Taiwan cuts 2019 offshore wind FiT by 6%

Image by Dong Energy, now Ørsted, taken from dongenergy.com

January 30 (Renewables Now) - Taiwan’s Ministry of Economic Affairs today officially reduced the feed-in tariff (FiT) rate for offshore wind projects that seal power purchase agreements (PPA) in 2019, but not as much as initially proposed.

The ministry has cut the 20-year flat tariff to TWD 5,516 (USD 179.1/EUR 156.9) per MWh, which is 6% lower than last year’s rate. Project developers have another option as well -- a tiered tariff of TWD 6,279.5/MWh for the first 10 years and TWD 4,142.2/MWh for the subsequent 10 years.

Taiwan is also introducing a tiered production cap: 100% of FiT for production up to 4,200 annual full-load hours (48% load factor); 75% for production from 4,200 to 4,500 annual full-load hours (48%-51% load factor); and 50% for production above 4,500 annual full-load hours (51%-plus load factor).

Danish offshore wind major Ørsted A/S (CPH:ORSTED) missed the January 2, 2019 deadline for signing a 2018 PPA with Taipower because Taiwan’s Bureau of Energy delayed the establishment permit for its Greater Changhua projects. As a result, Ørsted said it would review its plans for investments in the country.

Today, the Danish company announced that it will try to make its Taiwanese offshore wind projects “investable” by collaborating closely with the supply chain to mitigate the adverse impacts from the above-mentioned changes.

“The production cap has material adverse impact by preventing an optimal and efficient use of the wind farm. In addition, it puts far-shore projects at a disadvantage versus the near-shore projects which remain unaffected by the cap,” stated Martin Neubert, executive vice president and CEO of Ørsted Offshore.

Ørsted’s Greater Changhua offshore wind sites have a combined potential capacity of 2,400 MW, and some 1,820 MW of that was secured in two separate auctions held last year. In April 2018, Ørsted got the right to connect 900 MW of offshore wind capacity to the power grid from its Greater Changhua 1 and 2a projects, and in June it won a further 920 MW through the Changhua 2b and 4 sites. These 1,820 MW are earmarked for buildout in 2021 and 2025, if the final investment decision is made.

The company noted today that Greater Changhua 1 and 2a are seen to experience “extraordinarily high costs” because of the need to create a local supply chain at scale, reinforce the onshore grid infrastructure and the fact that the wind farms will be built and operated in challenging site and weather conditions. It added that it will cooperate with local authorities and stakeholders in the coming weeks to achieve key outstanding project milestones, including securing the establishment permit, concluding the supply chain plan and signing the PPA.

(TWD 1.0 = USD 0.325/EUR 0.284)

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