Macro Insights from CY Huang

What can we expect in 2021 under the Taiwan government’s ambitious energy transition policy?

Taiwan’s energy system is currently facing an enormous transformation with ambitious goals for 2025 to promote renewables, phase-out nuclear power, diminish the use of coal, and to foster energy efficiency. According to the goal, renewables shall account for 20% of the electricity production by 2025. The government set the goal of installing a capacity of 20 GW of photovoltaics and 5.5 GW of offshore wind power by 2025. Besides, hydro, biomass, onshore wind, and, to a lesser extent, geothermal and fuel cells shall be developed, too. This is an ambitious increase in capacity installed within a short period of time.

So far, Taiwan has 94 offshore wind farm projects of which 2 currently operating, none where construction has progressed enough to connect the turbines and generate electricity, 3 are in the build phase, and 3 are either consented or have applied for consent. Moreover, the consequences of the COVID-19 pandemic has slowed down the development of offshore wind resources due to disruptions in supply chains, and has resulted in “significant additional costs” and “substantial delays.” Besides, over the long-term, the government’s rigorous localization policy may present an even bigger impediment.

Here are some we can expect about renewable energy issues:

1. The challenges of the government’s localization strategy offshore wind projects face need to be resolved: As Taiwan has little capacity or experience in the offshore wind business, it relies almost entirely on foreign suppliers and crews. To jumpstart its offshore wind sector, Taiwan is offering a generous Feed-in-Tariff. Developers are required to submit their localization plans for approval by the Industrial Development Bureau, However, Taiwan’s lack of experience in the offshore wind or marine industries let developers struggle to meet both the scale and quality requirements for offshore wind, disrupting development plans. The government’s localization strategy must be flexible to enhance the capabilities and competitiveness of the local supply chain.
2. More and more Taiwanese companies will be becoming RE100 members. RE100, the global renewable energy initiative led by the Climate Group5 in partnership with CDP, brings together more than 280 major companies that have committed to 100% renewable electricity globally. In 2018, TCI was the first Taiwanese company to join RE100, and since then, four more have followed. Among these is TSMC, which has signed the world’s largest power purchase agreement.
3. There will be more and more investment in renewable energy in Taiwan to meet the goal of becoming a clean energy center in the Asia Pacific. More than 100 foreign nationals gained entry to Taiwan for renewable energy development during the restricted-borders period, and solar PV and wind power supply made notable strides with a 59% and 64% increase, respectively. And it can be expected more in 2021.

CY Huang

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Southeast Asia Ocean Economy

Japan to layout ‘green’ growth strategy to meet Suga’s net-zero emissions goal

* Japan will lay out a “green growth strategy” that includes a goal to replace gasoline-powered vehicles with electric cars by around 2035

* The strategy will serve as an action plan to achieve Prime Minister Shinzo Abe’s pledge to slash carbon emissions to zero on a net basis in 2050.

* The green strategy will also include an estimate that renewable energy will contribute 50-60% of Japan’s total power in 2050 （for more info at https://reurl.cc/k0mnMK）

The Chinese and Japanese groups have separately shown interest in taking over part or all of Spain-based Siemens Gamesa

* Siemens Gamesa shares rose in Madrid after reports in Spain that the wind OEM was the target of acquisition interest from Asian giants Shanghai Electric and Mitsubishi.

* Shanghai Electric’s existing relationship with Siemens Gamesa as a licensor of some offshore wind technology, and the recent decision of Mitsubishi Heavy Industries (MHI) to divest its half-share in offshore OEM MHI Vestas to its Danish partner Vestas.

* Siemens Gamesa is the global leader in the supply of offshore turbines, a sector where it is preparing to bring the world’s most powerful turbine to market at 15GW.（for more info at https://reurl.cc/Mdr3D4）

Pan Ocean to invest in $246.5 million in shipbuilding contract for LNG carrier

* Mainboard-listed Pan Ocean Co is investing S$246.5 million in a shipbuilding contract for a liquefied natural gas (LNG) carrier, the South Korea-incorporated company said in a bourse filing on Thursday afternoon (Dec 24).

* The investment, which represents 7.04 percent of Pan Ocean’s 2.9 trillion won equity capital, is intended to expand the company’s LNG business.

* The vessel is expected to be delivered on April 30, 2023, albeit subject to the shipbuilding schedule.（ for more info https://reurl.cc/7oOKAb）

Offshore Wind in Taiwan

Teras Offshore Pte Ltd has been awarded a contract by Foxwell Energy Corp Ltd. (“Foxwell”) for the transportation and installation of 31 offshore wind turbines for Phase II of the Taipower 300MW Offshore Wind Project.

* The wind farm, located approximately 14.7 kilometers west of Lukang in Changhua County, is expected to come online by September 2025.

CWind Taiwan sponsor 100 students and fishermen to attend the GWO pilot project

* CWind Taiwan is organizing five sessions open to individuals from local universities, technical colleges as well as the fishing association. The pilot project will provide a general introduction to the offshore wind industry through lectures and workshops, including fundamentals of the GWO working-at-height and sea survival modules.

BLIX Asia -BLIX Consultancy’s branch office in Taipei, Taiwan- will be strengthened with a new employee from the Netherlands

* Niek Olijve, started at the BLIX home office in the Netherlands in April of this year and is an experienced project manager and offshore wind and grids expert. Niek will take on the role of Interface and Risk Manager on the Hai Long Project.

M&A and Investment News

Jan De Nul Group Acquires Ocean Yield’s Multipurpose subsea cable- and flex-lay Vessel Connector

* Jan De Nul Group has signed on 4 December 2020 an agreement for the purchase of the Offshore Construction and Cable-Lay Vessel Connector from Ocean Yield ASA. This marks a further investment in the offshore installation capacities of the Luxembourg based maritime contractor. The vessel will be officially transferred during the fourth quarter of 2020.（for more info at https://reurl.cc/6lWKKy）

Vestas invests in Copenhagen Infrastructure Partners to further expand its presence across a wider range of the renewable value chain

* Vestas has invested in Copenhagen Infrastructure Partners, (CIP), the world’s largest dedicated fund manager in greenfield renewable energy infrastructure, to acquire a 25 percent minority stake in the investment management company, ref. Company Announcement no. 45/2020 of 18 December 2020. With the investment, Vestas seeks to create value across a wider range of the renewable value chain.（ for more info at  https://reurl.cc/odl8XD）

KKR unit snaps up 100-MW FRV’s Indian solar portfolio

* An Indian unit of US private equity group KKR & Co (NYSE: KKR) has purchased the 100-MW Indian solar portfolio of Spain-based Fotowatio Renewable Ventures (FRV).（for more info at https://reurl.cc/7oOKvb)