After a round of fierce haggling between the authority and developers, the 2019 wholesale rate for offshore wind power has been settled at NT$5.516 kWh, the average for a tiered-rate scheme for 20 years, NT$6.2795 for the first 10 years and NT$4.1422 for the remaining 10 years, with duration for full-capacity operation capped at 4,200-4,500 hours a year.

The rate scheme, finalized on Jan. 30, is much more favorable than the draft scheme, which calls for a fixed NT$5.1 rate for the 20-year period, an adjustment made in response to the fierce backlash from the prospective developers, including Ørsted, CIP, NPI, WPD, to the original proposal.

Initiated by the German government in 2000, the whole-rate scheme is designed to enable renewable-energy developers securing steady profits, so as to boost their investment willingness.

Developers contend that whole-rate scheme is essential for them to sustain their operation, enabling them to offset multiple potential risks, such as, in the case of Taiwan, the damage of turbines inflicted by typhoon.

They ascribe the relatively high rates in Taiwan to the nascent stage of Taiwan's offshore wind power market. In Europe, whose rates have dropped to the equivalent of NT$2.3-2.5 kWh, there were 105 wind fields in 2018, with total capacities topping 18.5 GW. The massive economy of scale has been driving down manufacturing costs yearly.

The situation is also the same in the U.S., where installation cost for the first wind field tops NT$370 million/MW, 3.5 times that in Europe. Even in Europe, some latecomers also have to bear higher costs for offshore wind power, such as France where the installation cost for two ongoing wind-field projects reaches NT$181 million/MW, 1.7 times that for more mature markets in the region.

In Taiwan, the 2019 draft rate of NT$5.1 kWh is tantamount of installation cost of NT$155 million/MW, lower than the costs in both the U.S. and France. In addition, developers in Taiwan must bear extra cost for meeting the government's localization requirement.

Developers point out that at NT$5.5 kWh, offshore wind power projects can break even at best, urging the government to release more wind fields, so that they can drive down cost, via economy of scale.

Moreover, offshore wind power will create multiple new business opportunities for Taiwan, such as maritime engineering, a sector which state-run CSBC Corp. is poised to tap.

(First photo courtesy of Archangel12 via Flickr CC BY 2.0)