SEOUL - On a small beach on South Korea's popular honeymooning island of Jeju a large blade spins against a cloudy sky, a noisy oddity for locals but a source of hope for emerging wind power gear makers eyeing a niche market.

From engineering firms to leading shipyards, new entrants are jumping on the wind power bandwagon, riding a global push for alternative, clean energy and seeking to counter a slowdown in their traditional businesses battered by recession.

As the newcomers try to muscle in on an increasingly crowded market to compete against established leaders such as Vestas Wind Systems, GE Energy and Gamesa, offshore wind power is one area still offering growth potential.

In deeper coastal waters, firms with shipbuilding expertise can edge ahead of the pack, designing and making floating wind power units to harness stronger tides and harsher conditions.

This industry is tough for latecomers because you can't convince clients to buy your equipment without time-consuming verification, said Yang Jeong-dong, an analyst who covers the industry for Korea Investment & Securities.

Offshore projects cost more and are technologically more difficult. But it's a bet worth making, Yang said. The growth is slowing onshore, and not many deals are left up for grabs.

Top names such as Vestas, Siemens and REpower are already in the offshore business but some are less aggressive in the sector, giving space for rivals.

South Korean power equipment maker Doosan Heavy Industries & Construction is one. In October, it began testing Asia's first 3 megawatt (MW) offshore wind power unit on Jeju.

Locals are coming to terms with the eerie noise made by the 80-meter high wind tower -- as tall as a 30-storey building.

I feel nervous when I'm near it, said Koh Young-shim, a tour guide on Jeju.

Choe Seung-joo, Doosan Heavy's senior vice president for R&D, says his company will focus on large offshore generators to enter overseas markets by 2012.

The wind power market is growing fast and can afford more players for some time, said Choe. The technology is largely accessible. What matters is experience.

Top shipyards are also interested in wind power equipment as a new revenue source to balance a lingering downturn in shipmaking.

Hyundai Heavy Industries, the world's biggest shipbuilder, has also recently started making wind power gear at its South Korean plant.

Second-ranked shipbuilder Daewoo Shipbuilding & Marine Engineering this year bought Dewind, a wind power turbine unit of U.S. group Composite Technology Corp, eyeing the offshore market.

It builds special ships for offshore turbine installation and is also considering building a wind power turbine plant in China.

The South Korean firms could run into competition from more experienced Chinese companies, such as China High Speed Transmission and Goldwind Science & Technology, which derive most of their sales from wind equipment for onshore power stations, but see potential in offshore wind.

In Japan, the government and industry remain more focused on solar energy.

MARINE POWER

Hit by a drought in new ship orders, Hyundai and Daewoo shares trade at just 5.4 and 4.2 times forecast 2010 earnings, respectively. The multiples for wind power firms are much higher, at 21 for Gamesa, 20 for REpower and 30 for Goldwind.

Shipbuilders have strength in offshore plants and can become quite successful in marine wind power, said Lee Bong-jin, an analyst at KTB Securities.

However, it could take years for these offshore ambitions to bear fruit. Offshore wind power currently makes up a fraction of the over $50 billion global wind power market.

While offshore wind farms can benefit from strong sea winds, they cost more to build than an onshore facility. Projects in Europe are estimated to cost $3-$4 million per megawatt installed.

Transmitting power to end-users also remains a key problem.

The offshore model still has to prove itself, said KTB's Lee, adding full-fledged growth would take a couple more years.

Despite the challenges, the long-term outlook appears bright.

There are large potential markets, off Europe, the United States and China. The European Union has more than 100 gigawatts of offshore projects at some stage of planning, and there are plans to use the U.S. East Coast to supply wind power to major coastal cities.

Britain expects nearly a third of its generation capacity by 2020 could come from offshore wind.

According to Emerging Energy Research, global offshore wind power capacity is forecast to reach 13,719 MW by 2015, up from just 2,070 MW this year.

By 2030, the total installed offshore wind power capacity could equal that of onshore systems, Doosan predicts, with high energy prices likely to support government wind power initiatives and private sector expansion.

(Additional reporting by Leonora Walet; Editing by Jonathan Thatcher and Ian Geoghegan)

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