Manufacturers and Project Developers Prepare for Phase 3 of Formosa 3 Offshore Wind Project

published: 2020-10-05 18:30 | editor: | category: News

Formosa 3, a 2-gigawatt offshore wind project located off the coast of Taiwan’s Changhua County, will soon begin Phase 3 or the Zonal Development Stage of its development process. The eligibility requirements and selection rules have been mostly established for the upcoming power auction, which could begin as early as 2021. Phase 3 represents a critical window for project developers that managed to have their proposals pass environmental impact assessment but have yet to get their bids accepted. On the other hand, Japan’s JERA, Australia’s Macquarie Group (or Macquarie Green Investment Group), and Germany’s EnBW are gearing up for the tender as they are already the key stakeholders in the project.

Situated off the coast of Changhua County, Formosa 3 (also known as Haiding) comprises three separate sites that together have an area of 300 square kilometers. The project is approximately 1.5 times greater than Taipei City. The wind turbines of the project will be installed in waters 25 to 40 meters deep.

The current government of Taiwan wants offshore wind power to play a key role in the island’s energy transition. Formosa 3 was given the greenlight for development in 2018 after it had passed the environmental impact assessment. The whole project is scheduled for completion in 2025. By that time, it is expected to be the largest of its kind in the world. With the preparation for Phase 3 and the application for grid connection underway, actors in the supply chain for offshore wind power have a limited period to join this endeavor either through bidding in the upcoming power auction or direct selection by the government.

To promote the growth of a home-grown offshore wind sector with a high degree of content localization in the supply chain, the government of Taiwan and stakeholders in the island’s offshore wind projects have been seeking domestic companies and investors to collaborate on infrastructure building. Local companies have been invited to participated in or devise innovative solutions for manufacturing of wind turbines, construction of offshore transformer stations, installation of jacket foundations, etc.

The team that oversees Formosa 3 has stated that every aspect has been thoroughly planned, and the actual development work can begin at the moment’s notice. However, there are still concerns about one subsection of the project with a designated generation capacity of 500 megawatts. The bidding rules and the development timetable for that subsection contain ambiguities that need to be clarified. In response, the relevant authorities have stated that a more detailed guidance will be provided this fourth quarter.

Matthew Green, senior vice president of Macquarie Group, has stated that the rules related to the next power auction and the capacity limit per bid need to be publicized as early as possible so that bidders have more time to prepare. More certainty in capacity allocation will further strengthen the major developers’ resolve in supporting the local supply chain.

Green has also pointed out that project developers wholly support the government’s promotion of domestic sourcing. Formosa 3 and projects of a similar scale require collaborations with local manufacturers and service providers.

Formosa 3 is currently being jointly developed by Macquarie Group, EnBW, and JERA. Macquarie has a 31.25% stake in the project, while EnBW and JERA have 25% and 43.75% respectively. However, it should be noted that Taiwan-based Swancor Holding initiated the development of Formosa 3 as well as Formosa 1 (Haiyang) and Formosa 2 (Haineng). Swancor Holding officially ended its business of building offshore wind farms in June 2019, when it sold Swancor Renewable Energy to Stonepeak Oceanview Holding. Now, the role of Swancor Holding in the offshore wind sector is that of a material supplier. Regarding Formosa 1, Ørsted has the largest stake of 35%, followed by JERA with 32.5%, Macquarie with 25%, and Swancor Renewable Energy with 7.5%. The ownership structure of Formosa 2 is as follow: JERA with 49%, Macquarie with 26%, and Swancor Renewable Energy with 25%.

(Photo credit: TechNews.)

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