Winning Bid Prices in Taiwan’s Latest Offshore Wind Auction Are Much Lower Than Expected

published: 2018-07-04 16:38 | editor: | category: News

Taiwan has set an ambitious target of establishing 5.5GW of offshore wind generation capacity by 2025, and this capacity quota is being allocated via a competitive bidding process. On 22 June, Denmark’s Ørsted A/S and the Hai Long Offshore Wind Project Office were announced as winners to operate four offshore wind farm sites with a total capacity scale of 1.664GW. Ørsted will be operating two sites along the shores of Changhua County, while Hai Long will be setting up two wind farms, Hai Long II and III, off the western coast of Taiwan. Hai Long is a joint venture of Canada’s Northland Power Inc. and Singapore’s Yushan Energy Co. Ltd. The four offshore wind farms are scheduled to complete grid connection by 2025. The winning bid prices range from TWD 2.2245 to TWD 2.5481 per kilowatt-hour, which are much lower than the expected price range of TWD 4-5 per kilowatt-hour and under the feed-in tariff rate of TWD 2.6 per kilowatt-hour. The rate for Hai Long II is the lowest among the four wind farms at just TWD 2.2245 per kilowatt-hour.

According to Taiwan’s Ministry of Economic Affairs (MOEA), seven developers with 12 sites participated in the 1.664GW offshore wind auction. Competing developers first had to present assessment reports on their own technical capabilities (for completing the projects), engineering/hardware designs, and cost estimates. Then, they offered bidding prices or the feed-in tariff rates for the projects. Northland and Yushan’s Hai Long II project has an assigned capacity 232MW and will be providing electricity at the rate of TWD 2.2245 per kilowatt-hour. Their Hai Long III project has an assigned capacity of 512MW and will providing electricity at the rate of TWD 2.5025 per kilowatt-hour. As for Ørsted, 337.1MW was allocated to its project southwest of Changhua County and 582.9 MW was allocated to its project northwest of the same area. The rates of the former and the latter projects are set at TWD 2.5480 per kilowatt-hour and TWD 2.5481 per kilowatt-hour, respectively.

During the initial selection phase of the bidding process, the guaranteed minimum price was set at TWD 5.8 per kilowatt-hour. The general expectation was that most bidding prices would be in the range of TWD 4-5 per kilowatt-hour. However, the prices of winning bids are much lower. Their average, which is around TWD 2.5 per kilowatt-hour, is also just under the current feed-in tariff rate of TWD 2.6 per kilowatt-hour. The rate of Hai Long II is the lowest among the four sites at TWD 2.2245 per kilowatt-hour.

Other participant of this latest offshore wind auction were Swancor Holding Co. Ltd., Asia Cement Corp., Copenhagen Infrastructure Partners, Taiwan Power Co. (Taipower), and Taiwan Green Power Co. Ltd. During the bidding process, Swancor offered one of its project site (Formosa III) that was jointly invested by Macquarie Capital and other entities.

 (The credit of the image at the top of the article goes to Ørsted A/S.)

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