The Global Wind Energy Council has called on the government of Taiwan to rethink proposed changes to the feed-in-tariff (FIT) for offshore wind projects and has advised it to ‘seek consensus’ to ensure that direct investment and job creation take place.
GWEC chief executive Ben Backwell said “Taiwan has been widely recognised for quickly establishing its offshore industry and attracting promises of investment from a number of world-class companies in the sector.
“The government must now avoid introducing damaging and unhelpful changes to contracts to ensure that these promises materialise into long-term investments that will create tens of thousands of skilled jobs and provide clean, competitive power for Taiwan’s economy.”
Taiwan has awarded contracts for a number of major offshore wind projects under both an initial FIT scheme and later under an auction programme. GWEC points out that the highly competitive prices that companies bid in the June 2018 auction round were based on assumptions that they would be able to build up a local supply chain and economies of scale, and this requires them to be able to build the first round of FIT projects.
“Looking at the last auction prices should not lead Taiwan’s government to retrospectively change the terms for the first round of projects, which it’s worth remembering – haven’t been built yet,” said Backwell.
“It took Europe over 20 years to bring prices down to their present ultra-competitive level. If Taiwan allows developers to build the projects they have been awarded and invest in the supply chain and skills, it can create its market in less than half the time and become an economic hub for offshore wind in Asia.”
The proposed changes to FITs are of two types. Firstly, a much steeper than expected reduction of 12.7% in tariffs which will sharply reduce project revenues.
And secondly, two completely unexpected structural changes: a limit of 3,600 annual full load hours; and removal of the so-called ‘ladder tariff.’
The cap on load hours constitutes, in GWEC’s view, a perverse disincentive for the efficient growth of Taiwan’s industry, as developers will not be rewarded for using the most efficient turbine models. And the removal of the ladder tariff closes off an effective way of helping developers attract project finance at the most competitive possible costs.
Taken together, the proposed changes could reduce project revenues by approximately 20% and so make the projects non-investable, thwarting growth in the sector
GWEC said it is committed to facilitating dialogue between the government and the wind industry and providing research and evidence, in order to help all parties to find a solution that allows planned investment to go forward and maximise the benefit for the Taiwan’s economy and society.
The offshore wind target of 5.5 GW by 2025 will bring some NT$880Bn (US$28Bn) of inward investment. Numerous agreements have been signed with Taiwanese supply chain companies and it is estimated 20,000 local jobs will be created.
The Offshore Wind Journal Conference in London on 5 February 2019 will address key issues including global market developments, increasing turbine sizes, floating offshore wind and industry regulations.