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Taiwan: A new horizon opens for offshore wind

IN DEPTH | With the country’s first two turbines now installed off its shores, Taipei may find that its aim to install 4GW of offshore wind by 2030 might be achieved far sooner, writes Brian Publicover

With its first offshore turbines about to be switched on and long-term visibility in terms of policy, financial support and build-out, Taiwan is set to become Asia’s second biggest offshore wind market after China — but with far more opportunities for foreign companies.

Taipei has a goal of 4GW of offshore wind by 2030, but the Asia Wind Energy Association (AsiaWEA) expects that target will soon be revised upwards once it sees the first two turbines spinning — especially light of the recent low prices seen in Europe.

AsiaWEA board member Edgare Kerkwijk tells Recharge he forecasts 5-7.5GW in the water by the mid-2020s — and expects clarity on the future market in the coming months, when Denmark’s Dong Energy is expected to get the go-ahead on four project sites in the Taiwan Straits totaling up to 2GW.

“It really depends on the next six to 12 months, when we see some of those developments,” says Kerkwijk. “If that goes according to plan, that market will become much bigger.”

The Taiwanese government under President Tsai Ing-Wen has committed to offshore wind as part of its programme to phase out all nuclear generation by 2025, earmarking 36 offshore locations for development while offering a choice of feed-in tariff. Developers can either choose NT$5,740 ($187/€175) per MWh for 20 years, or NT$7,108/MWh for the first 10 years and NT$3,459/MWh for the following ten.

There are also further incentives for demonstration projects, such as government-supplied wind masts and environmental impact assessments (EIAs) and interest-free loans.

Industry players say the government’s permitting process is relatively clear, albeit untested. And MAKE Consulting says the government’s EIA, while comprehensive, is considerably shorter than the process in, say, Japan, where development has been slowed for years by bureaucratic wrangling.

With ideal wind and seabed conditions in the Taiwan Straits, the island could replace a significant portion of its nuclear capacity with offshore wind, says Matthias Bausenwein, Asia-Pacific general manager for Dong.

“The long-term approach taken in the Taiwanese market enables investment by developers, investors and the local supply chain, on the basis of the visibility of a future pipeline,” he explains. “This is why our current focus is on Taiwan.”

If Dong’s four projects pass their EIAs, construction would begin between 2021 and 2024.

Dong buys into 128MW Formosa 1 off Taiwan

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In addition, it has taken a 35% stake in the country’s first offshore wind pilot, the 128MW Formosa 1 — phase one of which is almost complete, with two 4MW Siemens turbines installed on monopile foundations by Australian/Singaporean contractor Go Offshore in October, using RWE’s M/V Torben vessel. The machines were set for switch-on as Recharge went to press. A further 120MW are expected to be installed in a second phase during 2019.

Dong has been providing advisory services on the first phase, with local developer Swancor Industries, which has a 15% share in the project, leading the site development and construction. The remaining 50% stake is owned by Australia’s Macquarie Capital.

Western companies have a vital role to play in the ongoing development of Taiwanese offshore, says Bausenwein.

“Experience and track record is key in an emerging market. And this experience is definitely needed to create confidence,” he adds, pointing to financing, grid build-out and supply-chain development as areas in which European players can contribute.

“We are very optimistic about our engagement in the coming years,” adds Michael Holm, head of marketing and communications at Danish consultancy K2 Management, which is involved with the development of Formosa 1. “[Taiwan] is very open to outside support and involvement.”

Japan’s Hitachi is targeting the Taiwanese offshore market with its 5MW downwind turbine, according to Japanese media reports, and it may produce them locally in partnership with Kaohsiung City-based China Steel Machinery (CSMC).

CSMC and Taipei-based TECO Electric & Machinery announced a new turbine for the sector in 2015, but failed to test a 5MW prototype last year as planned.

Kerkwijk and Robert Liew, Asia-Pacific analysts at MAKE Consulting, tell Recharge that the TECO machine is unlikely to see the light of day.

“We have not seen much progress,” says Kerkwijk. “The market is not big enough for Taiwanese production of offshore wind turbines. It will be dominated by the likes of Siemens and Vestas.”

Taiwan is particularly appealing to German, Dutch and Danish industrial groups that have been shut out of the relatively closed offshore market in China, Kerkwijk adds.

“Everyone is looking at Taiwan,” Kerkwijk says, arguing that the island will serve as an ideal “stepping stone” for Western companies interested in the new offshore markets of East Asia. This in turn will help further accelerate development throughout the region.

“It will not take 20-30 years,” he argues. “It will take five to ten years to really scale up the offshore wind sector in the Asia-Pacific region.”

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