Taiwan's Energiewende With European Aid

September 20, 2016 | 00:00
Wind turbines in Kaomei Wetland
Wind turbines in Kaomei Wetland
The 2016 Taiwan Wind Power Investment International Conference and Green Energy Expo held August 24-25 attracted more than 100 companies and organizations vying for a piece of Taiwan’s recent US$41 billion, 10 year push into renewable energies. Recently inaugurated President Tsai Ing-wen is calling for 20% of Taiwan’s electricity needs to be generated from renewable sources, with 20GW of solar capacity and 3GW of offshore wind power installed by 2025. The event attracted a considerable number of visitors, including Taiwan’s Vice President Chen Chien-jen, who toured the venue and gave his support to the exhibitors.

Yet, that same week, Danish offshore wind installation firm A2SEA struggled to install two monopiles ordered by local wind developer Swancor Renewable Energy Co. for the Formosa 1 Offshore Wind Farm pilot project. Chinese firm ZPMC reportedly built the monopiles to tremendous dimensions to withstand to the harsh conditions of the Taiwan Strait, with each weighing some 700 tons, standing 90 meters tall and spanning nearly 7 meters in diameter. A week later, A2SEA conceded defeat and withdrew from the project, stating that “technical failure of equipment and project delays from the foundation contractor aboard the vessel” contributed to its failure. The US$8.33 million project, Taiwan’s first foray into offshore wind power, was expected to begin supplying power to Taiwan’s grid by the end of the year, but now that seems unlikely.

The contrast between the excitement generated by the administration’s push into renewable energy and the challenges on the ground and in the water clearly demonstrate that Taiwan’s own “Energiewende” will likely be neither smooth nor easy.

Offshore wind power development will see high winds, frequent earthquakes, and typhoons, while the densely populated island of less than 36,000 square kilometers, most of it steep mountains, lacks the space to readily install large ground-mounted solar farms.  

Bigger obstacles, however, might be bureaucratic red tape, a lack of coordination among relevant government agencies, and an overly complicated approval process for renewable energy projects.

“Sure you have a new administration, a new government, and there’s a change in the policies, but there is a lack of certainty, stability, and planning,” observes Robert Herzner, vice general manager of DEinternational Taiwan Ltd., a service unit of the German Trade Office. “It’s in the renewable energy sector, and it’s the same with energy efficiency.”

KH Chen from Sinogreenergy, which has recently entered into a US$220 million deal with Partners Group of Switzerland to develop 500MW of ground-mounted solar farms in Taiwan, says, the “application process (for solar power installations) is very very complicated,” requiring months of in-depth analysis of the impact of the power source on the grid and coordination with local and national officials. “We have to recruit special technicians just to do all of the analyses,” says Chen, noting that they are all retired engineers from state-owned monopoly power provider Taiwan Power Company (Taipower).

Background
Taiwan, the self-ruled, heavily industrialized island of 23 million people across the Taiwan Straits from China’s Fujian Province is bereft of conventional energy sources such as fossil fuels and imports some 98% of the its primary energy needs, which consumes around 15% of its entire GDP, according to the Bureau of Energy. Roughly 50% of Taiwan’s primary energy is used for the generation of power, and about half of this power is consumed by industry.

Three quarters of 219,000GWh of power supplied off of Taipower’s grid in 2015 was from fossil fuels, primarily coal (36%) and liquefied natural gas (LNG) (35%), while nuclear power supplied another 16%. Taiwan has three operating nuclear power plants, Jinshan (NPP1), Kuosheng (NPP2), and Maanshan (NPP3), all of which are approaching the end of their operating licensures. In the wake of the Fukushima earthquake and tsunami disaster, public opinion has turned strongly against nuclear power and the president has vowed that the licenses for these power plants will not be extended and that Taiwan will be nuclear-free by 2025. Off-record conversations with government representatives have revealed that NPP1 and NPP2 might actually go offline as early as next year as their cooling pools for spent fuel rods are nearly full and no politically palatable solution for nuclear waste storage has yet been tabled.

Renewables supplied some 3% of Taiwan’s power needs in 2015, almost entirely from hydropower. In 2015, Taiwan had some 842MW of installed solar capacity (potentially rising to 1.3GW by the end of 2016) and 647MW of onshore wind power capacity (rising to 747 at the end of 2016) which generated 875.5GWh and 1,525.3GWh of power, around 1% of the total.  

As Taiwan’s hydropower potential is maxed out and will likely diminish as reservoirs silt up and reduce capacity, raising the share of renewable energy power generation from 3% to 20% will depend almost entirely on solar and wind power.

Here, European funding and expertise is helping to lead this transformation.

The European Chamber of Commerce in Taipei (ECCT) has taken the lead in promoting Taiwan’s energy efficiency and energy transformation through its Low Carbon Initiative (LCI). Member companies in the LCI include Atlas Copco, Siemens, APP, Enercon, DONG Energy, Schneider, TUV Rheinland, BASF, and many others.

The LCI “aims to engage local business, policy-makers and the public to work together to meet the targets set by the Taiwan government to lower carbon emissions and prepare companies to deal with rising energy costs,” according to its website.

 “Where we help for the energy transition in Taiwan is bringing in the experience we have from activities and other energy transitions and share how this can be done on a federal level to the Taiwanese authorities,” explains Herzner. “This can be done with seminars, symposiums, these kinds of events.”
 
Taiwan last year passed its Greenhouse Gas Reduction and Management Act (GGRMA), which institutes Taiwan’s pledged Intended Nationally Determined Contributions to reduce emissions by 20% of 2005 levels by 2030, a law the ECCT strongly encouraged.  

The ECCT LCI and the German Institute were both instrumental in the recent renewable energy-related expos and conferences, including the 2016 Taiwan Wind Power Investment International Conference and Green Energy Expo. At the wind energy expo, many European trade offices and chambers of commerce were involved in sharing their knowledge and experiences, including the British Office; the Trade Council of Denmark, Taipei; the French Office in Taipei; the German Trade Office in Taipei; and the Netherlands Trade and Investment Office.

Wind
Taiwan has some 15.2GW of potential offshore wind power, with wind speeds averaging some 11 meters/second, some of the best wind resources in all of APAC. The island is committed to developing 3GW of offshore wind power by 2025 with a total of 4GW by 2030. Attempts to develop this energy resource are stymied by a lack of experience, resources, and capacity, however, and so far, research and standardization in offshore wind lags.

Yet this lack of development also means that the field is largely wide open for interested developers and industry suppliers, and Taiwan is inviting many companies particularly from Europe to participate in developing the industry, generating large opportunities for European renewable energy related firms.

For example, the Formosa 1 Offshore Wind Farm (OWF) pilot project remains active (although it is unclear who will take over the task of installing the monopile) and continues to engage European firms. Palfinger Marine announced in early July that it had cracked the Asian offshore wind crane market with the sale of two PF 8000 fixed boom type platform cranes. The cranes were reportedly delivered to Taiwanese company Fortune Electric Co., Ltd.

The Formosa OWF will eventually be comprised of 32 windmills with a capacity of 128MW, the foundations of which are being designed by Danish engineering consulting group COWI. The company notes that the task is particularly challenging given the risks of earthquakes and typhoons in the area. The pilot project is for two 4GW Siemens SWT–4.0-120 turbines installed some 100 meters high on masts, with blade diameters of 120 meters, which will serve as prototypes for the entire project.

Project Manager Martin Møller noted in a statement that the windmills will be exposed to wind speeds potentially in excess of 250kph, as well as strong earthquakes. “There is an obvious need for thorough geotechnical, structural and hydraulic analyses of the ground conditions to determine the optimal foundation design,” said Møller, adding that the company has employed a number of engineers with expertise in earthquake zones.

Denmark’s DONG Energy is also rumored to be pursuing leads in the Taiwan market.

French energy firm EOLFI is likewise seeking business in Taiwan but is pushing its floating turbines, which it has recently commercially developed in the UK and France. Floating turbines are far less common in the world’s offshore wind power market but offer a number of advantages over fixed foundations, according to Joel Cicerone, EOLFI’s Greater China head. He notes that fixed foundation has more of an impact on the ecosystem, which is a major drawback in ecologically sensitive waters surrounding Taiwan. The IUCN – the global scientific body tracking biodiversity – recently designated the Taiwanese humpback dolphin as a separate subspecies of the Chinese white dolphin; with a population of less than 100 individual animals, the dolphin is thus extremely endangered, potentially stymying efforts to pass an EIA in certain areas of the Taiwan Strait. Installing fixed foundations is logistically complex, as the difficulties encountered by the Formosa OWF Pilot Project illustrate, and are limited by waters depths of 50 meters or less. Taiwan’s Industrial Technology Research Institute (ITRI) says that 9GW, some 60% of Taiwan’s total optimal wind zones, lay above waters deeper than 50m.

“We are not competing with fixed foundations,” Cicerone told the Wind Energy conference in August.

Floating foundation wind turbines are based on the floating natural gas drilling platforms in the North Sea and Gulf of Mexico, and Cicerone noted that “Demonstrators are already working even in extreme weather and they are at no more risk than those that are on fixed foundations.”

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Floating foundation offshore wind turbines can be built onshore and towed out to sea using Taiwan’s local capabilities in steel and shipbuilding, creating some 1500 jobs. He said that EOLFI is open to technology transfer with Taiwanese organizations and companies with public financing involved.  

Herzner sees offshore wind as benefitting “the entire marine industry, where Taiwan is already relatively strong,” including steel, ship building, and carbon fiber for the blades. “We have that already in Taiwan, enough for offshore wind. The companies will be able to adopt and produce.”

Wind turbine maker Enercom is taking the contrarian view on Taiwan’s wind power sector, as its Taiwan head Bart Linnsom noted in an email, “Offshore is not going as smooth as anticipated and we expect a return interest in onshore.”

The company is now “working on a proposal for onshore wind including local manufacturing that could produce 10GW wind-power and would involve community participation and employment for around 2,000 workers and would include electric storage to keep the grid stable,” wrote Linnsom. “A total solution.”

The proposal is based on 4MW turbines in regions experiencing 7 m/s wind speeds and could generate steady revenues at US$.09/kWh. He adds the company would consider investing in blade, generator, and assembly facilities on the island “if there is a market,” adding that Taiwan offers a range of advantages, including “the right location, capable manpower, and acceptable labor costs.” He said that the company needs a regional hub as Vietnam, Japan and Korea are all potential markets.

“What the Taiwan government has to do is to create structures for easy setting up of community invested windfarms and speeding up the permitting process, for example, by removing the need for a separate EIA (all wind-turbines are basically the same, so you can do a general EIA for the whole area along the coast, excluding certain areas) and guaranteeing grid connection”, he wrote.

Solar
Taiwan already has a strong solar manufacturing industry, with 11GW of solar cell manufacturing capacity and 3GW of module-making capacity. European firms involved in the solar industry, including Schneider, Centrotherm, Hereaus, and Meyer-Burger, are mostly involved in selling equipment and components to solar manufacturers. Yet European expertise of another flavor – financing – is already playing a significant role in developing Taiwan’s domestic solar installations.

The biggest deal is the Sinogreenergy/Partners Group tie-up that will see the local developer expand its holdings from 70MW of entirely rooftop solar systems with an additional 500MW of ground based systems. KH Chen says that he was invited to meet the Partners Group in the offices of PwC Taiwan, which was assisting them in finding projects big enough to warrant the attention of the global fund. Chen’s initial proposal of US$30-40 million investment was deemed too small by the fund. At a later meeting following the election of pro-renewable energy president Tsai in January, Chen proposed US$125 million for 300MW in solar installations over three years, but again this was deemed not ambitious enough. Finally, the two parties agreed upon a US$220 million investment, with US$200 million coming from Partners Group and US$20 million coming from local insurance company Cathay Life, which is limited by local regulations to 10% of a renewable energy investment.

Clearly, Taiwan has its work cut out for it in making the transition away from nuclear energy and towards renewables. But each challenge, ranging from doing offshore wind in an earthquake and typhoon zone to large scale solar in limited space, offers the potential for developing new technologies, business models, and systems to overcome it. As one offshore wind expert who was not authorized to speak on the record observes, “if you can (do renewable energy) here, you can do it anywhere.” And this, the Tsai administration is betting, will launch Taiwan into a new era of technology, industry, and growth.

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Image: Wind turbines in Kaomei Wetland in Qingshui Township,Taichung County,Taiwan. By: Maggie Cchou. CC-BY licence
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