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Offshore Wind Power Projects Confronted with Major Hurdles

published: 2018-11-14 11:14

More than half a year following determination of developers of offshore wind-power projects on a screening basis in April, none of them has yet to win permit for preparation for electricity businesses, making it doubtful for them to sign power supply contracts with state enterprise Taiwan Power Company by the end of the year, deadline for the their projects to be entitled to the wholesale power rate of NT$5.8/kWh pledged by the government.

A major hurdle for securing the permit is passage of the localization plan for their projects by the Industrial Development Bureau (IDB), the Ministry of Economic Affairs (MOEA), in Nov., for which they have to sign cooperative agreements with local partners for supply of components or establishment of service industrial chain. Only after securing the preparation permit can the developers gain green light from the MOEA for starting construction works for their projects which will then have pass screening by the ministry after completion for electricity business licenses.

In order to apply for the preparation permit, developers have to submit multiple documents, including approvals for exploratory survey for determining the routes for submarine cables, location for marine sites, special locations other than first-grade coastal protection areas; study of submarine cultural assets; opinions or letters of agreement from municipal governments or fishing authorities; and other materials related to the development of wind fields, according to the MOEA. In addition, the projects have to comply with the "Coastal Zone Management Act," under the jurisdiction of the Ministry of the Interior, to avoid impact of the projects on marine ecology and coastal landscape.

Should the developers fail to sign power-supply contracts with Taipower by the end of the year, they will be settled with the wholesale rate of 2019, whose draft has yet to be publicized, despite the passage of the original schedule at the end of Oct. The Bureau of Energy, the MOEA, admitted that under the pressure of widespread public attention, members of the rate screening committee have been very cautious in considering next year's wholesale rate, due to the backlash to this year's wholesale rate, following determination at mere NT$2.2245-2.5481/kWh in wholesale rates for the winning projects settled via opening bidding in June.

The rate set via open bidding is not only lower than original expectation of NT$4-5/kWh but also even lower than the average going retail rate of NT$2.6/kWh of Taipower, triggering a public outcry. It appears to be inevitable that the 2019 wholesale rate will be lower than the 2018 rate, although the MOEA has denied that the scale of cut will be 5-15%, as reported.

Developer CIP (Copenhagen Infrastructure Partners) of Denmark urged the government to retain the wholesale rate at NT$5.8/kWh, citing special risks for offshore wind-power projects in Taiwan, for which the developers have to pay NT$440 million in extra premium for 300 MW wind-power capacity. The new rate is expected to be publicized after the completion of the upcoming municipal elections.

(First photo courtesy of Department of Energy and Climate Change via Flickr CC BY 2.0, reported by Daisy Chuang)

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