Taiwanese tariffs “jeopardise offshore wind supply chain, harm transition to renewables”

 

Ørsted offshore wind farm

Offshore wind firm Ørsted and Taiwanese utility Taipower have missed the deadline to sign a power purchase agreement (PPA) for 900MW of offshore wind, after Taiwan’s Bureau of Energy declined to issue establishment permits for the projects.

In April 2018, Taiwan’s Ministry of Economic Affairs awarded Ørsted the right to install 900MW offshore wind from its Changhua 1 and 2a projects in 2021. However, in November 2018, the Taiwanese government proposed a 2019 feed-in tariff of TWD5,106 (approx. EUR145) per MWh and suggested a production cap of 3,600 annual full-load hours, neither of which were satisfactory to Ørsted.

In accordance with Taiwan Civil Code, the deadline for signing the 2018 PPA was extended to 2 January 2019, but without an establishment permit the PPA could not be signed.

Martin Neubert, CEO, Ørsted Offshore

Martin Neubert, CEO, Ørsted Offshore said the firm was disappoiunted with the process and the delay of the establishment permit and PPA. “We will now pause and revisit all our project activities, the timeline of the projects, and our supply chain commitments and contracts as we had assumed signing of the PPA in 2018. We’re very concerned about the suggested feed-in-tariff level for 2019 as well as the newly proposed cap on annual full-load hours. We will need to see significant changes to these proposals before we can progress any further towards a final investment decision on the projects.”

“The feed-in-tariff needs to reflect the extraordinarily high costs faced by Greater Changhua 1 and 2a, mainly related to creating a local supply chain at scale, reinforcing the onshore grid infrastructure and building, operating and maintaining offshore wind farms in challenging waters where typhoons and earthquakes occur,” said Neubert.

“The proposed retrospective changes would jeopardise the creation of a local offshore wind supply chain, harm the planned transition to renewable energy and cause significant uncertainty among international investors looking to Taiwan. Only with a stable and predictable policy framework, Taiwan has the potential for developing large-scale clean power production while creating thousands of local jobs and becoming a hub for offshore wind in Asia-Pacific,” he said.

Ørsted’s Greater Changhua projects comprise a total potential offshore wind capacity of 2.4GW. Approx 1.8GW have now been earmarked for buildout in 2021 and 2025, and the remaining approx 0.6GW can participate in future auction rounds. Ørsted is also the co-owner of Taiwan’s first commercial-scale offshore wind project, Formosa 1, which will be extended from its current 8MW capacity to 128MW in 2019.

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