100 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 43 | 2025 ropean-made wind turbine blades are 20% cheaper than Taiwanese counterparts. Major developers, for instance, Copenhagen Infrastructure Partners, were able to mitigate supplier risks by partnering domestic suppliers with experienced international suppliers, who could lend their expertise. In July 2024, the European Union disputed the localization law through the World Trade Organization, citing the law’s inconsistency with organization’s principles of nondiscrimination against imported goods and services as well as how the law was creating efficiency losses and price increases, making the energy transition more costly (European Commission, 2024). As a result of this dispute, Taiwan decided to remove the localization law while committing to greater flexibility for developers in structuring their project proposals for future auctions (European Commission, 2024). The eradication of localization opens a range of opportunities for infrastructure investors and others interested in participating in Taiwan’s energy sector who were previously locked out due to their lack of scale or supplier networks on the island compared to what large infrastructure investors like Copenhagen Infrastructure Partners and BlackRock have. Lower construction costs enable firms vying for development rights to submit lower bids—the lowest price they are willing to accept for selling the electricity to transmitters and other buyers. Banks only provide financing if they see customers (i.e., PPAs) secured for a project, and a fall in construction costs increases possibilities for bank participation in project financing. Diminishing coastal land availability for additional offshore wind projects factors into the bidding process, with increased construction costs due to higher land prices along with costs associated with public outreach campaigns intended to build goodwill with local communities that have conflicting interests for the land, such as farming and indigenous land preservation. One solution is the growing development of floating offshore wind projects, also known as wind farms. Bloomberg New Energy Finance expects Taiwan’s wind farm capacity to surge from 0.4 GW in 2024 to 80 GW by 2040 (Wu, 2024). A buildup in floating offshore wind capacity not only alleviates some land use challenges with coastal projects but also enables increased investor appetite, specifically developers that have expertise in wind farms. A 2+1 model with two demonstration sites, each supporting 6–12 floating platforms with an installed capacity of ~90–180 MW, was proposed by the Energy Administration in January 2024 in an update to its draft demonstration plan for floating offshore wind farms. These sites are anticipated to be operational and grid connected by 2030. However, floating offshore wind projects are a nascent sector in Taiwan, lacking a well-defined policy framework for developers. A detailed floating offshore wind framework is a priority for the government, which plans to outline FiT and tender rules in 2025, a delay from the end of 2024 target previously set by the government (Reccessary, 2024). Taiwan, despite strong ambitions for a greater renewable energy infrastructure, has a track record of not meeting deadlines. An initial framework that developers can reference when considering wind farms is crucial for meeting ambitious offshore wind capacity targets. One attractive feature of the proposed framework is that, to guarantee developers fair profit margins, Taiwan is investigating creative incentive schemes, including combining FiTs with one-time subsidies. The recent commercial-scale floating wind tender in Brittany, France, which had a record-low subsidy contract price, demonstrates that this strategy aligns with the global shift toward cost-competitive, low-subsidy renewables development. A stable incentive scheme will allow developers to evaluate costs with more confidence, especially with the removal of local sourcing requirements. Furthermore, the risk profile of a wind farm is different from that of a coastal project. A good framework outlines a methodology for suitable foundation types, anti-typhoon and seismic measures, assessed impact on fishing, and other relevant operational risk areas. The success of the proposed 2+1 model will help attract future project develop- ment interest. Another critical barrier to offshore wind is an aging grid infrastructure. Without significant upgrades in transmission and storage integration, there will be significant bottlenecks for the new offshore wind capacity to connect to the system. Grid modernization, including the expansion of transmission lines, flexible balancing mechanisms, and coordinates investment in storage systems, is essential for maximizing the value from the build-out of offshore wind generation. Outlook One of the biggest challenges is the monopolization of the whole electricity sector—generation, transmission, and distribution—by Taipower. The government has been implementing new mechanisms to encourage offshore wind market participation.
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