Danish firm suspends wind-power facility construction in Taiwan

Taipei, Orsted A/S, a Danish investor in offshore wind-power sites in Taiwan, has suspended its part in the nation's offshore wind-power development program amid what it described as a re-evaluation of its investment in the country.

Orsted has informed its supply chain that it has suspended the execution of ongoing contracts to install wind-power facilities off the western coast of Taiwan, Wang Hsin-chieh the company's official in charge of corporate communication, confirmed Saturday.

For those contracts that have not yet been carried out, the company will renew price negotiations with the relevant businesses, Wang said, explaining that the decision was made as Orsted is assessing whether or not to continue its Taiwan investment.

The suspended contracts include the construction of onshore substations with Taiwan Cogeneration Corp., underwater structures with China Steel Corp. (CSC) and Century Iron and Steel Industrial Co. Ltd. (CISI), according to Wang.

Wang declared that Orsted is not withdrawing from the Taiwan market, but is concerned about the "unstable" investment environment here, referring to controversial changes in the feed-in tariff (FIT) rate.

Since 2016, Orsted has invested NT$2-3 billion in Taiwan, where it plans to build wind farms with a total grid capacity of 900 megawatts in Changhua County with investment totaling NT$165 billion (US$5.34 billion), according to Wang.

"The company needs the support of a stable policy to ensure that the investment is carried out smoothly and that the relevant supply chain can take root in Taiwan," Wang said.

The company is now studying the feasibility of whether or not to withdraw its investment, based on three factors, including if the FIT rate is maintained at NT$5.8 per kilowatt-hour, which it was offered before the Ministry of Economic Affairs (MOEA) notified last year that the rate will be cut by 12 percent to NT$5.1 for this year.

The pre-announcement drew protests, with some foreign developers threatening to "reconsider" their investment projects, according to local media reports.

Wang said her company will also see if a high FIT rate is limited to the first 3,600 hours of power sold -- a new regulation also set last year -- and whether the "political risk" of investment from local and central government is reduced.

Wang said the government's "sudden" moves to change its FIT rate calculation policy and set the 3,600-hour limit took the company by surprise because it had not communicated with investors, including Orsted, about the policy adjustment before announcing the change.

Asked about Orsted's latest decision, both CSC and CISI said Saturday that the suspension will not have a big impact on them, given that the Danish company has only suspended its contracts with them rather than scrapping them altogether.

Meanwhile, the MOEA's Bureau of Energy, which described Orsted's contract suspension as a normal business practice, said that the FIT rate for 2019 has not yet been settled, promising to settle the rate before the Chinese New Year holiday, which starts Feb. 4.

The bureau said that once the 2019 FIT rate is decided, it believes the offshore wind-power company will reopen its Taiwan investment project.

Tsai Ing-wen government had envisioned that all the nuclear power plants in Taiwan will be decommissioned by 2025, by which time renewable energy, mainly offshore wind and photovoltaic energy, is expected to account for 20 percent of the nation's overall power generation.

The policy, however, was called off after a Nov. 24 referendum that scrapped the 2025 goal previously stipulated in article 95-1 of the Electricity Act.

Source: Focus Taiwan News Channel