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Offshore Wind Journal

UPDATED: Taiwan unveils compromise proposal with higher tariff, higher cap and ladder

Wed 30 Jan 2019 by David Foxwell

UPDATED: Taiwan unveils compromise proposal with higher tariff, higher cap and ladder
The Taiwanese government has compromised on new tariffs for offshore wind but industry has yet to respond

The Taiwanese Government has announced new tariffs for offshore wind projects including a higher tariff than originally proposed for 2019, along with structural changes to the tariffs.

The feed-in tariff (FIT) for 2019 has been set at NT$5,516/kWh (US$1,788) and a ladder tariff has been reintroduced. New caps on full load hours have also been proposed.

The cap on full load hours has been increased to 4,200 hours and 4,500 hours. Between 4,200 and 4,499 hours the FIT will be cut by 25%; above 4,500 hours the FIT will be cut by 50%.

Taiwan renewable energy veteran Raoul Kubitschek said of the changes, “I don’t think anyone will be ecstatic about the announcement, but it is something to work with and far better than the first proposal. It will certainly also put price pressure on local newcomers to the offshore wind energy market, and on the government’s localisation strategy.”

Offshore Wind Consultants’ Taiwan project manager Howard Hu told OWJ, “After two months of intense debate, the new offshore wind FIT has been set, the ladder has been reintroduced and there is a new cap mechanism.

“Given the cost of grid enforcement, local site condition and several other issues, the Ministry of Economic Affairs has had to increase the FIT and relax the rules.

“The announcement shows that the government was struggling to reach a balance between the needs of developers and concerns about costs.

“We believe most developers would consider NT$5,500/kWh the bottom line if they are to continue to invest in offshore wind projects in Taiwan. They will probably accept the results and carry on with development work.

“However, the next fight could come between central government and local government. Further negotiation with local governments and fisheries associations will be needed to obtain establishment permits and sign power purchase agreements based on the new FIT.”

The Global Wind Energy Council (GWEC) welcomed the announcement. It said, “GWEC welcomes the move by the Taiwan Government’s feed-in tariff committee to revise proposed changes to FIT levels and structures, that are critical to kickstarting Taiwan’s offshore wind sector and installing 5.5 GW of zero carbon generation capacity.

"GWEC particularly welcomes the reinstatement of the ladder tariff and the increase in the level of the cap on load hours, although it considers that any cap is unhelpful and unnecessary. 

"Since announcing plans to change the FIT in October of last year, the voices of GWEC, developers and supply chain partners have clearly been heard by the government. However, the wind industry must now assess whether the new rate and the revised cap on load hours are commercially viable for the supply chain and allow planned projects to go ahead.”

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