January 3 (Renewables Now) - Danish offshore wind major Ørsted A/S (CPH:ORSTED) will pause and review its plans for investments in Taiwan as it has been unable to secure a key permit for 900 MW of offshore wind projects in time to get the 2018 feed-in tariff (FiT).
The company said Wednesday it missed the January 2, 2019 deadline for signing a 2018 power purchase agreement (PPA) with Taipower because Taiwan’s Bureau of Energy delayed the establishment permit for the Greater Changhua projects.
“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 Ørsted Offshore CEO Martin Neubert.
The Taiwanese government in November suggested a cut to the offshore wind FiT in 2019 to a level of TWD 5,106 (USD 165.7/EUR 145.4) per MWh and also proposed a cap of 3,600 on annual full-load hours. In December, the Global Wind Energy Council (GWEC) said such new offshore wind rules in Taiwan could reduce project revenues by roughly 20%, making projects “non-investable”. Neubert stressed in the press release yesterday that significant changes to these proposals would be needed for Ørsted to progress any further towards a final investment decision on the Taiwanese projects.
Ørsted believes the FiT has to reflect the very high costs for building Greater Changhua 1 and 2a, mainly related to the establishment of a local supply chain at scale, onshore grid infrastructure upgrades, and the operation and maintenance (O&M) of offshore wind farms in waters where typhoons and earthquakes occur.
The Danish company won in an auction in June 920 MW of additional offshore wind capacity from the Greater Changhua sites with a bid of TWD 2,548 per MWh.
“[..] 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 last month.
(TWD 10 = USD 0.32/EUR 0.28)