Taiwan cuts offshore wind feed-in-tariffs for 2019 by 6%

The Taiwanese Ministry of Economic Affairs has introduced a new feed-in-tariff (FiT) set at TWD5,516/MWh (about US$1.8c/kWh) for 20-year offshore wind power purchase agreements (PPAs) that will be signed in 2019. This represents a 6% cut compared with the previous FiT rate set for 2018 (TWD5,849/MWh or US$1.9c/kWh) and is actually twice less than the 12.7% decrease initially planned. Developers will be able to choose a two-tier FiT of TWD6,279.5/MWh (US$2.04c/kWh) for the first ten years and TWD4,142.2/MWh (US$1.35c/kWh) for the last ten years.



Taiwan has also introduced a tiered production cap: developers will receive 100% of FiT for production up to 4,200 annual full-load hours (i.e. 48% load factor), 75% of FiT for production from 4,200 to 4,500 annual full-load hours (48%-51% load factor) and 50% of FiT for production above 4,500 annual full-load hours (51%-plus load factor).



This decision comes in the wake of the previous feedback from project developers and the governmental watchdog Control Yuan (CY) during consultations which occurred over the last few months. CY pushed for the FiT decrease and estimated that the 2018 rate (i.e. for projects that signed their PPAs before the end of 2018) was too high and did not take into account the global decreasing levelised cost of electricity (LCOE) made possible by technological advances and economies of scale.



Taiwan aims to develop 5,500 MW of offshore wind capacity by 2025, most of which will be contributed by the Changhua projects (2,400 MW in total), currently slated for commissioning between 2021 and 2025. Danish power utility Ørsted has secured rights to develop the first 1,820 MW in auctions held in April and June 2018 and has to sign the power purchase agreement (PPA) with state-run utility Taipower before the end of 2019.