Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 260
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4. OFFTAKE/PPA
4.1 Offtake, remuneration,
and tariff scheme
The offtaker for OWF projects in Taiwan is
Taipower, which is a state-owned company
under the administration of the MOEA. Renewable energy generators may enter into a
PPA for offshore wind projects with Taipower with a guaranteed term of 20 years.
According to the RED Act, Taipower is obligated to connect and purchase power generated by renewable energy facilities at the
FiT applicable to the year in which the PPA
is executed. FiT in Taiwan is determined, reviewed, and adjusted annually by the review
committee convened by the MOEA, which
comprises relevant governmental agencies,
scholars and experts as required by law. The
factors that would be taken into consideration include relevant costs and other parameters such as the average installation cost,
service life, operation and maintenance fees,
annual electricity generation capacity, the
fisheries compensation, costs of maintenance and decommissioning, and whether the
facilities are installed in remote areas, etc.
Under Phase II of the Program, for the OWF
projects which are awarded grid capacity
in the selection process (Phase II Selection
Projects), Taipower will offtake the power
generation thereby at the FiT rate applicable
to the year of execution of the PPA. As for
the OWF projects which are awarded grid
capacity in the bidding process (Phase II
Auction Projects), they may only sell power
to Taipower at the price it offered in the
bidding process.
Taiwan
Thanks to the latest amendment to the EB
Act on January 26, 2017, OWF projects may
also sell the power directly to the private
end-users through wheeling arrangement or
their own transmission lines. In 2019, several
tech giants, including Google and Apple,
publicly vowed to purchase renewable
energy in Taiwan to fulfill their commitment
to operate their businesses on green energy.
The corporate power purchase agreement
("CPPA") market has seen significant growth,
as underlined by the signing of the world’s
largest (920 MW) CPPA between Ørsted and
Taiwan Semiconductor Manufacturing Company in July 2020. This transaction highlights
the potential of the CPPA as a mechanism to
allow companies to meet their green energy
targets and secure fixed energy prices, whilst
allowing renewable energy generators an
alternative route to market. The commercial
advantages are supported and accelerated
by Taiwan policy initiatives, making CPPAs
an attractive option for renewable energy
generators.
In particular, given that the bidding price
for the Phase III-1 Projects is capped at
NT$2.49/kWh (with no bidding price floor),
and also partially due to the enhanced
localisation requirements and the general
inflation and increase of costs of materials,
it is understood that most of the developers
who have been awarded grid capacity for the
Phase III-1 Projects have chosen to go for
zero-subsidy bids and then find other offtake routes through entering into CPPAs with
private end-users. This reflects that it may
have been considered by the developers
not economically viable for OWF projects to
follow the route of those Phase II Selection
