Japanese companies are dropping out of offshore wind projects in Taiwan, one of fastest-growing markets for the technology, as rising costs and worsening delays plunge the industry into deeper trouble worldwide.
Oil refiner Eneos Holdings Inc last week said that it might exit the Yunlin Offshore Wind Project (允能雲林離岸風廠) after regional utility Shikoku Electric Power Co decided to pull out of the same project due to delays threatening its profitability.
Electricity generator JERA Co announced that it completed the sale of its stake in Formosa 3, another Taiwanese offshore wind project, in June.
Photo courtesy of Taiwan Power Co
“The withdrawal of companies indicate that the attractive proposition of Taiwan’s offshore wind is diminishing, which might affect investor confidence in the sector,” said Diao Chenyuan (刁晨元), managing consultant for power and renewables research at Wood Mackenzie Ltd.
However, Japan’s Mitsui & Co has decided to continue investing in building offshore wind farm in Taiwan, teaming up with Canada’s Northland Power Inc, the Ministry of Economic Affairs said yesterday.
Spanish power company Iberdrola group, Blue Float Energy Co, France’s EDF group and Floatation Energy are also continuing with their plans to develop offshore wind farms, the ministry said.
Taiwan’s wind farms are part of a plan to increase the ratio of electricity coming from renewables to 20 percent by 2025, from 8 percent last year.
The nation aims to have 5.7 gigawatts of offshore wind capacity by then, compared with 2.1GW now.
Taiwan is also looking to increase its use of natural gas, cut coal and eliminate nuclear power, but is falling behind schedule on its targets.
Fewer players in the market reduces competition and leads to undersubscription in tenders, and could jeopardize Taiwan’s targets, Diao said.
The troubles in Taiwan’s wind industry compound a crisis that has already hit other parts of the world, as the aftereffects of the COVID-19 pandemic push up the cost of labor and borrowing.
While many businesses are able to offset cost changes by raising prices, many wind developments find themselves locked into contracts to sell power at rates set years ago.
Denmark’s Orsted A/S this week withdrew from a partnership developing offshore wind in Norway due to rising costs, while BP PLC and Norway’s Equinor ASA recently took large impairments on projects.
US-based public utility Eversource Energy also incurred a US$331 million after-tax impairment charge in the second quarter for its offshore wind operations.
In Taiwan, rigid requirements mandating that developers procure 60 percent of their equipment from local manufacturers have made projects even more expensive, sometimes doubling costs.
The rules could lead to a sharp rise in offshore tariffs, saddling ratepayers with higher prices and bringing delays in installations, BloombergNEF Analyst Leo Wang said in a report this month.
Less experienced suppliers in new offshore wind markets also often offer products that are more expensive than their international peers and of lower quality, he said.
Additional reporting by Lisa Wang
France cannot afford to ignore the third credit-rating reduction in less than a year, French Minister of Finance Roland Lescure said. “Three agencies have downgraded us and we can’t ignore this cloud,” he told Franceinfo on Saturday, speaking just hours after S&P lowered his country’s credit rating to “A+” from “AA-” in an unscheduled move. “Fundamentally, it’s an additional cloud to a weather forecast that was already pretty gray. It’s a call for lucidity and responsibility,” he said, adding that this is “a call to be serious.” The credit assessor’s move means France has lost its double-A rating at two of the
Jensen Huang (黃仁勳), founder and CEO of US-based artificial intelligence chip designer Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Friday celebrated the first Nvidia Blackwell wafer produced on US soil. Huang visited TSMC’s advanced wafer fab in the US state of Arizona and joined the Taiwanese chipmaker’s executives to witness the efforts to “build the infrastructure that powers the world’s AI factories, right here in America,” Nvidia said in a statement. At the event, Huang joined Y.L. Wang (王英郎), vice president of operations at TSMC, in signing their names on the Blackwell wafer to
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
RARE EARTHS: The call between the US Treasury Secretary and his Chinese counterpart came as Washington sought to rally G7 partners in response to China’s export controls China and the US on Saturday agreed to conduct another round of trade negotiations in the coming week, as the world’s two biggest economies seek to avoid another damaging tit-for-tat tariff battle. Beijing last week announced sweeping controls on the critical rare earths industry, prompting US President Donald Trump to threaten 100 percent tariffs on imports from China in retaliation. Trump had also threatened to cancel his expected meeting with Chinese President Xi Jinping (習近平) in South Korea later this month on the sidelines of the APEC summit. In the latest indication of efforts to resolve their dispute, Chinese state media reported that
RSS