Taiwan offered to meet the offshore wind sector half-way after a standoff over feed-in tariff support levels that saw global number-one Orsted suspend its activities there.
The Taiwanese Ministry of Economic Affairs (MOEA) published its final decision over offshore wind FIT rates today (30 January) after a two-month consultation and furious protests from investors in the fledgling sector.
A feed-in tariff of TWD 5.5160 per kilowatt hour ($0.179/KWh) will be granted to offshore wind projects that secure power purchase agreements this year, said MOEA. That is 8% up from a rate of TWD 5.1060/KWh originally proposed, but still 5.7% discounted from the offshore wind FIT of 2018.
The compromise by the government also includes a decision to allow a two-step pricing mechanism favoured by developers that it was previously set to cancel. Under the 2019 tariff, offshore projects could sell power at TWD 6.2795/KWh for the first 10 years of its operation, and at TWD 4.1422/KWh in the second decade.
In a third change, MOEA also scrapped plans to limit to 3,600 the maximum operating hours under which power could be sold at the FTI rate, instead introducing scaled pricing from 4,200 hours.
"The new fee is drafted based on actual market transactions and verified data, reflecting a fair and reasonable price point for (Taiwan's) situation," MOEA said in a statement.
Developers were furious when permitting delays meant they missed the deadline for signing the PPA in time to get the higher 2018 rate. Orsted, CIP, Northland Power and Yushan Energy, who claimed the lower fee is economically inviable for the nascent Taiwanese offshore projects.
Orsted then announced to halt the execution of local contracts and to revisit investment plans in Taiwan last month, after it failed to secure the key power purchase agreement necessary for gaining the 2018 price point.
The global offshore wind giant said after the announcement that it would look to its supply chain in a bid to make the projects "investable", but stressed the potential negative impacts of the revised support arrangements.
Edgare Kerkwijk, board member at the Asia Wind Energy Association, said the “belated” decision at least gives “breathing space” to the sector, but warned that the reduced FIT “will probably mean very painful cuts for the local industry, which now already needs to start to cost-down while having already started to invest”.
Kerkwijk said the revised arrangements on production caps could also still have an impact on the financing models of some projects.
MOEA previously claimed Orsted’s move to pause its activities “is a normal business decision,” and “will not impose material harm to the domestic industry”.
“Our determination to push forward offshore wind development has not changed a bit,” MOEA said earlier, “we will continue assisting developers to gain construction permits and pass other administrative procedures.”