TAIPEI -- Global renewable energy companies are rushing to set up offshore wind farms in Taiwan, seeing a promising business opportunity on an island offering one of the most suitable locations for such facilities in Asia.
Investment applications filed with the government so far reached around 1.8 trillion Taiwan dollars ($59.5 billion), more than triple the quota set by Taipei. Denmark's Dong Energy, Australia's Macquarie and Canada's Northland Power were among those joining the foray.
The Taiwan Strait is said to be uniquely suited for wind power generation. On Penghu Island, roughly 50km west of Taiwan's main island, blistering winds are constantly slamming the hilltop on the coast. "Here, it always feels like a typhoon, but winds are a lot weaker now than in the wintertime," explained a Taiwanese official.
While Dong Energy also handles oil development and fossil-fuel power plants, the company is focusing on wind, where it already is a major presence. It plans to deploy the know-how honed in competitive Europe in Asia. Macquarie, one of the largest managers of infrastructure funds, is also targeting renewable energy.
Taiwan's ambitious target to increase its reliance on renewable energy also boosts the island's appeal. In January, Taiwan's parliament voted to revise its electricity law, with plans to phase out nuclear energy, which filled 14% of its power needs in 2015, by 2025. The island instead plans to lift the share of renewables in its energy mix to 20%, quintuple the 2015 level. Using feed-in-tariffs, Taipei hopes wind energy will become the largest renewable energy source after solar power. "We will set prices so businesses can make 2-3% profit," said Lin Chuan-neng, director-general of Taiwan's Bureau of Energy.
In 2015, Taiwan had onshore wind turbines with a total capacity of roughly 640 megawatts, but none offshore.
Although the prospects of wind power generation were initially in doubt, Taiwan could now achieve capacity in excess of its 3,000MW target for 2025, due to strong foreign interest.
Complications in the Chinese market, which accounted for half of the world's demand for wind power facilities in 2015, are also contributing to the boom in Taiwan. "The market share of foreign companies has dropped from the previous 20-30% to 10%," says Leo Lee, a former investment adviser at a major borkerage. China lacks the grid capacity to transmit generated electricity, and the rise of local players and strict regulatory screening are creating headwinds for foreign companies.
Chinese wind turbine makers are growing fast. China's Goldwind became the world's top producer of wind turbines in 2015. Chinese companies are certain to step up exports as Beijing expands its sphere of economic influence through its Belt and Road Initiative, forcing foreign rivals to hone their strategies.
The world's wind power market is estimated to climb 64% from 2016 to 9.72 trillion yen ($87.3 billion) by 2030, with offshore wind to account for 3.26 trillion yen, up 1,100%, according to Fuji Keizai, a Japanese market research firm.
Rising environmental awareness is prompting many Asian countries to consider shifts to renewable energy. While offshore wind turbines are still in the testing stage everywhere except China, countries such as India, South Korea and Vietnam are believed to be suited for hosting such facilities.
Growing anti-nuclear sentiment is also providing a tailwind. In South Korea, newly elected President Moon Jae-in has promised to reassess the nation's nuclear energy policy while fiscal constraints and public opposition toppled a nuclear project in Vietnam in November.