Last month we attended the Global Offshore Wind Summit co-organized by the Global Wind Energy Council (GWEC) and the European Chamber of Commerce (ECCT) in Taipei, Taiwan. From the turnout, we could safely infer that the Taiwanese offshore market is of importance to both international and Taiwanese local stakeholders. All eyes were focused on how the local offshore wind scene will evolve, and we were closely observing how the rules, the players and the government and public’s reaction to the development of the industry all come into play.
It was a great chance to meet up with many of our global customers, many of which, have increased their local presence as we did to cater to the increasing and exciting opportunities available in Taiwan and the region.
Looking back to the beginning in 2012, when the pilot offshore wind projects were announced under the government’s grant scheme, to the now grid allocated target of 5.5GW by 2025; the industry has gone through a long journey – many of which can be valuable lessons in which the neighboring offshore wind markets such as Japan, South Korea and Vietnam, who can adopt or study lessons the lessons learned in Taiwan when coming up with their own growth plans.
Lately, discussions in the industry have been on the localization requirements, including possible revision of the vessel flag law, we summarize five (5) key takeaways from the Taiwanese offshore industry that could be of relevance to the neighbouring countries whom are venturing more large–scale offshore wind deployment.
- Localization of the supply chain
Firstly, having supported a large number of global turbine manufacturers and their respective component suppliers through their design and certification process, we know that establishing a new supply chain is by no means an easy feat; let alone a local supply chain that has no experience in offshore wind development. The economic benefits from increase in investments and job creation is indeed tempting, but the investment costs and lack of a clear strategy to compete on the global supply chain arena do tend to raise eyebrows among local players. As highlighted by my colleague Peter Brun in his blog on offshore wind in Vietnam, new suppliers have to consider the potential in the region and look also to acquiring the relevant competence that would allow them to compete in the future. Over the years, we have seen an increasing number of potential suppliers being identified, but it is important to note that it is not possible to achieve full localization – a trend evident in the current European offshore markets.
- Infrastructure development
Secondly, there are concerns raised about the lack of the required infrastructure (such as required skilled workers, vessels, grid infrastructure, etc.) many of which are concerns raised by developers whom are trying to strike a balance between the localization requirement and optimizing the Levelized Cost of Electricity (LCOE) of their wind farm. However, the lack of detailed information available at the early stage of development does not need to be a dampener. Modelling tools can help various stakeholders make informed predictions, and fill in the gap where information is missing. A few examples would be DNV’s Turbine.Architect tool, which allows the stress testing of various scenarios to help evaluate the benefits of different options, while our Windfarmer: Analyst tool allows the modelling of the expected energy production of the wind farms.
Additionally, the term ‘infrastructure’ does not stop at the ‘hard’ assets. ‘Soft’ assets such as training and development are also needed, and the development of soft skills and local talents will take time and effort. On the bright side, Taiwan has been very successful and willing to work and learn from more experienced stakeholders in the industry; and a good example of such initiative is our recent training project with a local Taiwanese certification team.
Apart from various offshore related training that we have carried out for various companies in Taiwan over the years, ranging from understanding project development risks to project certification process, we are excited to share our expertise in order to raise the competence level locally – something which we believe will make everyone’s work easier when we are on the same page.
- Technological advancement
Thirdly, technological advancement happens faster than we would expect. Just a few years ago, the industry was looking at predominantly 3-4MW turbines, but these days we are looking at 8 – 9.5MW turbines models being considered. It is therefore important for the local industry to engage the international suppliers and plan such that investments into supporting infrastructures, e.g. ports and harbours, have sufficient space and avoid ending up being obsolete. Imposing too many restrictions could also prove to be detrimental for when technologies change and get replaced. Investments made by the local players could be obsolete in the time that they take to build up competence and experience.
- Environmental impact
Fourthly, Environmental Impact Assessments (EIAs) and regulatory approval has and will always be of concern because of the scale and locations of these offshore projects. Having a concise regulatory and permitting process allows for a smoother development timeline, as opposed to navigating through various agencies and associations for approval or consent. Early engagement with local fishery agencies is also essential to ensure that there are no major delays or setbacks in the project schedule in the later stages of project. This is also something that we have constantly come across in other developing offshore regions such as Japan and South Korea, where this is a critical and often lengthy process to resolve.
- Adaptation to local condition
Lastly, while majority of the offshore wind projects have been happening in Europe, it is important to also amalgamate overseas experience with the local knowhow. For example, unlike in Europe, sites in Taiwan, Japan and South Korea are exposed to extreme seismic conditions such as typhoon and earthquakes. It is important to also consider these and other factors in the design stage so as to ensure that turbines used are able to operate smoothly through, and even beyond their design life. With this issue in mind, we have initiated a Joint Industry Project (JIP) on Alleviating Cyclone and Earthquake Challenges for Wind Farm (ACE) to help develop guidelines to align the methodologies for wind farms in these extreme weather conditions.
In summary, the risks in the Taiwanese market are accompanied by many opportunities. Coupled with the influx of talents and investments entering the region, we expect exciting times and activities in the Asia Pacific region. In DNV, we are already anticipating this change, and are growing both our local certification and advisory teams in order to help the industry and developers achieve the offshore wind targets by leveraging on both our global offshore wind experience, and understanding of unique local conditions.