As the Taiwanese market moves into the third zonal development round, there will be an increase in domestic opportunities for supply chain participants to develop economies of scale and achieve commercial viability.
Less risk at the construction and development phases
In the European markets improvements in technology, greater project experience and more effective leverage of competitive advantages have significantly reduced the construction and development costs of offshore wind farms. With the entry of experienced developers and manufacturers from the European markets, the fledgling Taiwanese market could experience similar progress. There will be opportunities for investors to obtain satisfactory returns from the construction/development phases of offshore wind projects, in addition to investments in the operational assets.
Taiwan as an Asia Pacific offshore wind hub
Access to broader Asia Pacific project opportunities and deals would also increase the commercial viability of businesses across the supply chain. For industry participants, project clusters reduce costs, especially in relation to maintenance and marine logistics.
One particular opportunity is in relation to maintenance operations coming out of Taiwan. A regional maintenance hub could be established in Taiwan, and maintenance costs spread over multiple projects in the region. Repair, operations and maintenance are long-term services that could provide jobs and revenues that last 20-25 years on any particular project, as opposed to construction which is estimated to last 1-2 years.
Floating offshore wind farms
Until recently, full-scale turbines with floating foundations were purely prototypes with commercial potential. However, the increasing viability of floating offshore wind farms has the potential to unlock even more development areas in Taiwan.
In order to take advantage of this opportunity, it is important to note that the scope of a floating offshore project is different to that of a fixed-bottom project in a number of critical respects:
- integration of the wind turbine tower with the floating foundation will need to be considered by developers at an early stage to ensure that contracts will provide the expected degree of protection;
- the more modular approach to construction that is expected for commercial scale floating offshore wind along with the need to consider O&M requirements could drive further differences when comparing floating with fixed bottom projects; and
- whilst design risk is not new to offshore projects, there is additional risk of new WTG models not being certified at the time expected, or not performing in the expected way.
If you would like further information on the Taiwanese Offshore Wind market, including a more comprehensive legal/commercial Update Paper, please contact: [email protected].
James Harris, Melanie Grimmitt, Bernard Ang, Nick Carlin are renewable energy experts at Pinsent Masons, the law firm behind Out-Law.