Taiwan’s Ministry of Economic Affairs has announced the feed-in-tariff for offshore wind projects, which sign a power purchase agreement with Taipower in 2019.
Developers have the option to choose between a 20-year flat tariff of TWD5,516 (approx. EUR157) per MWh or a tiered tariff of TWD6,279.5 (approx. EUR178) per MWh for the first 10 years and TWD4,142.2 (approx. EUR118) per MWh for the subsequent 10 years.
There will be a tiered production cap:
100% of feed-in-tariff for production up to 4,200 annual full-load hours (48% load factor).
75% of feed-in-tariff for production from 4,200 to 4,500 annual full-load hours (from 48% to 51% load factor).
50% of feed-in-tariff production above 4,500 annual full-load hours (above 51% load factor).
Martin Neubert, Executive Vice President and CEO, Ørsted Offshore, says:
“We take note of the 6% tariff reduction compared to the 2018 tariff as well as the introduction of a cap on annual full-load hours. 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.”
“We will now collaborate closely with the supply chain to mitigate the adverse impacts from the production cap and the reduced feed-in-tariff with the objective of making the projects investable.”
Greater Changhua 1 and 2a are facing extraordinarily high costs related to creating a local supply chain at scale, reinforcing the onshore grid infrastructure and building, operating and maintaining offshore wind farms in challenging site and weather conditions.
In the coming weeks, Ørsted will work with the Taiwanese authorities and local stakeholders to reach key outstanding project milestones, such as obtaining the establishment permit, completing the supply chain plan and signing the power purchase agreement.
Ørsted’s Board of Directors will review and decide on the final investment case once there is clarity on the outcome of supply contract renegotiations and relevant project milestones being achieved in time to keep Changhua 1 and 2a on track for potential commissioning in 2021.