The reduction was widely seen as a political response to domestic concerns that the tariff in Taiwan was considered unreasonably high when compared to similar projects around the world. However, as is often the case, it is difficult to compare project costs and returns based solely on the regulated tariff. Currently, Taiwan's local supply chain is undergoing development. As projects are built and commissioned, allowing a local supply chain to further develop, unit costs should reduce with tariffs similarly falling to reflect lower costs.
Local content requirements
An underlying policy element in Taiwan's offshore wind programme was to establish the island as a regional supply hub for offshore wind projects. Use of the local supply chain was therefore an important factor considered by the Taiwanese government when selecting winning projects during its 2018 allocation round.
The ability of developers to meet these 'local content' requirements has been impeded by a shortage of experienced local talent. However, leveraging Taiwan's advanced manufacturing industry, these challenges should not be insurmountable and training institutions, university programmes and internships have been set up to train talent - although this will take time.
Sourcing the sophisticated machinery required by these projects, such as wind turbine installation vessels, from domestic suppliers will be a greater challenge.
The offshore waters of Changhua, where Taiwan's offshore wind farms are concentrated, are almost entirely high risk areas for soil liquefaction. Although soil liquefaction risk can be mitigated by the construction method, this adds complexity to the design and engineering of the turbines.
Sand waves present another challenge when erecting turbines in the Taiwan Strait. As the sediments washed from the mountains to the seabed are mostly sand, the seabed sediment layer is not flat but rather like 'waves', with peaks and troughs of about five to 10 metres. These waves move by around 10 to 16 metres annually, according to satellite photo analysis.
Although there is no risk of immediate damage to the wind turbine, the movement of the waves means that some of the underwater foundations buried in the sedimentary layer will be exposed to seawater in a few years and other parts covered. This will affect the configuration of the submarine cable and the design of the underwater foundation. Accurate information will be required to help engineers find the design that best meets these requirements.
There are other geographical concerns arising from the region's history of typhoons and earthquakes. This is impacting the cost and long term availability of natural catastrophe insurance.
Construction, never easy in the offshore environment, is especially difficult in the Taiwan Strait, which is prone to strong winds, severe weather conditions and typhoons. The window for carrying out installation work is relatively narrow, from April to September, but this is also peak typhoon season so vessels and personnel need to closely monitor weather conditions while carrying out work.