Surge in Asia-Pacific offshore wind power attracts increased foreign investment in Taiwan

Annie Huang, Taipei; Vyra Wu, DIGITIMES Asia 0


The global push for offshore wind power development has gained momentum, with countries worldwide ramping up their investments in the industry. Notably, the Asia-Pacific region has emerged as a prime market for growth. Taiwan, guided by supportive government policies, has witnessed renewed interest from foreign offshore wind developers like Orsted Wind Power TW Holding A/S, NP Hai Long Holdings B.V., and Yunneng Wind Power, reaffirming their commitment to project development and construction within Taiwan.

The Global Wind Energy Council (GWEC) recently unveiled its "Global Offshore Wind Report 2023," projecting that by 2032, the world will add a staggering 380GW of offshore wind power capacity, with nearly half of this expansion anticipated in the Asia-Pacific region. Noteworthy contributions are expected from China, with its projected 180GW+ installed capacity, and Australia, poised to surpass 50GW. Additionally, data from 2022 reveals that the cumulative global offshore wind power capacity reached 64.3GW, with China accounting for approximately 49% and Europe making up 47% of this figure.

Taiwan's offshore wind power sector has recently witnessed a surge in foreign investments. According to statistics from Taiwan's Ministry of Economic Affairs' Investment Commission, there were 1,534 approved foreign investment cases between January to August 2023, representing a 7.92% decrease compared to the same period in 2022. The approved investment amount reached US$7.52 billion (approximately NT$225.61 billion), reflecting a 27.58% decline from the previous year, primarily attributed to a higher comparative base period. Nevertheless, globally renowned companies continue to demonstrate their commitment to investing in Taiwan.

The energy sector specifically attracted substantial investments, totaling NT$49.3 billion, encompassing three prominent cases. The first case involved Germany's Yunlin Holding GmbH, injecting around NT$29.2 billion to increase its stake in Yunneng Wind Power. The second case featured Danish heavyweight Orsted Wind Power, which committed a total of NT$12 billion across its subsidiaries. The third case saw Dutch company NP Hai Long Holdings infusing approximately NT$8.1 billion into a sizable investment project.

Notably, the first half of 2023 witnessed reports of financial challenges at the Yunneng and Hai Long wind farms, sparking industry concerns regarding the financial stability of these flagship projects and their potential impact on the sector's development. However, amidst the turbulence witnessed in the first half of the year, which included financial crises at wind farms and announcements of market exits by some developers and a slowdown in investment plans in Taiwan, the investments made by Yunneng and Hai Long in these flagship wind farms have instilled renewed confidence within the industry.

Insiders in the industry point out that while some foreign companies initially considered shifting their focus back to the European and American markets, the outbreak of the Russia-Ukraine war triggered shifts in energy prices and distribution in Europe. Therefore, the decision to withdraw from Taiwan may not be solely attributed to the Taiwanese market's growth potential. It is more likely linked to foreign companies reevaluating their global strategies, favoring the advantages and familiarity of established markets in terms of guarantee mechanisms and interest rates.

However, recent developments in the European market have fallen short of expectations. The UK government's recent launch of a new round of offshore wind power tenders has left some developers unsatisfied with the subsidies offered, which they deem insufficient to incentivize development. Rising costs, including wages and equipment, along with increasing interest rates, have significantly inflated construction expenses, surpassing guaranteed purchase prices.

Industry experts emphasize that market development dynamics differ for foreign and domestic developers and are closely intertwined with local government policies. While Taiwan grapples with the Taiwan Strait crisis, Europe and the United States face challenges related to Russia-Ukraine war and fluctuating interest rates. Each developer presents unique advantages, but a common desire prevails—to have government policies that offer greater flexibility, enabling global developers to mitigate risks when assessing markets.