Global offshore wind pacesetter Orsted has given the green light for 900MW of offshore wind development in Taiwan that was earlier on hold after a row with the country’s government over support levels.
The Danish group said a final investment decision on the Changhua 1 and 2A projects came after it signed a power purchase agreement with Taiwanese utility Taipower on the basis of the feed-in tariff announced by the government earlier this year.
Orsted had declared its Taiwanese offshore wind plans on hold after running into permitting challenges that prevented the projects qualifying for the better feed-in tariff on offer for those signing power deals in 2018.
The developer’s offshore wind CEO Martin Neubert said in January it would have to work with its supply chain to “make the projects investible” in the face of the “adverse impacts” of Taiwanese policy reverses.
Taiwan has placed huge emphasis on a heavy local content element in wind built off its coasts, but faced warnings from Orsted and others that it needed to maintain policy equilibrium to achieve that.
The government met the industry halfway with a revised FIT of TWD 5.5160 per kilowatt hour ($0.179/KWh) in an effort to get developers such as Orsted, CIP and Northland Power back on board.
Announcing the FID on Tuesday, Neubert said: “Over the last couple of months, we have been working intensively to obtain establishment permits, renegotiate contracts, get our supply chain plan approved and sign the power purchase agreement.
“Thanks to a close and strong collaboration with our supply chain partners, Taipower and decision-makers in Taiwan, we have achieved all these milestones.”
Initial onshore works for the projects will begin as soon as next month.
Changhua 1 and 2A are part of Orsted’s wider 2.4GW potential Greater Changhua offshore wind sites in Taiwanese waters.
Analysts at Macquarie said the decision is “good news for Orsted’s prospects in Asia. The Taiwan offshore wind market has faced challenges over tariff structures over the last three quarters.
“Not only does this FID announcement enhance the near-term visibility of Orsted’s global offshore wind pipeline but it reconfirms its commitment to the Taiwanese offshore wind sector.”
Macquarie added in a note: “Furthermore, we believe Taiwan is a valuable staging post for future offshore wind expansion into the rest of the Asia region.”
Note: Update adds comments from Macquarie