Turn to Taiwan7 December 2018
Carmine Frisk talks to Markus Wild, the managing director of EnBW Asia-Pacific, about the company’s new ventures in Taiwan, and why the country is a fast-emerging player in the offshore wind market.
Can you describe the partnerships you have regarding your 37.5% stake in three offshore wind projects in Taiwan and the evolution of this agreement?
Markus Wild: Together with the Taiwanese offshore wind developer Swancor, and Australian company Macquarie Group, we are further developing our Formosa III project, which is three offshore wind zones in Changhua, and in which EnBW holds a 37.5% stake. All three parties are pooling their strength and expertise into these projects. A capacity of roughly 2000MW has already been secured as part of the environmental impact assessment, and the team is currently working on the preparations for the expected third auction round.
This is EnBW’s first investment in offshore wind outside Europe. What was the impetus to have this as the company’s first extra- European investment?
EnBW intends to expand renewable energies to form one of the main pillars of its business by 2020. With a view to long-term growth, EnBW will invest over €5 billion in the further expansion of renewables through to 2025. In the process, it is targeting selective internationalisation to enter markets that are complementary to the company’s core market – Germany. We have chosen Taiwan due to its strong international business mindset, stable regulatory environment and clear energy policy until 2025. Taiwan has developed into a key market in the region, and the country wants to build a local supply chain during 2021–24.
What is particularly attractive about the potential of offshore wind power in Taiwan?
After promulgating their ‘nuclear-free homeland’ policy, which entails the phaseout of nuclear power by 2025, the government is rebuilding its power sector. Offshore wind plays a key role in this, with a first ztarget of 5.5GW by 2025. Taiwan holds strong potential for offshore wind, as 16 out of the 20 best wind sites in the world are situated in the Taiwan Strait.
What regions in Taiwan are you particularly focussing on?
For Formosa III, our key region is Changhua, which is one of the offshore wind hotspots in Taiwan. But we are also actively looking into other regions in Taiwan.
Can you describe the process that led to the agreement of the investment, and what lies ahead in terms of having a more pronounced presence in Taiwan?
Each of the three partners contributes its individual strengths and capabilities, which show an ideal complementary fit. Macquarie Capital is an internationally experienced infrastructure investor that has a long-standing business relationship with us. Swancor Renewable is the Taiwan-based partner, and is contributing its tight-knit local network and experience as a pioneer – it made the first offshore wind farm, Formosa I, possible. EnBW, as an experienced developer and operator of offshore wind farms, will bring the know-how in planning and construction, as well as operations and maintenance. We are growing with the market, and we are in the process of hiring staff from the local talent and from experienced offshore personnel in Germany.
In terms of investment, how did you see this as commercially viable and what is the time frame to see ROI?
Taiwan has provided an attractive feed-in tariff for 2018, due to the fact that they also want to build a strong local supply chain that can provide foundations, offshore works and wind turbine generator suppliers. The 2025 projects were bid at international levels, so they have been competitive and could discard localisation demands. This will create an ambitious framework going forward, but we consider ourselves well prepared.
We expect a healthy ROI for the projects. In the current market environment, FiTs will likely go above the 2025 bids, as local suppliers will still need to recoup their investments.
Are there any other regions that EnBW is looking at outside of Europe?
We have already expanded our offshore activities to the US by a regional subsidiary – EnBW North America. We are planning activities on the east and west coasts of the US. At the west coast, we formed a joint venture with Trident Winds to develop an offshore wind project off the coast of central California. On the east coast, EnBW will participate in auctions in the New Jersey and New York area.
In light of strong competition in the industry, what is EnBW’s mission statement, or what is its policy to make a globally positive impact and spread its ethos to new, untapped regions?
With 336MW in operation, 610MW in construction and a further 900MW planned, we are evolving into one of the leading offshore wind developers and operators.
When developing projects, we rely on local partnerships and create added-value locally, and we work closely with the local population – we are good neighbours.
Compared with Europe, what are the differences in terms of regulation that you had to address in order for the deal to move forward Specifically, what are the variations in environmental criteria you have to adhere to?
For Taiwan, not only is the offshore wind market quite new, but, in general, private participation in the power-generation market is new. The power market is still managed by Taipower, a state-owned utility, and only with the reform of the Electricity Act, in 2017, did we see a deregulation of Taipower into three parts under one holding.
In terms of development of the offshore wind projects, we certainly need to take into account earthquakes, typhoons and different soil conditions. We work closely with local, experienced engineering companies to match their expertise with ours and work on safe designs.