Copenhagen Infrastructure Partners (CIP) yesterday urged the government to keep next year’s purchasing price for offshore wind energy at current levels to reflect higher risk hedging costs.
The Ministry of Economic Affairs is expected to publish its proposed offshore wind energy purchase price before the end of this month and finalize its decision in December.
CIP urged the government to maintain this year’s price of NT$5.8 (US$0.19) per kilowatt-hour, as further cuts would stifle the nation’s efforts to create a homegrown industry to harness offshore wind energy, CI Wind Power Development (Taiwan) Co chief financial officer Keith Hsu (徐正穎) said at a media gathering.
A reasonable price would ensure that offshore wind farm developers have enough time to build a local supply chain and meet the government’s renewable energy and local content targets, Hsu said.
CIP last year began risk analysis services on behalf of lenders for insurance company Aon PLC, which revealed that Taiwanese offshore wind power projects have a considerably higher risk compared with similar projects in Europe.
Apart from frequent typhoons and earthquakes, Taiwan also has higher exposure to foreign-exchange volatility as well as elevated geopolitical tension as relations with China sour, Aon chief technical officer Clive Lin (林彥碩) said.
A 300-megawatt project in Taiwan costs between NT$320 million and NT$440 million more than a similar project in Europe, Lin said.
Taiwan also has higher construction fleet rental fees as vessels must sail long distances to work on projects, while the readiness of the local supply chain still remains a concern for investors, he said.
As a result, the government has underestimated the cost of offshore wind projects by neglecting risk hedging provisions, he added.
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