#1 cleantech news, reviews, & analysis site in the world. Subscribe today. The future is now.


Clean Power no image

Published on January 25th, 2019 | by Joshua S Hill

0

Taiwanese Offshore Wind Industry Threatened By Government Inaction & Meddling

January 25th, 2019 by  


In a blow to the immediate future of offshore wind in Taiwan, Danish power company Ørsted has suspended development of its local projects following delays imposed by the Taiwanese Government’s failure to issue a Power Purchase Agreement (PPA) under 2018’s Feed-in Tariff (FiT) rate, highlighting concerns raised by the Global Wind Energy Council.

Formosa 1 Phase 1, Taiwan’s first offshore wind farm

The news appears to have first been reported by The Taipei Times based on information provided by local suppliers. Ørsted confirmed the suspension of projects when approached, but did not make any official announcement of its own. According to a press representative who spoke to me via email, the news was simply “a logical consequence” of the company’s official announcement earlier in the year which revealed its decision to “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.”

While this news should come as no real big surprise following Ørsted’s official announcement at the start of the year, it is nevertheless confirmation of an unnecessary delay.

Ørsted announced on the third day of the year that Taiwan’s Bureau of Energy had failed to issue an establishment permit for the 900 megawatts (MW) from its Changhua 1 and 2a projects which were awarded to the company in April 2018. Failure to issue the necessary permit therefore meant it was impossible for Ørsted and the Taiwanese utility Taipower to sign a 2018 Power Purchase Agreement for the two projects.

This not only means that Ørsted was unable to sign under the 2018 FiT rate, but the 2019 FiT rate has not yet been decided upon — although 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, a change which the Global Wind Energy Council has warned will significantly stymie growth.

Specifically, the Global Wind Energy Council (GWEC) published new data on January 17 — with examples from the French and German offshore markets — showing that the changes currently proposed by the Taiwanese Government could significantly hamper development. The various changes include what GWEC describe as “a much steeper than expected reduction of 12.7% in tariffs which will sharply reduce project revenues” and “two unexpected structural changes” including a limit of 3,600 annual full load hours which GWEC described as “a perverse disincentive for the efficient growth of Taiwan’s industry, as developers will not be rewarded for using the most efficient turbine models.”

“Taken together,” GWEC explained, “the proposed changes could reduce project revenues by approximately 20% and so make the projects non-investable, thwarting growth in the sector.”

“Taiwan has done an extraordinary job of establishing one of the world’s most exciting new offshore wind markets in a very short period of time,” said Ben Backwell, CEO of GWEC. “The competitive prices achieved in European tenders in recent years, where it is now lower than gas and nuclear, have sparked global interest in the industry, and Taiwan is well placed to benefit from that. We are on the cusp of something very exciting happening in Taiwan – bringing an influx of foreign investment, local job creation and the creation of clean competitive power generation capacity. However, Taiwan must stick to its plans and allow the industry to establish itself, or there is real risk of developers and investors exiting the market.”

Ørsted’s decision to first “pause and revisit all our project activities” and second to actively suspend development serves only to cement the concerns raised by the Global Wind Energy Council.

“The government wants offshore wind to play a key role in its energy transition but not at any price,” explained Tom Harries, senior wind analyst at Bloomberg New Energy Finance. “Its proposed drop in the FiT is just it showing it’s hand in what has turned out to be an hostile negotiation with developers. It will likely end with developers and the government reaching an agreement and I wouldn’t be surprised if it was around halfway between the proposal and the price in 2018. The long-term impact will be possible delays to projects and investors pricing in heightened regulatory/political risk in the market.”

“I will add, what is to me, the most interesting aspect of this,” Harries added. “A lower FiT in 2019 is the secondary impact of all of this. A failure to permit these wind farms by close of 2018 is a concern — the gov has always held the right to change the FiT each year. And it is a lesson to other budding markets: There is a concern that some new markets try ramping-up too quickly to the point they struggle to deal with all the administration of issuing sites and permitting wind farms in time to meet developer expectations. The European market took time to reach gigawatts per year of installations and it meant governments could get up-to-speed with what was needed from them.”

 
 





Tags: , , , , , , , , , ,


About the Author

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.



Back to Top ↑