Offshore wind power developers yesterday railed against the government’s plans to cut the preliminary feed-in tariff (FIT) by 12.7 percent over the next two decades.
The Ministry of Economic Affairs (MOEA) on Thursday proposed to cap the FIT at NT$5.106 per unit for the next 20 years, drawing the ire of all five developers that are overseeing offshore wind projects in Taiwan.
The change is unacceptable and a significant blow to the viability of ongoing projects and Taiwan’s progress toward renewable energy development, Copenhagen Infrastructure Partners (CIP), Northland Power Inc, Orsted A/S, Wpd Group and Yushan Energy Co (玉山能源) said in a joint statement.
The government’s U-turn has damaged Taiwan’s reputation in the global market and rocked investors’ confidence, as they were duped by the ministry, which originally promised an FIT of NT$6 per unit, the developers said, adding that many are reassessing their investment thesis.
Any effects on Taiwan’s first batch of offshore wind projects — with capacity totaling 3.5 gigawatts — would compromise the nation’s ambition to tap into clean energy and become a leading regional supplier in the industry, they said.
Aside from the FIT cut, the developers said that they were also concerned about the ministry’s plans to cap the government’s purchase of offshore wind-generated energy to 3,600 operating hours per year and the cancelation of a tiered FIT scheme.
Under a tiered FIT scheme, offshore wind farm operators would be paid at a higher rate when a facility goes online, with the rate tapering off later.
“The loss of a tiered FIT scheme would deal a significant blow to financing efforts, as that arrangement was pivotal in winning over lenders,” CI Wind Power Development Taiwan Co Ltd director Marina Hsu (許乃文) told the Taipei Times.
“While we were able to convince lenders to commit to loans of between eight and 10 years, the lack of a tiered FIT scheme could lengthen the time frame as much as twofold,” Hsu said.
“Lenders are not likely to take on additional exposure if loan repayment periods are lengthened any further,” she said, adding that Taiwan’s green financing landscape is not as mature as the ministry claims.
Among other global offshore wind developers, CIP has committed to NT$20 billion (US$648.3 million) in contracts with Taiwanese suppliers to meet the government’s requirements, she added.
In light of CIP’s commitments, it is not fair to subject the company to an across-the-board FIT cut, she said, adding that commitments by some of its peers have not progressed beyond the signing of memorandums of understanding.
While some of the company’s peers have begun a race to sign power purchase agreements at the current FIT rate to lock in returns, CIP would carry out the commitments it has made, she said.
However, the company is no longer sure about future endeavors, she added.
CIP is conducting a thorough re-evaluation of its projects in Taiwan and hopes to continue negotiations with the government, Hsu said.
“The MOEA’s proposed changes stray from prevailing development trends across the globe and have exceeded our worst expectations,” she said.
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