East Asia’s wind power ambition faces execution issues

The region needs $200b by 2030 for its wind energy goals.

Power producers in East Asia were warned about execution risks and funding problems as they push to develop the region's wind power capacity.

According to S&P Global Ratings’ new report, 70% of the sector’s capital expenditure is funded by debt. The agency expects bond issuance as more projects become operational.

"Offshore wind is becoming an important part of energy supply and will involve substantial debt raising. However, the projects face significant execution challenges," said S&P Global Ratings credit analyst Daye Park. "The key credit factors for offshore wind projects vary significantly by geography, and investors will have to parse through these regional variations."

Mainland China, Taiwan, South Korea, Japan and Vietnam collectively target 172 gigawatts (GW) of offshore wind power by 2030, up from the current installed capacity of around 44 GW. Mainland China accounts for about three-quarters of this target.

S&P Global Ratings said the estimated funding needs in the region could exceed $200b by 2030.

“We expect debt to continue to dominate offshore wind financing. Developers typically funding capex at a debt-to-equity mix of 70:30. The success and profitability of the initial projects could also have a bearing on funding and investments in this sector,” the agency said.