Orsted’s commissioning of Formosa I marks a milestone for Taiwan’s entry into offshore league, says GlobalData
Danish power company Orsted has officially inaugurated Taiwan’s first commercial offshore windfarm, Formosa 1. The 128 megawatt (MW) plant is a joint venture (JV) project of Orsted (35%), JERA (32.5%), Macquarie Capital (25%) and Swancor (7.5%). It is the first offshore wind project in the Asia-Pacific (APAC) region for Orsted, which has worked with its partners to secure NT$18.7bn ($612m) to build the windfarm, says GlobalData, a leading data and analytics company.
Harminder Singh, Director of Power at GlobalData, commented: “Taiwan is being much talked about as an investment destination for offshore wind. A good number of the world’s biggest international players are attracted by the island’s strong winds, shallow coastline and stable regulatory framework, as well as the availability of 20-year power purchase agreements with a feed-in-tariff.”
Taiwan’s pipeline currently contains projects with more than 10 gigawatt (GW) of cumulative capacity, and the Taiwanese Government has set an ambitious renewable energy target of 20% of the energy mix by 2025. The target is backed by the country’s feed-in-tariffs and regulatory framework. Taiwan aims to add 20GW of solar photovoltaic (PV) installations, 5.5GW of offshore wind and 1.2GW of onshore wind capacity by 2025 to meet its target.
Singh continues: “The Taiwanese Government is focusing more on the offshore segment of the wind power market, as there is limited land area available, along with large potential offshore resources. The entire 5.5GW of offshore capacity has already been allocated through a grid allocation process in April 2018 and a competitive auction in June 2018. Auctions of an additional 4.5GW for post-2025 commissioning is being planned and a third-round development auction design is expected to be announced in Q4 2019.”
Orsted has ambitious plans for Taiwan, with 900MW of offshore wind capacity – on which a final investment decision (FID) has been made – and another 920MW – for which the FID is yet to be made. The Greater Changhua 1&2a projects (900MW) are expected to be commissioned by 2022, while the Greater Changhua 2b&4 projects (920MW) are expected by 2025, pending the FID in 2023.
Apart from the attractiveness of Taiwan’s offshore sector, another reason for European players such as Orsted to enter this market is to gain a stronghold into other Asian countries such as Japan and South Korea, which are yet to adopt offshore wind. Other European companies such as wpd, Cobra Concesiones, EOLFI have also joined the race for early movements in the region.
Singh concludes: “These developments go on to substantiate the bright prospects for offshore wind in Taiwan. If the plans outlined by the government materialize, Taiwan would be among the top ten countries in terms of offshore wind capacity by 2030.”