The Taiwanese Government has set aggressive renewable energy targets, with a particular focus on the development of its offshore wind power capabilities. This exciting new market presents great opportunities for foreign investors. At the same time, it highlights the need for a local legal and regulatory framework that will foster the development of the market in an effective and efficient manner.

This Jones Day White Paper provides an overview of the current legal and regulatory framework for offshore wind farm projects in Taiwan, including the general procurement process, environmental approval process, grid allocation process, approvals/licensing regime, and other key considerations for offshore wind developers (i.e., foreign ownership limits, foreign exchange controls, etc.). The intention is to provide foreign investors with an early "heads up" of what to expect when seeking to undertake offshore wind energy projects in Taiwan.


Taiwan Profile

Taiwan is located in East Asia with Mainland China to the west, Japan to the northeast, and the Philippines to the south. It is referred to as one of the "Four Asian Tigers" 1 and is the seventh-largest economy in Asia. Taiwan is a member of the World Trade Organization ("WTO"), the Asia-Pacific Economic Cooperation ("APEC"), and International Chamber of Commerce ("ICC") and is an observer at the Organisation for Economic Cooperation and Development ("OECD"). Taiwan's primary trade partners include Mainland China, Hong Kong, the United States, Japan, and Singapore. Annex 1 provides an overview of the legal framework in Taiwan.

Diagram 1

Source: U.S Passport Service Guide

Taiwan Offshore Wind Farm Market

Taiwan is surrounded by sea. The geographic environment provides an abundance of wind energy to many areas along the coast of Taiwan and its offshore islands. On the west coast of Taiwan, where the majority of the offshore wind farm projects will be located, the average wind speed reaches up to approximately 11.24 meters per second (measured at 100 meters).2 These wind speeds are far in excess of the neighboring coastal area of Hong Kong, with wind speeds of up to approximately 5.8 meters per second (measured at 105 meters).3 The abundance of offshore wind resources in Taiwan presents a significant opportunity for investors in the offshore wind farm market.

The Taiwanese Government (the "Government") has set aggressive renewable energy targets, with a particular focus on the development of its offshore wind power capabilities. In 2016, electricity generated from renewable energy power plants accounted for 4.8 percent of the aggregate produced electricity and 9.4 percent of the aggregate installed capacity in Taiwan.4 The policy of the Government is to progressively phase out nuclear power plants and have an energy mix containing 50 percent natural gas, 30 percent coal, and 20 percent renewable energy by 2025.5 The achievement of this renewable energy target will focus on the development of solar photovoltaic ("PV") generation and offshore wind power. Refer to Annex 2 for a summary of the Government's renewable energy targets.

To achieve the Government's renewable energy targets, the Government announced on July 3, 2012, the "Thousand Wind Turbines Project" (the "Program"). The Program is divided into the following three phases:

1. Demonstration Round (2016–2020)

Three projects were awarded contracts for the Demonstration Round with an aggregate capacity of approximately 360 MW. These projects include the Formosa Demonstration Project (expected capacity of 120 MW with 32 installed wind turbines), the Fuhai Demonstration Project (expected capacity of approximately 120 MW and 30 installed wind turbines) and the TPC Demonstration Project (expected capacity of approximately 108 MW and 22-36 installed wind turbines). The intention is for each of these projects to be under a 20-year PPA with fixed feed-in tariff pricing. While the Formosa Phase I Project (aggregate capacity of 8 MW) is operational, the other demonstration projects are expected to be operational by 2020 (including the Formosa Phase II Project).

2. Transition Round (2019–2020)

In July 2015, the Bureau of Energy ("BOE") released 36 zones for potential development of future commercial wind farms. Those developers that have received preliminary approval of their environmental impact assessment ("EIA") may apply for developing the relevant zone. As of January 30, 2017, 24 offshore wind farm projects have received the Taiwanese Environmental Protection Administration's ("EPA") preliminary approval (including 11 projects that have obtained final approval). There are three offshore wind farm projects continuing to undergo the preliminary EPA review.

Recently, the BOE increased the offshore wind energy target for the Transition Round from 3 GW to 5.5 GW.6 3.5GW of projects will be guaranteed at a fixed feed-in tariff for 20 years. The remainder of the projects will go through a competitive auction to sell power at a lower price in a tender held by Taiwan Power Company ("Taipower"). Of the 5.5 GW of targeted capacity, the Government plans for 500 MW (with feed-in tariffs) to be operational by 2020, with the remainder to be operational by 2025.

Further details regarding the process for developers to apply for an allocation of the 5.5 GW of capacity is set out in "Grid Allocation Process" below.

3. Zonal Development Round (2021–2025)

As part of this phase, the offshore wind farm projects with an aggregate capacity of 5 GW, as selected pursuant to the Transition Round, will be developed as self-sustaining projects and on a commercial scale.

It is anticipated that the projects will be developed according the following indicative timeline:

In the period to 2025, the Taiwan Ministry of Economic Affairs ("MOEA") intends to invest NT$684 billion (US$22.74 billion) in order to achieve its onshore/offshore wind power targets. The MOEA hopes that this initial investment will stimulate the private sector to contribute NT$478 billion (US$15.92 billion) in the same period.

Lessons Learned from the Taiwan Onshore Wind Farm Market

While the offshore wind farm market in Taiwan is in its infancy, the onshore wind farm market is relatively mature. As of July 2017, there were a total of 348 onshore turbines in Taiwan situated mainly along the western coastline and in outlying Penghu County with a total capacity of 686.7 MW, accounting for 15.3 percent of installed capacity of renewable energy.7 By 2025, the Government aims to have a total of 450 turbines, with an installed capacity of 1.2 GW.8

Since 2000, the Government, including the BOE and the MOEA, has actively promoted the development and application of onshore wind power development through resource exploration, technical guidance, research survey, and, particularly, by providing subsidies for the purchase of equipment.

While the Taiwan onshore wind farm market is reasonably developed, it is not without its challenges, including:

  • projects located on government-owned land are given a nine-year lease, which may be renewed provided certain requirements are satisfied. This raises a bankability issue for any proposed limited or non-recourse financing for a period longer than the lease term;
  • limited appetite of local banks for non-recourse project financing, impacting on costs;
  • stringent environmental requirements making for a complicated and prolonged application and approval process; and
  • onshore wind farms are saturated due to limited land space. Most onshore wind energy resources have been constructed or planned.

Some of the same issues will also be challenges for the development of the offshore wind farm sector in Taiwan. For instance:

  • developers are already experiencing challenges with regard to the environmental application process; and
  • as the revenues will be denominated in NT$, it will be important for developers to obtain financing from local financial institutions. The need to obtain domestic financing is also included as a key consideration in the selection criteria for grid allocation (see "Grid Allocation Process" below).

With regard to the necessary site leases for offshore wind energy projects, the National Property Administration has released a regulatory letter, specifically permitting the lease for an offshore wind farm project to extend beyond the nine-year limit placed on onshore wind farm projects on government-owned land and to instead remain effective for the period of the electricity license. Upon the expiry of the electricity license, the lease will remain effective with the consent of the Government.9


From a foreign investor's perspective, an informed understanding of the legal and regulatory framework (including the general procurement process, environmental approval process, approvals/licensing regime, foreign ownership restrictions, environmental requirements, and foreign exchange controls) will be critical before making any investment decision regarding the Taiwan offshore wind farm sector.

The primary legislative instruments for the renewable energy sector in Taiwan include:

The Electricity Act ("EA"): The EA covers the establishment of power plants and the transmission and distribution of electricity. The EA was amended on January 26, 2017, with the aim of liberalizing the power market by:

  • allowing the renewable energy generation industries to sell electricity through wholesale, wheeling, or direct sales;
  • allowing renewable energy companies to be operated by corporate forms other than limited companies (e.g., cooperatives);
  • fully releasing the users' power purchasing choices and allowing all users to choose either the electricity generated from renewable energy or from traditional energy sources; and
  • clearly stating the target of being nuclear-free by 2025.

The Renewable Energy Development Act ("REDA"): The REDA was introduced in July 2009 as part of the Government's aim to increase the installed renewable energy capacity in Taiwan.

The REDA covers a mixture of obligations and incentives, including:

  • Fund Establishment: Financed by the Renewable Energy Fund with revenues collected from power generators using fossil fuels and nuclear energy.
  • Feed-In Tariff Rates and Tariff Setting Method: The feed-in tariffs regulated by REDA apply to solar, onshore/offshore wind, biomass, and hydro energy and are subject to annual review by a dedicated committee. When conducting its annual review, the dedicated committee will take into account any technology development, changes in costs, target accomplishment, and other relevant factors to determine the applicable feed-in tariffs.
  • Other: Land-use requirements, demonstration/capital grants, mandatory grid connection, and power purchasing obligations (i.e., power purchase agreement).

In order to achieve the Government's aggressive renewable energy targets, the MOEA has proposed amendments to the REDA, which would require that large consumers of electricity are required to pay a fee or purchase renewable energy vouchers for their consumption of nonrenewable energy. Alternatively, those large consumers of electricity may install renewable energy generators to generate power proportional to their consumption of nonrenewable energy. This amendment was approved by the Taiwan Cabinet on January 11, 2018, and will now be reviewed by the Legislative Yuan.

In addition to the EA and the REDA, there are various other legislative instruments that govern the development and implementation of offshore wind farm projects. These are set out in Annex 1.



The process for implementing offshore wind energy projects in Taiwan is currently in its infancy. Diagram 3 below provides a high-level overview of the procurement process. At present, the market is developed only as far as the EIA approval, with the grid allocation the next hurdle to overcome.

The procurement process is considered in more detail in the following paragraphs of this section, with a particular focus on the processes currently being encountered by offshore wind power developers—the environmental approval process and the grid allocation process.

Approval / Licensing Process

To operate an offshore wind farm project, the project developer must obtain an electricity license. There are six phases to be satisfied in order to obtain the electricity license:

1. EIA Process: The project developer is required to obtain the EPA's final approval of the EIA in order to obtain the Establishment Permit. Refer to "Environmental Framework" below for a detailed analysis of the process for obtaining the approval of the EIA.

2. Obtain the Establishment Permit ("EP"): The EP is issued by the BOE. It is a precondition to the EP that the final EIA approval has already been obtained. To obtain the EP, the applicant is required to obtain consent letters from various authorities, including the local government, the National Property Administration, and the Ministry of Transportation and Communications. Based on the practice in other sectors in Taiwan, the processing time for these consent letters varies and may be unpredictable.

It is also necessary for the project developer to: (i) satisfy a capitalization requirement of at least 5 percent of anticipated capex; (ii) enter into a connection agreement with Taipower; and (iii) obtain letters of intent from financial institutions for the financing of the project.

The EP is valid for a period of three years (and may be extended for a further two years).

Annex 4 provides a detailed flowchart of the process for obtaining the EP.

3. Recognition by the BOE: After the project developer has obtained the EP, it is required to apply to the BOE for recognition that the project developer's energy facilities are renewable energy power facilities.

4. Power Purchase Agreement ("PPA"): Within six months of obtaining its EP and the required recognition from the BOE, the project developer is required to enter into a PPA with Taipower. Taipower is a 96.92 percent government-owned power entity providing electricity to Taiwan.

The standard form PPA for the offshore wind energy sector was recently published by Taipower. Refer to "Power Purchase Agreement" below for Jones Day's preliminary comments on the PPA.

5. Obtain the Construction Permit ("CP"): The CP must be obtained from the BOE prior to the commencement of construction. An applicant may submit an application for an EP and CP in parallel; however, the CP may be granted only after the applicant has obtained the EP. The CP is valid for five years and is renewable.

6. Obtain the Electricity License ("EL"): The EL must be obtained prior to the commencement of operations. Annex 4 provides a detailed flowchart of the process for obtaining the EL.

While it may vary, the time period for the BOE to issue the EP, the CP and the EL usually takes a period of two to three months for each license / permit from the time of application.

Environmental Framework

Regime. The EPA is the agency responsible for the development of the environmental standards and coordinating action among the various other Governmental agencies. It has also been proactive in developing a legislative basis for environmental management in Taiwan.10

The Environmental Impact Assessment Act governs the EIA process. The EIA process is intended to prevent and mitigate adverse impacts of development activities (including pre-implementation planning, project implementation, and post-project facility use) to attain the goal of environmental protection.

EIA Process. A project developer for an offshore wind farm development is required to obtain the EPA's approval of the EIA in order to progress with the development of the project.

To date, the EIA process has proven to be a difficult barrier for offshore wind power developers. The Taiwan Strait is a heavily trafficked waterway, and the EPA is closely scrutinizing how offshore wind development will affect the ecology.

The process for obtaining the requisite EPA approval is summarized below (and illustrated in Diagram 4). The process may vary (depending on whether the project developer is required to conduct a Phase II EIA) and may take an extended period of time to complete.

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