Taiwan to provide credit guarantees for green electricity corporate power purchase agreements

The authority is doing so to provide assurances to offshore wind developers and project lenders and to help more companies to buy green power, according to a report.

Energy expert William Stroll of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said: “This offer is a clear acknowledgement by the Taiwan authority of the difficulty commonly faced by developers in securing project financing for unsubsidised offshore windfarms; namely that many PPA offtaker candidates do not meet the credit rating criteria required by lenders. It will be interesting to see how the credit guarantees are intended to work in practice and whether they have the desired effect.”

The offer follows an announcement in December 2022 by Taiwan’s Bureau of Energy (BOE) that ten offshore wind projects had been allocated to developers in the first auction of the Round 3 Zonal Development Phase. This list was then narrowed down to seven projects. The planned commissioning year for most of the projects is 2027.

All successful projects had submitted zero-subsidy bids and will rely on PPAs. In a zero-subsidy bid, a developer bids to sell electricity at the wholesale price.

“The success of zero-subsidy bids reflects the authority’s aim of reducing subsidies as the cost of developing new offshore wind projects falls,” Stroll said.

In June five developers expressed their intention to sign administrative contracts for the projects, according to a news release from the BOE. Developers were given two months to prepare the required documents. Developers for the other two projects that were allocated at auction decided not to sign contracts because the project size was too small and not economically viable.