Southeast Power, Establishing LCR Standards… Assignment of 10 evaluation points
15 major parts designated… 1~22% individual ratio applied
[일렉트릭파워 박윤석 기자] A bidding method will be introduced that reflects the localization ratio of major parts used in offshore wind turbines in the evaluation score. The calculation method of domestic and foreign manufacturers is expected to be complicated as the results of selection of preferred negotiators may vary depending on the localization of parts.
According to the wind power industry, Korea South-East Power has recently temporarily confirmed detailed standards and scope, etc. in relation to the wind turbine Local Contents Requirement (LCR) standard, which it serviced last year, and is preparing to introduce the field in earnest.
First of all, it is planning to apply the LCR contents prepared by this time to the current bid for the Sinanwui Offshore Wind Power Wind Turbine. It has already finished sending RFPs (Request for Proposal) to domestic and overseas equipment companies, and plans to receive a bid proposal by the end of April. As it is the first bidding method attempted in Korea, it seems that companies participating in the bidding will be cautious in writing proposals.
Southeast Power is planning to lay the foundation for fostering the domestic offshore wind power industry and strengthening the health of the ecosystem through the enactment of the LCR. By encouraging domestic and foreign wind turbine manufacturers to use domestic parts, it will revitalize the domestic market and establish a bridgehead to advance into the overseas market.
As Southeast Power reflects the LCR evaluation score in the bid for wind turbines, it is expected that the rest of the power generation companies will apply a similar bidding method in the future due to the nature of KEPCO, which is tied to the concept of a power group company.
In light of the domestic offshore wind power development environment where SPC investment by power generation companies is becoming a pre-determined fact, it is highly likely that LCR will be applied to most offshore wind power equipment bidding, and the movement of domestic and foreign manufacturers is also expected to be busy.
First pilot application of Sinanwui offshore wind power
LCR, called the localization regulation, regulates the use of a certain percentage of domestic parts when manufacturing wind turbines. It is used in a similar form in many countries that are promoting large-scale offshore wind power projects such as Taiwan, Turkey, and India in that it can protect their own industries and induce the attraction of domestic production bases.
The LCR criteria prepared by Southeast Power to be used for wind turbine bidding include contents such as ▲localization recognition range ▲evaluation score ▲parts item ▲localization rate ▲penalty.
The scope of recognition for the localization of parts that attracted attention was set to allow both parts produced by domestic companies at overseas factories and parts produced by foreign companies at domestic production facilities. It is interpreted as a plan to catch two rabbits: strengthening the competitiveness of domestic companies and localizing parts. CS Wind is a representative wind power tower manufacturer, but it does not have a production line in Korea yet.
Southeast Power Co., Ltd. allocated 10 points for the localization ratio, which is reflected in the wind turbine evaluation score when bidding. For example, if the ratio of localization of wind turbine parts is 70%, you will receive an evaluation score of 7 points. In the case of Sinanwui Offshore Wind Power, the evaluation score was reduced by half, considering that it is a pilot application.
Compared to the existing bidding method, which comprehensively evaluates the technical aspect and wind turbine price, the evaluation of the industry is that the evaluation score of the localization rate of 10 points is quite high.
In case of non-compliance, penalty for down payment
A total of 15 parts were selected for the parts to look at the localization ratio. The localization rate is applied differently for each part, from a maximum of 22% to a minimum of 1%. In the case of a gearless wind turbine without a gearbox, the rate of localization of the generator is set high.
The ratio of localization applied by parts is based on geared type ▲Blade (22%) ▲Tower (20%) ▲Gearbox (13%) ▲Power converter (5%) ▲Generator (4%) ▲Transformer (3%) ▲ Nacelle cover (3%) and so on.
An official from Southeast Power said, “The parts localization ratio was applied in consideration of the cost weight and the possibility of localization. Because of the possibility,” he explained.
“If the final selected company fails to comply with the localization of the contracted parts, a 50% deduction application rate will be applied to the localization ratio of non-compliant parts, and it will be deducted from the total supply contract amount.” We plan to hold a related public hearing in April to collect industry opinions.”
Domestic company Yuri?… I have to open the lid
The wind power industry expects that this LCR standard will not be entirely favorable to domestic equipment and equipment companies. Although it can show an advantage with a high superficial score, the actual evaluation score can be received lower than expected.
There is also an opinion that penalties applied in case of non-compliance with the localization rate may be more burdensome for domestic companies. As the domestic wind power parts market has not yet reached a stable track, there are concerns that it could disrupt the supply and demand of parts.
On the other hand, in the case of foreign equipment and equipment companies, the risk of deducting down payments is not significant as most of them use domestic parts only for wind power towers and some parts with low localization ratio standards. In addition, since the nacelle assembly process, which has a high localization ratio, is included in LCR, localization can be considered according to market conditions.
An official from the wind power industry said, “In order to compete for wind turbine prices with foreign equipment and equipment companies, which are mass-produced in terms of economies of scale, aggressive bids must be presented. It is expected that the gap in the evaluation score of equipment and materials will be offset to some extent, so the evaluation results in the future technology sector are expected to act as a major variable in the selection of preferred negotiators.”
“It is meaningful that the direction of the localization rate of wind turbines has become clearer with the presentation of this LCR standard.”
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