Offshore wind super-major Ørsted said it plans to work with its supply chain to mitigate what it described as “the adverse impacts” of the production cap and the reduced feed-in-tariff announced in Taiwan, “with the objective of making the projects investable.”
As highlighted by OWJ, the Ministry of Economic Affairs in Taiwan has announced the feed-in-tariff for offshore wind projects that sign a power purchase agreement with Taipower in 2019.
Developers have the option to choose between a 20-year flat tariff of TWD5,516/MWh or a tiered tariff of TWD6,279.5 /MWh for the first 10 years and TWD4,142.2/MWh for the subsequent 10 years. There will be a tiered production cap with 100% of the feed-in-tariff for production up to 4,200 annual full-load hours (48% load factor); 75% of the feed-in-tariff for production from 4,200 to 4,500 annual full-load hours (from 48% to 51% load factor); and 50% of feed-in-tariff production above 4,500 annual full-load hours (above 51% load factor).
Ørsted Offshore chief executive Martin Neubert said “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.
“The production cap has a material adverse impact by preventing an optimal and efficient use of the windfarm. In addition, it puts far-shore projects at a disadvantage compared to near-shore projects, which remain unaffected by the cap.”
“We will 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.”
The company noted that projects in which it is potentially involved, Greater Changhua 1 and 2a, face what it described as “extraordinarily high costs related to creating a local supply chain at scale, reinforcing the onshore grid infrastructure and building, operating and maintaining offshore windfarms in challenging site and weather conditions.”
It said that it will work with the Taiwanese authorities and local stakeholders to meet project milestones, such as obtaining an establishment permit, completing the supply chain plan and signing the power purchase agreement.
The company’s board of directors will review and decide on the final investment case once it has clarity on the outcome of supply contract renegotiations and relevant project milestones being achieved in time to keep Changhua 1 and 2a on track for potential commissioning in 2021.