The government's target of 5.5GW offshore target by 2025, plus an attractive and flexible regulatory framework successfully stimulated the interest of the offshore wind industry around the world.
Projections forecast the offshore wind industry could bring some TWD 880 billion ($28.63 billion) of inward investment into Taiwan by 2025 and create some 20,000 jobs.
However, this ambition is not without its challenges.
In late 2018, the Taiwanese Government proposed revisions to the feed in tariff (FIT): a 12.7% reduction in the FIT rate, from TWD 5,8498/MWh to TWD 5,106/MWh; a cap on the rate of 3,600 full load hours; and the removal of the optional accelerated FIT for the first ten years, the so called "ladder tariff".
Combined, these changes would reduce project revenues by 20-25% and therefore making them commercially unviable.
Along with our members, developers and the wider supply chain, we responded to the Taiwanese Government on these proposed changes and highlighted their potentially damaging impact on the growth of the country’s offshore market.
In October 2018, we met with the Ministry of Economic Affairs (MOEA) to explain how such a dramatic reduction in the tariff, combined with the two new restrictions, would stall the offshore wind market.
Subsequently we provided a number of pieces of evidence to MOEA on how the UK and Germany had successfully managed changes in their subsidy regimes whilst achieving substantial market build out, job creation and cost reduction.
In January 2019, we again met with MOEA and presented comprehensive evidence that a lesser reduction in tariff was highly advisable, plus the removal of the cap and reinstatement of the ladder tariff.
"We believe that avoiding any further unhelpful changes and working together an industry with the local supply and authorities will enable us to create a strong and successful offshore wind sector in Taiwan."
-- Alastair Dutton, chairman, Global Offshore Wind Task Force
We welcomed the subsequent MOEA announcement on 30 January that the new tariff would be a 5.7% reduction in the original FIT rate to TWD 5,5160/MWh; a stepped load hours cap; and the reintroduction of a revised ladder tariff.
As a result, it is estimated that the revenue reduction will be approximately a third of that previously proposed in 2018 and we are now cautiously optimistic that the industry can proceed to develop its projects and in time reach financial close.
However, the changes still have a negative impact on projects by disincentivising the most efficient and optimised technology and wind farm design.
We will, therefore, continue to advocate for the complete removal of the proposed load hours cap.
The emerging market in Taiwan has a number of challenges ahead to create a local supply chain at scale, reinforce the onshore grid infrastructure and build, operate and maintain offshore wind farms in challenging site and weather conditions.
We believe that avoiding any further unhelpful changes and working together an industry with the local supply and authorities will enable us to create a strong and successful offshore wind sector in Taiwan.
Successful evidence-based engagement with policy makers and regulators, as part of a united voice from our industry has helped to mitigate the potential disastrous impact of the originally presented changes.
Whilst the latest developments have certainly brought us back from the brink – we are cautious of the challenges that remain ahead.
To further assist the market, we are holding a Global Offshore Wind Summit in Taiwan on 24 & 25 April, which is supported by MOEA and others.
Alastair Dutton is the chairman of the Global Offshore Wind Council's (GWEC) Global Offshore Wind Task Force
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