Published on January 8th, 2019 | by Joshua S Hill0
Ørsted’s Offshore Wind Plans In Taiwan Delayed By Government
January 8th, 2019 by Joshua S Hill
Danish wind energy giant Ørsted revealed last week that Taiwan’s Bureau of Energy had not issued an establishment permit in time for the 900 megawatt (MW) Changhua 1 and 2a projects, which had been awarded to the company by Taiwan’s Ministry of Economic Affairs in April of 2018, meaning that Ørsted was unable to sign a 2018 Power Purchase Agreement (PPA) with Taiwanese utility Taipower.
Ørsted was awarded the right to connect 900 MW of offshore wind capacity to Taiwan’s power grid by the country’s Ministry of Economic Affairs in April of 2018. The electricity would be generated by two offshore wind projects — the 605 MW Changhua 1 offshore wind farm and the 295 MW Changhua 2 offshore wind farm.
This was followed several months later by a further 920 MW awarded to Ørsted for projects in the Changhua region — 337.1 MW for one project, and 582.9 MW for the second.
Ørsted obtained site exclusivity for the Changhua developmental zone, located between 35 and 60 kilometers from the shore of Changhua County, and worked steadily through 2017 and 2018 to obtain the rights to begin moving forward with late-stage development and construction.
However, and unfortunately, Ørsted revealed on January 3 that, by close of business, Taiwan’s Bureau of Energy had not issued an establishment permit for the company’s Changhua 1 and 2a projects which means that it is no longer possible for Ørsted and the Taiwanese utility Taipower to sign a 2018 PPA for Changhua 1 and 2a. Taiwan’s Civil Code had extended the deadline for signing 2018 PPAs to 2 January 2019, and the Taiwanese Government has not yet decided upon the 2019 Feed-in Tariff (FiT) — though, in November 2018, it did propose a 2019 FiT of TWD5,106 (approx. €145/$165) per MWh and suggested a production cap of 3,600 annual full-load hours.
Unsurprisingly, therefore, Ørsted will now be reevaluating its Greater Changhua projects.
“We’re disappointed with the process and the delay of the establishment permit and PPA,” said Martin Neubert, CEO, Ørsted Offshore. “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.”
Specifically, Ørsted is looking for a FiT which reflects “the extraordinarily high costs faced by Greater Changhua 1 and 2a” which are due primarily to creating a local supply chain at scale, reinforcing the onshore grid infrastructure, as well as building, operating, and maintaining offshore wind farms in challenging waters. Specifically, as I reported in October, Taiwan’s nascent offshore wind industry will need to withstand typhoon conditions and the potential for regular earthquakes.
“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,” Martin Neubert added. “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.”