An offshore wind power development plan in Changhua County got stuck because the county government and the Bureau of Energy had different interpretations of a procedure through which electricity enterprises apply for construction permits.
As a result, four developers failed to secure a favorable feed-in tariff of NT$5.8498 per kilowatt-hour (kWh) for their six wind farm projects in the county. Watching the political conflict between the bureau and the county government, foreign companies in Taiwan cannot help but heave a deep sigh of disappointment.
Since late last year, the bureau and the county have been in a dispute over the feed-in tariff for wind power developers — a favorable rate of NT$5.8498 per kWh or a lower rate of NT$5.106 starting from this year.
For the four developers — Denmark’s Orsted A/S and Copenhagen Infrastructure Partners, and Hai Long Offshore Wind and China Steel Corp — NT$5.8498 per kWh is a matter of survival and is a bottom line to which they need to hold fast.
The offshore wind power development plan is an indicative major project under the central government’s Forward-looking Infrastructure Development Program, with a total investment of hundreds of billions of New Taiwan dollars. For the county government alone, the stamp duty for the project was projected to reach NT$2.1 billion (US$68.1 million).
Unimaginably, this huge project is stuck due to a trivial matter: whether a consent box in an attachment to an official document had been ticked.
The problem is that the government agency in charge, the bureau, is unwilling to be the only one to endorse the plan, while Changhua County Commissioner Wang Hui-mei (王惠美), who took office just a few weeks ago, is skilled at playing politics.
The latest response from the county government was that the “review of the preparatory work does not fall within the county government’s remit.”
In plain English, the county government is saying that it has replied to the bureau that the county government has “no opinion” on the matter.
Bureau officials are not that naive. If it goes ahead and the developers secure the favorable feed-in tariff of NT$5.8498 per kWh, the next step would be a scenario that Chinese Nationalist Party (KMT) politicians have already prepared: presenting President Tsai Ing-wen (蔡英文) as “favoring certain foreign companies” and “wasting public funds,” as well as blaming the bureau for “helping foreigners extort money from Taiwan Power Co” or anything else from their wild imagination, creating the government’s first political dilemma of the year. When that happens, the county government can throw up its hands, and put on an air of helplessness and of being suppressed.
There are many aspects worthy of discussion in connection to the wind farm program, such as whether the feed-in tariff mechanism is suitable for green energy industries, whether NT$5.8498 per kWh is reasonable and whether purchasing power locally would support local development.
As a former Ministry of Foreign Affairs official, what worries me is whether Taiwan’s unstable political environment will be the last straw for foreign businesses when evaluating the nation’s investment environment.
The European Chamber of Commerce Taiwan’s position papers for last year, themed “Clearing the Hurdles to Economic Progress,” said that Taiwan has “a strong need for legal certainty and consistent policies related to renewable energy” and urged the government to establish “greater interagency coordination in formulating policies and processes” in a section concerning “Energy security and transition.”
Similar calls have appeared in the American Chamber of Commerce in Taipei’s annual Taiwan White Paper.
For foreign companies seeking to make an investment, a stable political environment and a stable energy policy are essential. In contrast, the offshore wind power project shows a lack of political determination on energy policy. Even worse, ugly political conflicts between the KMT and the Democratic Progressive Party take place before the eyes of foreign businesses.
In the past few years, government agencies, including the ministry, have made great efforts to negotiate a bilateral investment agreement with the European Economic and Trade Office in Taiwan. Such an agreement requires gradually building a dynamic relationship through concrete investment performance.
If the offshore wind farm plan is stillborn, it could have a strong negative effect on foreign businesses’ investment confidence in Taiwan: An unstable political environment creates higher investment risk, which is the last thing foreign investors want.
Jerry Liu is a former Ministry of Foreign Affairs official.
Translated by Chang Ho-ming
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