is going to be some 10.1GW to be tended in AO10, which will be the combined round. And that’ll be roughly 50% fixed, roughly 50% floating, with awards for the first sites, which will presumably be the ones that had already made some progress under the AO9 banner, coming later this year or early next year, according
into the French government.

Bahzad Ayoub   15:45
And in terms of this mega auction, is there any particular thing within the rules that have stood out to you.

Peter Lloyd-Williams   15:55
Yes, although we’re mostly working from comments by ministers at the moment rather than the official tender documents themselves, since they haven’t been released. It does seem like there are going to be rules in the tender to prioritise European sourced components. Offshore wind developers will reportedly be limited to sourcing 4 from 9 strategies components from China and with the share of permanent magnets from China also limited to 50% according to reports.

Bahzad Ayoub   16:26
Thank you, Peter. So, it’ll be interesting to see how that tender goes. And this takes us to our final topic, which is that The Crown Estate in the UK has announced that it intends to open its round six offshoring leasing process within the first half of 2027, offering around 6GW of capacity. Do you have any views on this, Peter?

Peter Lloyd-Williams   16:49
Yes, Baz. So this is the plan by The Crown Estate in England and Wales to set up the next offshore wind leasing round following the Celtic Sea leasing round, which concluded last year. Details are still to be finalised. Everything’s going through the consultation process, but the areas being scoped are some off the northeast coast of England. And these will be the first areas leased off the east coast of England since round four back in 2021. Most of the sites are expected to be suitable for fixed bottom foundations and as you said, probably about 6GW is going to be on offer when all is said and done. But we’ll have to wait for the consultations to conclude to see the exact details. But for those looking for fresh acreage in the UK, this is likely where it’s going to be next.

Bahzad Ayoub   17:40
Thank you, Peter. So yes, we’ll be keeping an eye on all of those auctions and the activity surrounding them, as well as supply chain movements within our product WindLogix. And I’d also like to encourage our audience to please have a look at Hui Min’s insight and if you’d like to reach out to us if you have any comments around that as well.

 

Once again, thank you all for listening, and please do make sure you join us for the next episode. Thank you, bye.

 

 

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