Orsted says that it will “pause and revisit” all of its project activities in Taiwan’s offshore wind energy sector following a delay in the permitting process for the Changhua 1 and 2a projects.
The company was aiming to sign a power purchase agreement with Taiwanese utility Taipower by the end of 2018 for Changhua 1 and 2a. However, it says that the Taiwan Bureau of Energy has failed to issue an establishment permit for the projects, leaving Orsted unable to seal the PPA by a deadline of January 2, 2019.
In addition, the Taiwanese government has not yet made a decision on feed-in tariffs for offshore wind, although a rate of TWD5106/MWh (€145/MWh) has been proposed for 2019 alongside a suggested production cap of 3600 annual full load hours.
“We’re disappointed with the process and the delay of the establishment permit and PPA. We will now pause and revisit all our project activities, the timeline of the projects, and our supply chain commitments and contracts as we had assumed signing of the PPA in 2018,” said Martin Neubert, CEO, Ørsted Offshore. “We’re very concerned about the suggested feed-in-tariff level for 2019 as well as the newly proposed cap on annual full-load hours. We will need to see significant changes to these proposals before we can progress any further towards a final investment decision on the projects.”
Orsted said in a statement that the feed-in-tariff “needs to reflect the extraordinarily high costs faced by Greater Changhua 1 and 2a, mainly related to creating a local supply chain at scale, reinforcing the onshore grid infrastructure and building, operating and maintaining offshore wind farms in challenging waters where typhoons and earthquakes occur”.
Neubert added: “The proposed retrospective changes would jeopardise the creation of a local offshore wind supply chain, harm the planned transition to renewable energy and cause significant uncertainty among international investors looking to Taiwan. Only with a stable and predictable policy framework, Taiwan has the potential for developing large-scale clean power production while creating thousands of local jobs and becoming a hub for offshore wind in Asia-Pacific.”
In April 2018, Taiwan awarded Ørsted the right to connect 900 MW offshore wind to Taiwan’s power grid in 2021 from Ørsted’s Greater Changhua sites. In June 2018, Ørsted won the right to build an additional 920 MW offshore wind capacity from its Greater Changhua sites. Subject to Ørsted’s final investment decision, these projects will be built in 2025.