Ørsted, the world’s leading developer of offshore wind projects, is revisiting commitments it made to build offshore windfarms in Taiwan amid concern about delays and retrospective changes to feed-in tariffs.
In April 2018, Taiwan’s Ministry of Economic Affairs awarded Ørsted the right to install 900 MW of offshore wind at its Changhua 1 and 2a projects in 2021.
In accordance with Taiwan Civil Code, a deadline for signing the 2018 power purchase agreement (PPA) was extended to 2 January 2019.
However, because Taiwan’s Bureau of Energy did not issue an establishment permit for the projects in time, it is no longer possible for Ørsted and the Taiwanese utility Taipower to sign a 2018 PPA for Changhua 1 and 2a.
The 2019 feed-in-tariff has not been decided yet. However, in November 2018 the Taiwanese Government proposed a 2019 feed-in tariff of TWD5,106 (approximately US$167) per MWh and suggested a production cap of 3,600 annual full-load hours.
Responding to the issues that have arisen in Taiwan, Ørsted Offshore chief executive Martin Neubert, said, “We are disappointed with the process and the delay of the establishment permit and PPA.
“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 are 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.”
The company said the feed-in tariff “needs to reflect the extraordinarily high costs faced by Greater Changhua 1 and 2a,” which it said were mainly related to creating a local supply chain at scale, reinforcing the grid infrastructure onshore and building, operating and maintaining offshore windfarms in challenging waters where typhoons and earthquakes occur.
“The proposed retrospective changes 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,” said Mr Neubert. “Only with a stable and predictable policy framework does Taiwan have the potential to develop large-scale projects while creating thousands of local jobs, becoming a hub for offshore wind in the Asia Pacific region.”
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.