Energy & Infrastructure Insight - Issue 3

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Page 25 of 29

26 The "Thousand Wind Turbines Program" has offered an exciting opportunity for investors and stakeholders to participate in the growth of a nascent energy sector in Taiwan, which has so far been supported by firm policy commitments from the government, attractive Feed-in- Tariff (FIT) rates and the implementation of new limited or non-recourse project financing structures familiar to international investors, in lieu of prevailing corporate financing solutions. However, the headwinds to further progress remain. CONSIDERATIONS FOR INVESTORS The government's initial efforts to offer a generous FIT was successful in attracting major international investment. In 2019, international investors made more than $5 billion of investments in offshore Taiwanese wind farms. This led to the commissioning of Taiwan's first offshore wind project in November of 2019, which was developed on a limited recourse project financing basis. Construction of a second US$2 billion offshore wind project began during the same month and an agreement was reached in May 2019 to develop a third US$3 billion windfarm off the coast of Yunlin County in south-central Taiwan. However, recent tariff reductions by the government have created financial pressures for developers, including a reduction of the 2020 FIT by approximately 7.64 percent to $0.17 per kWh, placing the economic viability of offshore wind projects at risk. Uncertainty with respect to the future of the auction process, which remains to be finalized, is likely to add to investors' concerns. Taiwan Offshore Wind – Challenged by Headwinds? Taiwan's "Thousand Wind Turbines Program" is an existing energy initiative by the Taiwanese government to increase Taiwan's offshore wind power capacity by 5.5 GW by 2025 and a further 1 GW per year from 2026 to 2035. This article examines the challenges that are faced in achieving this goal.

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