Episode 6 – UK CfD AR8, South Korea’s Auction Success & Germany’s Challenges – WindLogix Offshore Wind Podcast

Bahzad Ayoub   0:09
Welcome to episode six of Westwood Global Energy Group’s WindLogix Offshore Wind Podcast. I’m Bahzad Ayoub, offshore Wind Manager at Westwood, and I’ll be your host for today’s discussion. Joining me once again are two of Westwood senior offshore wind analysts, Peter Lloyd Williams and Hui Min Foong.
Thanks for being here.

Peter Lloyd-Williams   0:28
Hi, everyone.

Hui Min Foong   0:30
Hello, everyone.

Bahzad Ayoub   0:32
Now, as always, we have a packed agenda covering some of the most important developments across the offshore wind sector. Today, we’ll be discussing the UK’s upcoming Contracts for Difference Allocation Round Eight, the results of South Korea’s latest offshore wind auction, growing debate in Germany around the return of previously awarded offshore wind sites, and a roundup of recent news from across the Asia Pacific region. But before we dive into these topics, Peter recently attended and chaired the 6th annual Floating Wind Europe Conference in London. So Peter, it’d be great to hear your take on the event. What’s the overall mood among attendees and what are the key themes emerging around floating wind?

Peter Lloyd-Williams   1:15
Thanks, Baz. It’s always great to be able to get out to industry events and speak to people in person. There was quite a presence from technology providers and financiers at this particular event. A lot of the focus was on emphasising the need for coordination within the sector and support for the industry from outside it. Something that I noticed came up quite a few times was the presence of a sort of lacunae in the industrial delivery system, as these types are perceived by market players. Things like the absence of an alternative to export credit agency support when selling to domestic projects, or the lack of test sites for designers looking to advance their technologies TLR 7 or 8 by subjecting it to 7 or 8,000 load hours. That was also one of the things mentioned. And that’s the so-called valley of death for technology providers, as I heard it described. So, there’s support and resource to get your concept off the ground, but there are far fewer opportunities to demonstrate the real-world load hours that developers want to see before committing to use a technology at their project.

Bahzad Ayoub   2:21
Thank you, Peter. Great to hear those insights. Now, let’s move on to our first topic, which is the UK’s Contracts for Difference Allocation Round Eight. Now, the UK government has recently announced a number of changes to the round and confirmed the strike price parameters. Peter, can you walk us through the latest developments and share your perspectives on what they could mean for the market?

Peter Lloyd-Williams   2:21
Thanks, Baz. Yes, earlier this month, the UK government confirmed round parameters for the 8th contract for difference allocation round. The big headline, I think, is that the ASPs, the administrative strike prices, which represent the ceiling price for bidders, the highest price they can offer to provide power at, this was remaining the same for fixed and floating winds. So that’s £113 per MWh in 2024 prices for fixed bottom Wind, £271 per MWh for floating Wind, again in 2024 prices. We won’t know the final budget allocations until the round concludes sometime in Q4 of this year or Q1 of next year. And I think another noteworthy change is the introduction of this new other deep water category in the set of pots. This provides a niche for the non-floating deep water foundation technologies that we’ve seen emerging, things like moored monopiles, which have a fixed bottom component and a mooring component. And these novel technologies have sort of a similar cost profile to floating wind, but they don’t float, so to speak, in the traditional sense. They didn’t fit into any of the existing categories.

Bahzad Ayoub   4:03
Thank you, Peter. Yes, I think it will be another interesting round which we will be definitely keeping an eye on, especially with the addition of this new non-floating deep water pot. We’ll see what happens with those projects as well as the floating and fixed bottom projects as well.

 

Now moving away from the UK, let’s turn our attention to South Korea, where the latest competitive auction for fixed price contracts has recently concluded. Hui Min, please could you take us through the auction results and share your thoughts with what they tell us about the current state of the South Korean offshore wind market.

Hui Min Foong   4:37
Yeah, South Korea has awarded specifically 1.786GW of capacity in its latest first half 2026 auction round, which is essentially equal to the 1.8GW target that was originally set. This is a much stronger result than seen in the previous auction in September 2025, which saw just below 700MW awarded in a 1.25GW auction, despite being oversubscribed.

This latest auction was similarly oversubscribed and to an even larger extent, receiving 9 bids with a combined capacity of 3.6GW or double what was on offer at that auction. This shows the sustained interest from the developer perspective in one of Asia’s top offshore wind markets.

The types of projects awarded are worth paying attention to as well. South Korea has a unique auction model, and this auction included a fixed bottom component split by public versus private led projects and also a floating wind component. Compared to last year’s auction, where only public led projects secured awards, this year saw nearly 1.1GW of private-led fixed bottom projects awarded, compared to 160MW in the public category. So this represents somewhat a cost correction from last year, helping to make up for the shortfall in private projects and bringing the capacity allocation much more closely in line with government targets.

One of the key differences this year was the focus put into localising the supply chain and all projects awarded are planning to use locally manufactured or locally assembled turbines.

Overall, this auction has been a success for South Korea. And once again, the focus now turns to project delivery. The auction results also came alongside the newly released long-term auction roadmap, which targets 55GW of auction capacity over the next 10 years. And these two developments firmly position South Korea.
as a market to continue keeping close watch off. And that’s not just within APAC, but globally as well.

Bahzad Ayoub   6:56
Thank you for that great overview. And in terms of the winning bidders, do you have any additional observations?

Hui Min Foong   7:03
Yes, in terms of notable developers, Copenhagen Infrastructure Partners, or CIP, secured the largest award with the Haesong 3 Fixed Bottom Project, as well as the Haewoori 2 Floating Project, both selected. These two projects account for over 1GW of the 1.8GW awarded in total. And while this could potentially pose some concentration risk, maybe reminiscent of the recent AR7 award in the UK where RWE secured majority of the auction capacity, CIP has been a major developer with a proven track record here in Asia, and this includes past development
experience specifically in South Korea as well.

Bahzad Ayoub   7:49
Thank you for those insights, Hui Min. Next, we will shift our focus to Germany. And in recent months, there’s been numerous reports of developers seeking to potentially return offshore wind sites that were awarded in auctions that they won several years ago. Peter, can you explain what’s driving the situation and what the potential implications could be for Germany’s offshore wind sector.

Peter Lloyd-Williams   8:15
Thanks, Baz. So this concerns the so-called not pre-investigated sites, which were awarded on a lease fee basis in 2023 and 2024. That’s where you had 10% of the lease fee paid up front, with a further 5% to be paid annually from FID, so a heavily stepped payment structure rather than a one-off payment or a recurring payment.
The payment schedule took the edge of the lease fees a little bit, but even so, these were fairly expensive leases. If you’re looking at 2 to 3 billion EUR per site, Four sites with capacities of around 1 to 2GW, seven sites were leased in this manner with all but one being picked up by Total Energy or BP, which is now, of course, under Jera Nex bp. Both of these developers are now being fairly open about the fact that they want to return these sites, which together total 9.5GW. Uncertainty about when the TSO can provide grid connection is one of the reasons being mentioned, alongside the general economic challenges of developing such projects.

Part of the challenge in particular here is that there’s currently no mechanism for the developers to return the sites, which leaves them in a sort of limbo where the developers only meeting its minimum contractual commitments, but the capacity which is needed for the country to meet its offshore wind capacity target isn’t being developed really at any speed. So far the German government seems to have been resistant to allowing the projects to be returned, but we’ll have to see what happens.

Bahzad Ayoub   9:55
Thank you, Peter. Yeah, that’s definitely one to watch. In particular, as we’ve already aware, the German government were look into redesign their auction, which they postponed for this year to next year. So we’ll see if these developments have any effects on that or if they’ll do it in conjunction with that. But yeah, it’ll be quite interesting to see what happens with Germany’s offshore wind sector over the next year to 18 months.

Now, to round off today’s episode, we’ll head back to the Asia Pacific region, where a number of notable developments have emerged in recent weeks, and Hui Min has been tracking them very closely. So Hui Min, are we seeing any examples of strong policy momentum in the region at the moment?

Hui Min Foong   10:39
South Korea is probably the best example to highlight right now. I briefly mentioned South Korea’s 10-year auction roadmap earlier, and this is significant as it’s the first time South Korea is implementing such a roadmap. And it follows other efforts that the South Korean government has been carrying out in recent years to refine its offshore wind sector, such as the implementation of the Special Act, to transition the industry to a government-led site planning.

We also see this in the design of the long-term roadmap, which features a dual-track system. Firstly, with the fixed price competitive bidding we’ve been seeing in recent auction rounds, alongside a second newly introduced category for planned development sites.

Each year’s auction focus gradually shifts towards that second planned site system.
With an auction capacity target of 55GW in the next decade, which translates to 4GW or more of auction capacity each year, this has the potential to firmly establish South Korea as a leading offshore wind market globally. South Korea, for background, is also currently reliant on energy imports and domestic offshore wind
is viewed as a pillar to support energy security in the longer term. And this is one of the driving motivations behind the government’s efforts to accelerate the sector.
Having a long-term roadmap in place is a positive start and helps to send a strong signal to investors. But having said this, holding successful auctions is the first milestone and project delivery would be the next key focus.

Bahzad Ayoub   12:20
Thank you for that overview. Yeah, it’s definitely a positive step, as you mentioned, and quite positive news coming out of South Korea with the auctions and this roadmap. So we’ll see how they continue to progress the sector. And in terms of the region, what other key stories should our listeners be aware of?

Hui Min Foong   12:39
Yeah, so apart from South Korea, if we look at Taiwan, where round 3.3 was launched in March this year, Taiwan has revised its auction rules to include stalled project sites from previous auction rounds. These are your Haixia 1 and 2 and Haiding 2 projects, which total 1.2GW.

This follows similar practises in other offshore wind markets where unallocated sites have been rolled over into subsequent tenders. However, in this case, the amendment decision has come less than three months before the bidding deadline.

Furthermore, the nuance here is that these sites are included as so-called expansion sites. Taiwan’s Round 3.3 auction allows developers to expand awarded capacity by up to 50%, meaning that under this design, developers need to secure other project sites as their primary sites in order to then potentially use these additional sites as part of their 50% expansion.

Meanwhile, in Japan, the country is proposing to set a 30 Japanese yen per kWh power generation cost guideline for future offshore wind auctions, which falls below what some industry players have been calling for and suggest that project economics will remain tight.

Projects from rounds two and three are allowed to bid into the long-term decarbonization power source auction, or LTDA, which will provide capacity payments. And this is a significant support measure. However, participation is currently capped at 500MW, which will not be able to cover all the projects. And therefore, we will continue to closely monitor the progress of each individual project
Japan to understand where they stand on the path to a FID.

And finally, in the Philippines, hopes of the country emerging as a potential new market have been somewhat dampened as the Green Energy Auction 5, which was slated to be the country’s first offshore wind auction, has now been officially suspended. This sends the Philippines back to the drawing board in terms of auction design and it extends the timeline for any potential first projects.

Bahzad Ayoub   14:59
Thank you for all those great updates, Hui Min. And also Peter, thank you as well. As always, you both provided some excellent insights into the latest developments shaping the offshore wind industry.

 

And with that, that brings us to the end of episode 6 of the Wind Logix Offshore Wind Podcast. Thank you all for listening. If you’d like to discuss any of the topics of the day, learn more about our research and publications, or hear how Westwood can support your business, please don’t hesitate to get in touch with the team.

 

But until next time, thank you for listening, and we hope you’ll join us for the next episode.

 

 

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