December 12 (Renewables Now) - A proposal to cut feed-in tariffs (FiTs) for offshore wind in Taiwan by 12.7% in 2019 and change the contract structure is threatening growth in the sector, the Global Wind Energy Council (GWEC) warned.
In a statement published on Tuesday, GWEC is urging the Taiwanese government to seek consensus on the FiT reduction and rethink the “damaging and unexpected changes” to the structure of contracts.
In April 2018, Taiwan awarded grid connection capacity to 3.84 GW of offshore wind projects, giving them the right to sign power purchase agreements (PPAs) under the FiT programme. Then in June it held auctions for offshore wind, awarding a further 1.66 GW of capacity at prices significantly lower than the current FiT.
“[..] the highly competitive prices that companies bid in the June 2018 auction round were based on assumptions that they would be able to build up a local supply chain and economies of scale, and this requires them to be able to build the first round of FiT projects,” GWEC stressed. The proposed 12.7% cut is much steeper than expected.
In addition to the FiT rate reduction, there are also plans to limit annual full load hours to 3,600 and remove the “ladder tariff”. GWEC said the load hour cap would serve as “a perverse disincentive for the efficient growth of Taiwan’s industry” because with it in place there would be no point in using the most efficient turbine models available. The ladder tariff, on the other hand, allows developers to get better project finance terms so removing it would hit project math.
The proposed changes could reduce project revenues by roughly 20%, making offshore wind projects “non-investable”, GWEC sums up.
The list of companies developing offshore wind projects in Taiwan includes sector players like Canada-based Northland Power Inc (TSE:NPI), Denmark's Ørsted SA (CPH:ORSTED), Copenhagen Infrastructure Partners (CIP) and German developer Wpd AG.