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Taiwan cuts offshore wind FiT

4C Offshore | Tom Russell
By: Tom Russell 30/01/2019 Taiwan Ministry of Economic Affairs
The Taiwan Ministry of Economic Affairs has set a new Feed-in-Tariff (FiT) for 20-year offshore wind Power Purchase Agreements (PPAs) signed 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 also 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).

The announcement follows backlash from industry regarding proposed changes from the Taiwanese government last year which originally set a FiT with a rate of NT $5106/MWh with the 2018 rate being NT$ 5800/MWh; a decrease of 12.71%.

Commenting on the FiT reduction, Ben Backwell, CEO of the Global Wind Energy Council, said: "We note that the changes still include both a 6% tariff reduction and an introduction of a cap on annual full-load hours, which has a negative impact on projects by dis-incentivizing the most efficient and optimised technology and wind farm design. GWEC has argued for the complete removal of the proposed load hours cap.
"However, we are now cautiously optimistic that the industry can proceed to bring its projects to financial close. There is much to do, and in particular creating a viable and cost efficient supply chain will constitute a significant challenge. But GWEC believes that working together and avoiding any further unhelpful changes, the wind industry, local supply chain and authorities will be able to create a strong and successful offshore wind sector in Taiwan."

Last week Ørsted confirmed that it decided to suspend its offshore wind development projects in Taiwan after failing to receive permits for its projects off the coast of Changhua County before FiT changes came into effect. Ørsted was one of the unfortunate developers unable to secure a power purchase agreement for the 900MW
Changhua 1 and Changhua 2a projects due to be generating power in 2021.

Martin Neubert, Executive Vice President and CEO, Ørsted Offshore, commented on today's announcement: “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 we have 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."

For more information on the Taiwanese offshore wind market
click here. You can also view projects worldwide on 4C Offshore's Interactive map.


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