HK Summit: Localisation requirements bump up Taiwanese offshore wind capex

Localisation requirements in Taiwan make capex costs on offshore wind projects much higher than in other countries, a panel of developers has told attendees at Infrastructure Investor’s Hong Kong Summit.

Kunal Patel, head of partnerships and structured solutions at Ørsted Offshore Wind, said that local procurement requirements in the country led to higher up-front costs that developers and investors had to factor in when considering schemes.

“Compared to some of the other markets we’ve operated in, the localisation [process] is accelerated in Taiwan. It goes from big-ticket items like having very large contracts executed in Taiwan, to smaller things like ensuring all the engineers adhere to the same health and safety standards [as in Europe],” he said.

“It does come at a cost to the project – it’s fair to say the capex is higher than had they not been procured so heavily locally. But in the long term that should lead to cost reductions.”

Steen Lønberg Jørgensen, partner at Copenhagen Infrastructure Partners, said the localisation requirements were one of the major challenges of developing offshore wind in Taiwan and that the pace of development in recent years had made it even harder.

“Heavy industry in Taiwan is actually quite advanced and sophisticated, but they’re not used to working in joint ventures, or to technology transfer from Europe. We’ve spent a lot of time finding local companies and facilitating the JVs between them and European technology owners – now the challenge is to make it work day to day,” he said.

Investors and developers are targeting opportunities in Taiwan as a significant market for offshore wind, the Hong Kong Summit heard, with challenges around financing and the length of power-purchase agreements beginning to be resolved as more deals are done.

Kok Leong Toh, vice president for private infrastructure at Partners Group, added that its experience with developing solar schemes in Taiwan had led it to make its operation as ‘Taiwanese’ as possible.

“The way we approach solar is that the majority of our employees in Taiwan are Taiwanese, as it’s easier to push for things to be done if you push yourself as a Taiwanese company with foreign investment, rather than a foreign company wanting to do a Taiwanese project,” he said.

Ørsted Offshore Wind, formerly known as Dong Energy, has five ongoing projects in Taiwan, while Copenhagen Infrastructure Partners is developing around 900MW of capacity across several sites in the country.