Orsted says Taiwan government plans to cap full-load production related to 2019 feed-in tariffs at offshore wind farms located off the Asian island will have a “material adverse impact” on projects.
The Ministry of Economic Affairs announced the production limits today together with FiT levels for 2019.
A tiered production cap will see a 100% feed-in tariff for up to 4200 annual full-load hours, 75% FiT for 4200 to 4500 hours and 50% FiT for above 4500 hours, Orsted said.
Orsted offshore chief executive Martin Neubert said: “The production cap has material adverse impact by preventing an optimal and efficient use of the wind farm.
“In addition, it puts far-shore projects at a disadvantage versus the near-shore projects which remain unaffected by the cap.”
“We will now collaborate closely with the supply chain to mitigate the adverse impacts from the production cap and the reduced feed-in-tariff with the objective of making the projects investable.”
He added that the company took note of the 6% FiT reduction that the company said will see a choice between a 20-year flat rate of NT5516 (€157) a megawatt-hour and a tiered tariff of NT6279.5/MWh for the first 10 years and NT4141.2/MWh for the remaining 10 years.
Orsted said its 900MW Greater Changhua 1 and 2a offshore projects are “facing extraordinarily high costs related to creating a local supply chain at scale, reinforcing the onshore grid infrastructure and building, operating and maintaining offshore wind farms in challenging site and weather conditions”.
The Danish company added that it will work over the coming weeks with “Taiwanese authorities and local stakeholders to reach key outstanding project milestones, such as obtaining the establishment permit, completing the supply chain plan and signing the power purchase agreement”.
Orsted’s board of directors will review and decide on the final investment decision once “we have clarity on the outcome of supply contract renegotiations and relevant project milestones being achieved in time to keep Changhua 1 and 2a on track for potential commissioning in 2021”, it said.
Global Wind Energy Council chief executive Ben Backwell welcomed the Taiwan government’s decision to modify the proposed changes to the FiT by 6% but not the full-load hours cap.
“We are pleased that that the government has listened to the views and evidence presented by GWEC and the industry since the changes were announced late last year,” he said.
“We note that the changes still include both a 6% tariff reduction and an introduction of a cap on annual full-load hours, which has a negative impact on projects by dis-incentivising the most efficient and optimised technology and wind farm design.”
GWEC has argued for the complete removal of the proposed load hours cap, he said.
“However, we are now cautiously optimistic that the industry can proceed to bring its projects to financial close.
“There is much to do, and in particular creating a viable and cost efficient supply chain will constitute a significant challenge.
“But GWEC believes that working together and avoiding any further unhelpful changes, the wind industry, local supply chain and authorities will be able to create a strong and successful offshore wind sector in Taiwan.”
Meanwhile, Orsted said the company’s earnings before interest, tax, depreciation and amortisation in 2018 reached an all time high of Dkr30bn, up 33% on 2017.
The company will announce its full results for last year tomorrow.