2020 Green Economy Forum
The ECCT was the co-organiser of the three-day 2020 Global Offshore Wind Summit Taiwan - Virtual together with the Global Wind Energy Council (GWEC). The event, which was attended in person by delegates from Taiwan and virtually by over 650 participants from Europe and other regions, began with opening remarks by the guests of honour which was followed by high level industry forum and a mayor's session, followed by a VIP dinner. Opening remarks were made by Shen Jong-chin, Vice Premier of Executive Yuan; Wang Mei-hua, Minister of the Ministry of Economic Affairs (MOEA); Giuseppe Izzo, Chairman of the ECCT and Ben Backwell, CEO of GWEC.
Taiwan offshore wind development forum
The forum brought together senior executives of leading wind industry players active in Taiwan's offshore developments to discuss with directors-general (DGs) of the Taiwan government the challenges and opportunities ahead for offshore wind in Taiwan. The session was moderated by Alastair Dutton, Chair of Global Offshore Wind Task Force, GWEC. The session featured presentations by the DGs which was followed by a panel discussion, featuring the DGs and the corporate leaders.
Government participants were Yu Cheng-wei, Director-General, Bureau of Energy (BOE), Ministry of Economic Affairs (MOEA); Yang Chih-ching, Deputy Director-General, Industrial Development Bureau (IDB), MOEA; Lian Ching-chang, Director-General, Bureau of Standards Methodology and Inspection (BSMI), MOEA. Industry participants were Maida Zahirović, Business Director Taiwan, MHI Vestas Offshore Wind; Wang Yuni, Chairperson, wpd Taiwan Energy; Matthias Bausenwein, President / General Manager Asia-Pacific, Ørsted; Niels Steenberg, Chairman and Managing Director, Siemens Gamesa Renewable Energy Offshore Wind; Jesper Krarup Holst, Senior Vice President, Partner at Copenhagen Offshore Partners & CEO, CI Wind Power Development Taiwan (CiP).
In his presentation, BOE DG Yu Cheng-wei gave an overview of current status of offshore wind policy. Taiwan is currently in phase 2 of development after wind farms of 128 megawatts (MW) of capacity were connected to the grid at the end of last year. Currently, according to Yu, another 3.836 gigawatts (GW) of capacity are under construction. Auctions have been held for a further 1.664GW of capacity. According to Yu, there were some learnings from phase 2 that will be taken into account in phase 3. Authorities are still collecting opinions and hope to finalise rules by the end of 2020. According to Yu, the wind power sector will create 57,000 jobs and bring in foreign investment worth NT$2.6 trillion (€77.6 billion) by the end of the phase 3 in 2035.
In his presentation, IDB DG Yang Chih-ching spoke about localisation policy and listed some of the local companies that have been selected to produce various components. He noted that this included joint ventures between Taiwanese and Danish and Spanish companies.
According to Yang, the IDB has hosted 75 consultations to get input from 86 stakeholders on the future development plans. He expressed the view that the Covid-19 pandemic will result in the restructuring of supply chains, including green and renewable energy and that European investments will help Taiwan to become competitive.
In his presentation, BSMI DG Lian Ching-chang gave an overview of offshore wind farm third party certification. He listed some national standards that have been developed for seismic and typhoon resistance. Designs must be certified as must the process for the manufacturing, transportation and installation of turbines. Taiwan will also need energy storage standards. In this regard, the BSMI will set up a lab to test energy storage systems
Panellists made the point that Taiwan has great potential but that a sustainable framework is required based on consistency and sufficient volume for Taiwan to become a competitive hub in the Asia Pacific region. All of the panellists spoke about how they are working hard with local companies to meet localisation commitments. Some companies have ambitious plans and have already started setting up local production facilities.
DG Yu noted that more and more companies are requiring green energy and that the government is taking the energy transition seriously, noting that it is also an issue of energy security and improving Taiwan energy independence as well as creating jobs.
DG Yang noted that good synergy is possible with European players given Taiwan's good experience in manufacturing, such as steel making. He therefore hoped for more joint ventures between European and Taiwanese companies. He acknowledged that Taiwan needs to meet quality and price and timelines to be successful. He said that Taiwan is learning fast and expressed confidence on making progress.
Several panellists noted that they had seen good progress by local suppliers in terms of delivering products on time. Some suppliers were good from the start, others improved over time after overcoming initial hiccups. On the other hand, it was noted that some local companies have not been able to meet expectations or are not interested in making long term commitments. Another point reiterated was that local manufacturers need to be open to new ideas and that if they work with European partners, they can shorten the learning curve.
Sufficient volume will be needed if Taiwanese players want to be competitive. One panellist remarked that if there is only a single source for any given component in Taiwan, it will be difficult to bring prices down. He added that if Taiwan sticks to an item-based localisation framework it will not become competitive. Pushing the local supply chain too hard too fast may not work. In addition, adaptability is essential. Taiwan needs to go for the latest technology if it is to succeed. This is important if consumers want cheap electricity. Solutions being developed today will be obsolete in 10-15 years.
DG Yang said that IDB wants to be able to learn from current experience to develop local suppliers for the export market. He noted that local suppliers faced criticism initially but have shown that they can improve. Another point made by a panellist is that good policy is important, but it is not effective without good execution. There also needs to be more transparency in electricity policy.
Taichung development session
The session on the topic “Ports, turbine manufacturing and talent training” focused on recent developments on how to build a sustainable industry supply chain to benefit the local economy. Participants included Linghu Jung-da, Deputy Mayor of Taichung City; Irene Tang, Senior Director of New Business Development, TIPC and Vincent Tsai, General Manager of the Taiwan International Wind Power Training Center.
Linghu Jung-da gave a presentation on Taichung's investment advantages and offshore wind power development. He noted that the city's industry base serves as a good foundation for the wind energy industry. It also has a good talent pool from its universities. While the trade volume of Taichung port is lower than that of Kaohsiung, it is the highest in terms of value. Taichung harbour has been chosen as industrial zone for the wind turbine industry. The municipal government offers subsidies to companies too set up headquarters in Taichung and the Taichung mayor has loosened regulations and set up one-stop service window to help companies set up shop. Several companies have already set up facilities in Taichung harbour.
In her presentation, Irene Tang said that Taichung port has 62 quays and 8,000 vessel voyages per year. New development plans will make Taichung larger than Kaohsiung and harbour development plans already set aside areas for specific functions. The port is only 25-30 nautical miles from most planned offshore wind farms. The port authorities have set aside areas for preassembly area, manufacturing, a training centre and O&M services. It renovated quay 2 for Formosa 1 project. She noted that it took 530 voyages and almost a year to construct Formosa 1, indicating the amount of work involved in building an offshore wind farm.
In his presentation, Vincent Tsai said that the Taiwan International Wind Power Training Center was established three years ago to provide Global Wind Organisation (GWO) courses, enhance quality standards and provide localised training. It is a joint venture between TIPC, China Steel, C-Wind and Taipower. Training facilities include a mock wind tower for trainees and a pool for training exercises. It is hoped that the centre will be become a regional training centre in Asia given that it has space to train 300 people at a time.
Courses offered include basic safety training, basic technical training, (the only place in Asia offering this course) and enhanced first aid, among others. Basic training includes sea rescue, fire safety and first aid. According to Tsai, more than 1,400 people have received training so far and completed over 8,000 courses.
Besides the live session, Day 1 of the summit included virtual sessions. The main session was on the topic: “Innovative Solutions to Address Workforce Demand in Taiwan and in the Region”. In addition, there were virtual expo booths and meetings designed to recreate the “coffee-in-the-lobby” conversations that are unique to in-person events.
Asia in focus: Emerging Asian offshore wind markets
The first session on Day 2 of the summit provided a regional perspective on the various offshore wind markets that drew upon the success stories and challenges that each individual market is facing or could potentially anticipate. The session was moderated by Qiao Li-ming Qiao, Asia Director, GWEC.
To speak about Japanese offshore wind energy development was Jin Kato, President of the Japanese Wind Power Association (JWPA). In his presentation, Jin Kato said that the Japanese government does not have a clear target. He also gave an overview of grid connection proposals to connect the best wind rich areas to areas of greatest demand. He noted that Japan used to have its own wind turbine manufacturers but that they would need a clear government commitment for them to be revived.
Covering South Korea's offshore wind energy development was Lee Yeonsang, President of the Korea Energy Agency (KEA). He noted that Korea also has local a content requirement for international developers to partner with local developers. The government is helping to develop an industrial centre.
Giving a perspective on Australia's Offshore wind development potential and perspectives was Andy Evans, CEO, Offshore Wind Australia. He noted that Australia is not just a country of coal and solar. There is no formal regulatory framework in place for offshore wind but there is a plan to put in place legislation by next year. Only one project near Melbourne is in the works at the moment but more are expected after legislation is in place. According to Evans, there is potential for 10GW of capacity.
Speaking about the South East Asia/Vietnam offshore wind energy market was Robert Liew, Principal Analyst, Commercial Leader for Wind Markets, Wood Mackenzie. Liew said that power demand is expected to grow by around 80%. Given low wind power, solar will be dominant but Wood Mackenzie still expects wind power to increase seven-fold by 2025 (albeit from a low base) or compound annual growth rates of 80% per year, translating into about 1GW of capacity. Vietnam and the Philippines are the largest markets. However, he said not to expect major development until the mid-2020s.
Most countries still rely on gas and coal but as renewables prices fall, they will become more competitive. It remains to be seen if near shore offshore wind will be competitive with gas and coal in the region.
In Japan, there are many parts and component suppliers, including steel producers and ship producers who are capable of contributing, although they are not ready at the moment. But there is no legal local content requirement.
Floating foundations should be the key technology in future for Australia given deep water near shore and because the windiest locations are far offshore. However, Robert Liew noted that cost will be an issue until they are brought down.
Side event: Renewables and energy storage session with VDE Renewables
This session covered lessons learnt on storage applications in the renewable sectors – and how the offshore wind sector can leverage on the breakthrough. It featured a presentation by Jan Geder, Head, Energy Storage Systems (ESS), VDE Renewables Asia, and a panel discussion on the best way for wind farms to “profit” from ESS.
In his presentation, Geder spoke about lessons learnt from solar and the risks that need to be considered, including quality assurance in both the products and implementations.
There are numerous technical risks that will later turn into financial risks. Based on 25 years of experience, the most obvious risk is with non-compliance of components with standards, followed by where systems are not installed properly, problems with grid connections and finally offtake risk from country and political risks. He went to give an example of a power plant in the UK that only operated for four years due to poor installation of cables.
In terms of batteries, there has been a 90% drop in the price of energy storage per kilowatt hour (kwh) over the past few years. However, the price drop may not continue as fast given supply issues and the lack of competition. Lithium ion batteries come with very specific risks, such as fires. For every kwh there is a higher risk of combustion. They also age and decrease capacity and efficiency over time. As they do so, they release more heat, which needs to be taken into account when designing cooling mechanisms in battery storage systems.
There were 23 large fires in Korean energy storage systems. Almost half of their energy storage systems were suspended in the first quarter of 2019 as a result. This is because of insufficient safety features. After investigation, it was found that that systems were not properly installed, not because of battery cells but because they are flammable materials that caught on fire.
Building Taiwan's offshore wind industry: Local supply chain, infrastructure and manpower
This session provided an overview of the challenges and opportunities facing the Taiwanese offshore wind industry. It outlined the government's plan for Round 3 auctions, localisation plans, as well as industry challenges at different levels. Speakers included Lee Wen-bing, Deputy Director of Renewable Energy Department, Taiwan Power Company; Chen Fu-ching, Deputy Chief, Industrial Research Section, Metal Industries Research & Development Centre (MIRDC); Irene Tang, Senior Director of New Business Dept, Taiwan International Ports Corporation (TIPC) and Dr Sebastian Rothe, Head of Wind Energy Business Unit, TÜV Rheinland.
In his presentation, Lee admitted that there are challenges ahead but that, as Taiwan's sole electricity utility, it has the responsibility to upgrade the grid's capacity and to develop a smart grid plan to meet expectations. Some parts of the grid need enhancement. He expressed confidence that Taipower can meet the government's targets. Installing ancillary services from energy storage to deal with sudden drops in energy being fed into the grid.
For PPAs like TSMC/Orsted, Taipower provides wheeling services. But Lee pointed out that Taipower is also a large provider of green power at a reasonable price. Hydrogen also has a lot of potential. Floating offshore wind is another technology that can provide huge cost savings. He concluded that the Taiwan Strait is an excellent location, but challenges remain.
In her presentation, Irene Tang gave an overview of developments in Taichung harbour.
Dr Sebastian Rothe said that the main challenges include local content. Market players have to finalise production in Taiwan, though local suppliers may not be familiar with international standards. Another challenge is the timeline. It may be difficult for local players to get ready in time. There may not be enough local experts but that TÜV is helping with training. The company's German team can provide technical support in cooperation with colleagues from Taiwan, who are familiar with the local market, regulatory and geographical conditions.
Finance & insurance forum
This session was designed to give a high-level review of the challenges and opportunities channelling a high volume of investments to offshore wind in Taiwan and Asia, taking into account the view of project developers, investors and financial advisories on investment, finance and insurance trends in Asia's offshore wind markets. The session was moderated by Mark Hutchinson, Chair of SEA Task Force, GWEC. Panellists included Steve Mercieca, Project & Infrastructure Finance Executive Director, Standard Chartered Bank; Julian Lynn, Regional Head, Middle East & Asia Pacific, UK Export Finance; Jorgen Kragh; EKF (Denmark's export credit agency) and James Harris, Head of Finance & Project, Asia Pacific, Pinsent Masons MPillay.
Jorgen Kragh said that EKF had been active in offshore wind since 2005. In 2018, the first deal outside Europe was in Taiwan. Now there are four deals in Taiwan, which he said had had a good start and has a predictable regime, which is very positive.
Julian Lynn said that UK Export Finance had underwritten three projects in Taiwan. Local financing was in New Taiwan dollars, which was a game changer.
James Harris wrote a market guide for Taiwan. He said that the framework gives investors confidence and an acceptable and bankable PPA with Taipower. Taiwan is already at a cross-roads in terms of developing a secondary market for M&A. Early movers are selling some shares in different projects. There is also a secondary debt market.
Julian Lynn said ECAs will continue to play a role given the halo effect. Jorgen Kragh agreed but said that ECA's involvement will be reduced gradually in future.
On the question of the impact on the cost of finance from ever-increasing local content requirements, it was noted that all developers have accepted local content although they have taken different approaches. Many suppliers have struggled to meet requirements and delivery requirements at the same time, which adds a cost.
One panellist said that local players will need to forge JVs across the region in order to reach economies of scale. Without this, there is a risk. He added that Taiwan's desire is understandable, but they need to be more patient.
Japan takes a different approach – guidance rather than an items-based approach to local content that must be local content.
Panellists agreed that exchange rate risk is not so much of an issue in Taiwan and that corporate PPAs makes sense for both developers and off-takers who are signed up to RE100.
On the question of risk from typhoons, panellists said that this was initially a concern because of a lack of experience and data. For this reason, insurance was expensive initially, but insurers have since worked with engineers and become comfortable with the risks, thanks to technology. The highest risks now are during construction but there has been some experience with onshore turbines. Turbines are designed to cope with typhoons.
Looking ahead, panellists expect to see successful projects. One panellist speculated that Taipower may be deregulated further. There will still be an ongoing learning curve in the development of the market, but Taiwan may see some of the biggest turbines ever. Given Taiwan's early mover status Taiwan should become a hub in Asia.
Other sessions on day 2 included the following:
Belgian expertise in offshore wind
Side event: Offshore oil & gas expertise in offshore wind
The session explored synergies between offshore oil and gas with offshore wind.
Side event: Corporate renewable energy procurement with RE100
The session covered developments in corporate procurement of renewable energy in Taiwan.
Safety and training with G+
The session focused on health and safety practices in the young but growing offshore wind industry with G+
The third day of the summit featured several side events in the morning session and several technical breakout sessions in the afternoon.
Technical breakout session 1: Offshore wind turbine technology and the optimisation of electricity output
Technical breakout session 2: Offshore wind assessment, siting and marine water condition surveying
Technical breakout session 3: Building a local supply chain in Taiwan
Technical breakout session 4: Underwater structure and construction
Side event: Floating offshore wind: What's the future for floating offshore wind
Both the second and third days of the summit ended with virtual booth and meeting sessions.