Taipei, An economic official defended Taiwan's offshore wind power policy and decision to lower its feed-in tariff (FIT), but an executive with a local company involved in the program said the FIT scheme could undermine Taiwan's offshore wind industry.
Speaking at a forum Monday on the prospects and challenges of Taiwan's offshore wind sector, Deputy Economic Affairs Minister Tseng Wen-sheng said the FIT scheme is not the only factor affecting the industry's development.
Its success also has to do with the country's economic, financial, industrial and legal environment, Tseng said, and he hoped contractors involved in Taiwan's offshore wind sector would not solely focus on FIT rates for wind power this year.
The Ministry of Economic Affairs (MOEA) is scheduled to finalize the controversial rates on Wednesday.
It angered foreign contractors in November last year when it proposed setting the FIT rate for wind power in 2019 at NT$5.1 per kilowatt hour (kWh), down 12.71 percent from NT$5.8 per kWh in 2018.
The move has prompted one of the contractors, Danish company Orsted A/S, to suspend its two offshore wind projects in Taiwan, according to local media.
It warned on Jan. 2 that it would "pause and revisit" its participation after missing a deadline to secure the higher FIT rate for its projects.
Tseng argued, however, that the MOEA has been working over the past year to establish economic, financial, and industrial conditions and a legal framework favorable for companies looking to develop the business.
"For the offshore wind industry to flourish, there is a need to strike a balance among many issues involving these four variables," he said.
In a presentation given later at the forum, Wang Shyi-chin executive vice president of China Steel Corp., said he agreed with Tseng's view that the FIT level is not the only determinant of the industry's development.
But the FIT rate is a decisive factor, said Wang, whose company is part of a consortium with Denmark-based Copenhagen Infrastructure Partners and Mitsubishi Corp. subsidiary Diamond Generating Asia Ltd. that was formed in 2017 to develop offshore wind farms in Taiwan.
The MOEA's Bureau of Energy, which proposed the lower FIT rate, has underestimated the costs associated with building an offshore wind farm, Wang said.
According to the executive, the cost to build such a farm in the United States is NT$370 million (US$11.91 million) per megawatt of installed generating capacity, 3.5 times higher than the cost needed in European countries, where offshore wind power is a maturing industry.
But even in the United Kingdom, where offshore wind power generation is advanced, its FIT was kept in a range of between NT$5.47 per kWh and NT$7.5 per kWh for 15 years before tenders were introduced to replace the FIT scheme in 2015, Wang said.
Also, France, which benefits from the resources of its neighbors, nonetheless estimated building costs for two offshore wind farms set for completion in 2021 and 2022 at NT$181 million per megawatt, Wang said.
The lower FIT rate proposed by the MOEA was based on a cost of NT$155 million per megawatt, lower than the cost even in France, and also below the estimated cost of NT$227 million for the demonstration project in Changhua County Taipower hopes to complete in 2020, he argued.
Without an FIT scheme that can offer a reasonable rate of return for the companies that have invested in the offshore wind industry, Taiwan could miss out an opportunity to become a leader in the Asia-Pacific region in this field, Wang said.
Source: Focus Taiwan News Channel