Taiwan cuts offshore wind tariffs

Taiwan’s ministry of economic affairs has cut the flat and tiered feed-in tariffs for offshore wind developers that sign power purchase agreements (PPAs) in 2020.

Taiwan's first large-scale offshore wind farm, the 120MW Formosa 1 Phase 2 (pic credit: Siemens Gamesa)

The ministry will offer developers offtake deals with a flat rate of TWD 5,094.60/MWh for 20 years ($169.44/MWh) — a 7.6% reduction on the flat rate available last year — or a tiered tariff this year.

Under the tiered tariff structure, developers will receive TWD 5,801.50/MWh for the first ten years of production and then TWD 3,822.70/MWh for the next ten years. It represents 7.6% and 7.7% reductions from last year’s prices respectively.

The ministry said the reductions “reflect progress and consideration of international development trends”.

The flat rate of TWD 5,094.60/MWh is below the rate the ministry had initially proposed for 2019.

It eventually settled on offering a flat rate of TWD 5,516/MWh or the tiered tariff after developers expressed concerns about the economic viability of their projects at a lower rate.

In 2018, the ministry awarded contracts for 5.5GW of offshore wind capacity across two rounds, to add to the 128MW of operational capacity across two demonstration projects. 

All projects awarded capacity in the first round have subsequently secured PPAs, while those in the second round competed for offtake deals.

There are only a few projects in Taiwan's existing development pipeline the tariff reduction may affect. 

German developer Wpd missed the deadline for the 2019 tariffs for its 350MW Guanyin wind farm, which is not yet fully permitted.

Wpd would not comment on whether it would seek to sign a PPA in 2020 or enter the project into future auctions, but a spokesman told Windpower Monthly the developer was "looking forward" to realising the project and expected "positive solutions within the next few weeks".

Meanwhile, a Macquarie spokeswoman told Windpower Monthly that it, alongside development partner Swancor, planned to enter its up-to 2GW Formosa 3 wind farm — also without a PPA — into the country's next auction round.

Additional capacity

In a separate announcement, the ministry’s bureau of energy is planning for a further 10GW of offshore wind capacity to be commissioned between 2026 and 2035.

The ministry is currently deciding on development zones to support this new capacity.

Taiwan’s bureau of energy expects bid prices for the capacity due online between 2026 and 2035 to be below the average consumer price, it said.

Taiwan is due to meet its target of renewable energy providing at least 20% of the country’s electricity generation by 2025, with 20GW of solar PV and 5.7GW of offshore wind online by the middle of the decade.