Taiwan Offshore Wind Industry Needs A Major Shuffle

-Taiwan Offshore Wind Industry Needs A Major Shuffle

Taiwan Offshore Wind Industry Needs A Major Shuffle

Publish time: 2024-03-17
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It is absolutely gratuitous to see what was supposed to be a constructive, efficient discussion about Taiwan's R3-2 bidding rules called by MOEA turned sour last week, so much so that very few see a beacon of hope, let alone a suggestion of new direction, for an industry that is on the brink of collapse.

Are we surprised? Not so much. Are we disappointed? Absolutely!

 

What Were People Expecting?

Offshore wind in zonal development phase has been anything but smooth for several reasons. The repercussion of the COVID-19 pandemic crisis, the eruption of Russian-Ukraine war in February 2022, all weighed adversely on global economic conditions, causing inflation, spike in interest rate dampening investment and lowering risk appetite.

Cost control has become paramount to ensure sustainability of any organization. With less than twenty days to final submission day for R3-2, most of developers are looking for a window of opportunity, however slight, for an extension to sort out the changes in localization scoring, negotiate a reasonable quotation with suppliers and generate a CPPA price that appeals to offtakers. All the same while, taking these numbers into account and make a feasible business case.

Clearly, very few have done all of the above.

Relaxation in Industrial relevance plan (IRP) is no news to Taiwan government and developers. It has been the centre of discussion time and again since the inception of the industry. Objectively, if the Taiwan government is confident that the local suppliers have become "matured" enough, have been meeting ends in quantity, quality with a competitive price in the past six to seven years, there is no reason for the government to impose localization on developers, but to allow free market to work its magic.

To establish a healthy environment to foster positive competition is of dire importance to Taiwan offshore wind. It would cause irreversible harmful to the industry, even just by entertaining the idea, of allowing the offshore wind market to become oligopolistic. As one can imagine without competitors, a company could rule over the market and exploit rooms for negotiation, harboring stagnation for future growth.

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A Bald Transformation In Need

"…power wrestle, threatening and put on a dramatic show with no intention to solve problems," a local press described the scene on Thursday's R3.2 public discussion. But really, no one is threatening but to reveal the painful truth some are being left with no choice but to leave. It is not a easy time for either the government, one which is in process of power transition, as well as developers, OEMs and their satellite of supplier network.

Taiwan's offshore wind is way pass dare to dream phase, it is time to look again at the old and new problems faced by this industry.

This not exactly the best time to tell heroic story of a businessman falling from pedestal and bounce back, for this is about the survival and continuity of the entire offshore wind industry and green energy supply. This bidding is certainly not as simple as "test" which some are or aren't ready to take, but a careful examination of the policies and how it fare in real practice. The big picture here is Taiwan will need more green energy in the next ten years to support RE100 industries and the island's ambition to achieving energy independence. So far, not a single renewable energy, including photovoltaic, geothermal, biomass, is going to generate enough green power like offshore wind does. We are now at a critical cross-section, Taiwan offshore wind industry needs a major shuffle.

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Selena Ku

A industrial expert specializes in offshore wind and renewable energy

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