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Developer Demands Lowering of Local-Contents Requirement for Off-Shore Wind Farm Projects in Taiwan

published: 2019-08-26 11:25

MHI Vestas, a Danish wind-turbine manufacturer, has entered into a formal agreement with the Taiwanese government to supply its wind turbine platform units and technologies to Taiwan for the development of its future wind farm projects. However, the company has also demanded that the government relax its local-contents requirement, which requires the company to transfer some of its patented technologies to Taiwan.

The technology at issue is the Danish company’s power conversion technology, which is considered to be a key component for the high-voltage power distribution board. The power converter’s patent is currently owned by Vestas, the parent company of MHI Vestas.

On August 21st, MHI Vestas officially signed a contract with Japan's Mitsubishi Electric to supply wind turbines for the Changfang and Xidao wind farm projects in Taiwan. MHI Vestas plans to outsource the assembly of the power distribution boards for the wind turbines to Shihlin Electric and plans to license, rather than transfer, its critical power-converter technology to the latter company.

To comply with the current localization rules, MHI Vestas has expressed that it would be willing to build a factory in Taiwan to produce the power conversion modules (PCM) for the needs of its wind field projects. The wind field projects are currently estimated to have a capacity of around 900 MW. The factory, which would be the first overseas one for Vestas, will foster a high-value supply chain. As a PMC is known to have as many as 7,000 components and parts, it is expected to bring substantial business opportunities to the local businesses and firms in Taiwan.

Under its current localization policy, the Taiwanese government will require up to 16 components and parts of any technologies to be localized.

In August of 2018, MHI Vestas and CIP signed three localization contracts for the production of wind-turbine tower frames and blades. The production of these parts are expected to create a total of NT$9.2 billion in production value and will pave the way for as many as 5,300 job openings in Taiwan.

The high-voltage power distribution board is a key electric component of wind turbines which is mainly used for the control and protection of electric equipment. Its assembly and testing will be carried out at the Hsinchu plant of Shihlin Electric. The first batch of the products is scheduled for delivery in 2022, before the inauguration of the two wind fields, which is expected in 2023 and 2024, respectively.

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