In response to over 10% cut on 2019 wholesale rates for renewable energy, unveiled by the Ministry of Economic Affairs the other day, PV and offshore wind power developers issued a joint statement on Dec. 4, calling for the government to reconsider the decision which they said would hamper the development of renewable energy in Taiwan.
In addition to higher-than-expectation 12.71% cut on wholesale rate for offshore wind power, to NT$5.1060 kWh from 2018's NT$5.8498 kWh, the MOEA also substitutes fixed rate for existing tiered rates and caps the purchase at the wholesale rate by Taiwan Power Company at 3,600 power generation hours, with the excess output to be purchased by the state enterprises at its power generation cost in the year.
Offshore wind-power developers charged that in determining next year's wholesale rate, the MOEA fails to take into account the costs for land acquisition and wind field installation, as well as such intangible costs as technology and financial risk management, saying that the move will dampen the confidence of domestic and foreign investors and Taiwan's reputation on the global market. It, they said, would affect the schedule for the installation of wind fields and localization policy.
Source: SEMI
Offshore wind-power developers stressed that the scale of cut shouldn't exceed the predicted global average of 4.25% next year. Sean McDermott, general manager of Northland Power Taiwan, noted that the sharp cut has prompted developers to suspect the stability of Taiwan's investment environment. Matthias Bausenwein, general manager of Ørsted Asia Pacific and chairman of Ørsted Taiwan, also stated that the formula for calculating the wholesale rate should include financial and technological risks in emerging markets.
Bausenwein expressed that change in the rules of the game would impede development of wind power in Taiwan, which relies on a stable regulatory framework, adding that major changes in investment environment would jeopardize mutual trust.
Ørsted stated previously that should the company fail to sign power purchase agreement (PPA) with Taipower this year and the 2019 rate be too low, the company will reconsider its investment policy and renegotiate contracts with local partners.
Hsu Nai-wen, superintendent of the CIP Taiwan project, noted that CIP will carry out overall review of and precision computation for existing project, as the revocation of the tiered rates has led to a structural change.
Faced with the new situation, developers have started preparing data and parameters, as basis in discussing with the government, in the hope of attaining agreement on a better rate.
Faced with the backlash, the MOEA reiterated its policy for developing offshore wind power and asked developers to put forth concrete data and proofs as references for the rate review committee, which will convene to discuss the proposed 2019 rate in two months before finalization of the rate, sometime after Chinese Lunar New Year.
* Representatives of PV and offshore wind power developers urge the government to reconsider sharp cut on 2019 wholesale rates
(First photo courtesy of Tee Cee via Flickr CC BY 2.0, written by Daisy Chuang)