Ørsted Finally Commits To 900 MW Taiwanese Changhua Offshore Wind Farm

Danish offshore wind energy giant Ørsted announced at the end of April that it had finally taken the Final Investment Decision (FID) on the Changhua 1 and 2a offshore wind farms in Taiwan after several months of delay caused by the country’s indecision and delays regarding the Feed-in Tariff for offshore wind.

In January, Ørsted announced that it had been unable to sign a 2018 Power Purchase Agreement (PPA) with Taiwanese utility Taipower because the country’s Bureau of Energy had not issued an establishment permit in time for the 605 megawatt (MW) Changhua 1 offshore wind farm and the 295 MW Changhua 2 offshore wind farm.

At the time, Ørsted announced that it would reevaluate its Greater Changhua projects and, later that month, it was reported that Ørsted had suspended development of its local projects due specifically to delays caused by the Taiwanese government’s failure to issue a PPA under 2018’s FiT rate.

In early February, Taiwan’s Ministry of Economic Affairs finally announced the 2019 FiT rates for offshore wind projects, and though they were not as bad as the industry had feared, they were nevertheless not as strong as could have been.

“We take note of the 6% tariff reduction compared to the 2018 tariff as well as the introduction of a cap on annual full-load hours,” explained Martin Neubert, Executive Vice President and CEO, Ørsted Offshore, speaking in February. “The production cap has a material adverse impact by preventing an optimal and efficient use of the wind farm. In addition, it puts far-shore projects at a disadvantage versus the near-shore projects which remain unaffected by the cap.”

“We will now collaborate closely with the supply chain to mitigate the adverse impacts from the production cap and the reduced feed-in-tariff with the objective of making the projects investable.”

On Tuesday, Ørsted finally revealed that it had taken Final Investment Decision on the Changhua 1 and 2a projects which, together, have a combined capacity of approximately 900 MW. Prior to the FID, Taiwan’s Ministry of Economic Affairs approved Ørsted’s local supply chain plan, which allowed Ørsted to sign a PPA with Taipower at the FiT level established earlier in the year.

Located approximately 35 to 50 kilometers off the coast of Changhua County, the two wind farms will generate enough power to supply the equivalent needs of 1 million Taiwanese households and are expected to be constructed through 2021-22.

“Over the last couple of months, we have been working intensively to obtain establishment permit, renegotiate contracts, get our supply chain plan approved and sign the power purchase agreement,” said Martin Neubert, Executive Vice President and CEO of Offshore at Ørsted. “Thanks to a close and strong collaboration with our supply chain partners, Taipower and decision-makers in Taiwan, we have achieved all these milestones and can now take the final investment decision on this landmark project, which will be Taiwan’s largest offshore wind farm and demonstrate offshore wind’s potential to decarbonize energy systems in Taiwan and the Asia-Pacific region.”

“With the Changhua 1 and 2a offshore wind farm, which is the first under the localization rules to take final investment decision, Ørsted will invest significantly in Taiwan’s transition to renewable energy with substantial impact on local job creation and industrial development,” added Matthias Bausenwein, President of Ørsted Asia-Pacific. “We are proud that we have secured a very high level of local content on the project, and we will start the initial onshore works already next month.”