Sustainability & CSR

Onshore's second wind?

17 March, 2022

Onshore wind energy has received little attention in recent years but with no end in sight to the chronic shortage of green energy capacity, companies are finally realising that it is by far the cheapest, most practical and technically feasible renewable energy option available today.

By Duncan Levine

Daopeng wind farm, built in 2006 near Miaoli in central Taiwan, has 21 x 2MW turbines. Each turbine produces 5GWh of electricity per year, enough to power 2,000 homes

Just two months ago, Bart Linssen was not optimistic about the outlook for onshore wind energy in Taiwan. The government had not adjusted its unambitious target for 1.2 gigawatts (GW) of capacity, offshore wind energy was continuing to attract all of the attention of investors, the government and the media, while red tape and NIMBYism (Not In My Backyard) continued to stifle the development of ongoing onshore wind projects. But when I spoke to him earlier this month, Linssen, the Managing Director of Enercon Taiwan, the largest supplier of onshore wind energy equipment in Taiwan, had suddenly turned optimistic. And he is not alone. His positive outlook is shared by wpd, a wind farm developer, which sources equipment from Enercon, among other suppliers. The reason, it turns out, is not because of changes to Taiwan’s onerous permitting procedures or a new-found enthusiasm on the part of the government or the general public, but rather because businesses have finally woken up to the fact that there is no end in sight to the chronic shortage of renewable energy capacity and that onshore wind is by far the cheapest, most practical and technically feasible renewable energy option available today that is sufficiently scalable to meet a significant portion of the surging demand. As summed up by Alex Robertson, the Country Manager of Vestas Taiwan, which provides equipment for both onshore and offshore wind farms, “Onshore wind has the potential to add much needed renewable energy capacity to the grid quickly and at a competitive cost and the industry is ready to scale up.”

Some international developments, such as the EU’s pending Carbon Border Adjustment Mechanism (CBAM) and Taiwan’s own plans to make large emitters source a portion of their electricity needs from renewables, have prompted local companies to start looking for sources of renewable energy while others are voluntarily signing up to RE100, a global organisation of major corporations which have pledged to only consume power generated through renewable energy.

Up until recently, the government and corporations have focused just about all of their attention on solar photovoltaic (PV) and Taiwan’s burgeoning offshore wind energy sector. With wind conditions in the Taiwan Strait just off Taiwan’s west coast regarded as some of the best in the world for wind power, the offshore sector has, naturally, attracted most of the world’s top wind energy developers, equipment and service suppliers to invest in and set up operations in Taiwan. Given the enormous potential scale of offshore wind energy capacity in the Taiwan Strait, offshore is likely to continue to attract most of the attention and investments over the long term, especially after floating turbine technology is perfected (which would obviate the need to build fixed foundations on the ocean floor and thereby allow turbines to be placed virtually anywhere, including deep waters where wind conditions are optimal). But the slower-than-expected build-out of offshore wind farms to date, coupled with the realisation that demand is strong and growing rapidly has since prompted a frenzy to secure green energy capacity, wherever it can be found.

In retrospect, it was the announcement in mid-2020 that Taiwan Semiconductor Manufacturing Company (TSMC) had signed a 20-year corporate power purchasing agreement (CPPA) with wind power developer Ørsted to buy all of the power to be generated from the 920MW offshore wind park being built by Ørsted, that served as the starting gun for the scramble by corporations to secure green energy. TSMC, the world’s largest semiconductor foundry operator and one of Taiwan’s single largest energy consumers, did not stop there. According to the transaction history of direct supply and wheeling certificates registered with the National Renewable Energy Certification Center under the Bureau of Standards, Metrology and Inspection, more than 95% of renewable energy directly supplied to companies has been bought by TSMC, leaving little for other companies. Add to this the slow speed of offshore wind farm build out, blamed by some on Taiwan’s local content rules, and exacerbated by the Covid-19 pandemic, which prompted authorities to impose severe logistical restrictions, especially on the movement of technicians and other talent. With so much demand chasing so little offshore wind capacity, companies have had no choice but to look for alternatives.         

All this comes after Taiwan last year joined other developed nations around the world in a pledge to reach net zero greenhouse gas emissions by 2050. As Taiwan is already facing difficulties in reaching its modest target of getting 20% of electricity from renewable sources by 2025, getting to net zero now looks like a really tall order. Add to this the fact that demand for electricity in Taiwan is actually increasing, thanks to the local economic boom driven by Covid-19 and digitalisation, Taiwan’s energy transition is only becoming more challenging.

According to statistics from Taiwan’s state-owned utility, Taiwan Power Company (Taipower), as of the end of 2021, renewable energy installations in Taiwan had a total capacity of 11.556GW, of which solar power was 7.7GW, hydropower was 2.094GW, wind power was 1.033GW, waste power generation was 631.93MW, biomass power was 91.88MW and geothermal power was 4.5MW. In terms of generation, electricity generated by Taipower rose by 15% from 207,400 gigawatt hours (or 207.4 Terawatt hours, TWh) in 2010 to 238.93TWh in 2020, and by a further 4.1% to 248.8TWh in 2021. While Taipower’s website only provides a breakdown of sources for 2020, it reports that 17.43072 TWh of power was generated by renewables in 2021. This works out to just 7% of the total, while (based on 2020 figures, and assuming that the thermal/nuclear breakdown was similar in 2021), around 80% came from thermal sources (mostly coal and natural gas) and about 12.7% from nuclear power.

The rise in demand last year exceeded estimates by the Bureau of Energy (BOE) that power demand will continue to rise by 2.5% annually through to 2027. This means that just to meet its 20% goal by 2025, Taiwan will need a higher portion of renewables than originally projected. With Taipower struggling to ramp up its capacity, many companies, which previously assumed that they would simply be able to buy green energy from Taipower or through offshore wind CPPAs, have concluded that they will have to get at least some renewable capacity through non-offshore CPPAs or by building their own capacity.  

Taiwan has great potential for several types of renewables. Solar photovoltaic (PV) is a proven technology and well suited to Taiwan’s sunny climate, especially in the south. However, the limited amount of energy generated per PV panel means that a large area is needed for solar panels, which is a challenge for a small, mountainous and densely populated island like Taiwan. Initially, a lot of companies looked into solar power, and many have since installed solar panels on the roofs of their offices, factories and other facilities. However, although this has been good for PR, it has not gone far enough in terms of adding actual electricity generating capacity and will continue to pose a problem for companies without access to sufficient land to install panels.

While offshore wind is the favourite target of the government and investors given the huge potential capacity and fewer regulatory or NIMBY obstacles, the fact that only a couple of hundred megawatts of offshore capacity have been added so far (the bulk of the 1.033GW of wind energy capacity in place currently is onshore) indicates how challenging it has been to build offshore wind farms, due to the combination of technical difficulties, local content regulations, and pandemic-related restrictions. But even assuming that these difficulties will eventually be overcome, it would seem prudent, if you’ll excuse the mixed metaphors, not to put too many of Taiwan’s renewable eggs in the offshore wind basket.

Taiwan also has great potential for onshore geothermal energy, but this comes with a lot of technical challenges and costs which would be required to reach meaningful scale. By contrast, onshore wind energy is a proven technology, that is cheaper than other options and takes up far less space. For example, you would need between 20 and 32 acres of solar panels to produce the same amount of energy that can be generated from a single 4MW wind turbine. Moreover, onshore turbines are relatively easy to install and connect to the grid, especially compared to offshore wind farms, which require specialised vessels and personnel, expensive cables and facilities to connect offshore wind farms to the grid, not to mention good weather and ocean conditions for construction (there is a limited season for developers to work in the Taiwan Strait due to strong winds and waves, especially during the winter months).

All this does not mean that it will be completely smooth sailing for onshore wind. There remain considerable obstacles to overcome. For a start, while onshore wind has been successfully employed in Taiwan for over 20 years, it has always had an image problem. Like other countries, environmental issues, red tape and NIMBYism have all played a role in stifling development, but Linssen suspects that the reputation of onshore wind energy has been tarnished by a single failed project. The culprit, which is often cited by government officials, is a wind farm of 18 turbines produced by a now bankrupt Dutch company and located in the Gaomei Wetlands on the coast of Taichung, which has a history of poor performance. According to Linssen, the company responsible for providing the turbines in the Gaomei Wetlands had no prior experience in wind energy and only ever produced the 18 turbines for the wetlands. After the company went bankrupt, Taipower subcontracted the maintenance of the turbines to the Industrial Technology Research Institute (ITRI), which also had limited experience in wind energy. It should come as no surprise, therefore, that the wind farm has had a less than stellar performance record. Several of the turbines have since collapsed, three of them during typhoons, while the others have had a patchy performance record ever since they began operating. This is unfortunate because it is not an indictment of onshore wind energy but just one obsolete company, according to Linssen, who proudly points out that Enercon has never had any issues with any of its turbines in over 20 years, showing that turbines can and have been built to withstand Taiwan’s erratic weather conditions, including typhoons.  

The undeserved poor reputation of onshore wind may partly explain why the government has set such a low target of 1.2GW for onshore wind (compared to 5.7GW for offshore by 2025 and more than 15GW by 2035), even though estimates have shown potential for up to 10GW of onshore wind capacity. Taichung Harbour, for example, is an excellent location for wind turbines given excellent wind conditions there as well as abundant space for installing turbines. According to Linssen, Taichung Harbour alone could provide 420MW of capacity if 100 x 4.2MW turbines were installed. However, the government has apparently not yet acknowledged this potential. This is perfectly illustrated by the government’s official reply to a recommendation in the ECCT Wind Energy Committee’s 2022 Position Paper on the subject, which stated that Taichung harbour already has onshore wind turbines in place. However, these refer to 44 tiny turbines which have a total capacity 431.2 kilowatts (kW). This is miniscule compared to the 2,300kW (2.3MW) of just one of Enercon’s existing turbines, and 4.2MWs of the newest models which would be suitable for the harbour. The Wind Energy committee has also identified other harbours, science and industry parks and highways in Taiwan as ideal sites for onshore wind turbines but so far, no one has paid much attention.

Then there are the regulatory, environmental and NIMBY issues that have hampered enthusiasm for onshore wind up until now. According to Alex Robertson, onshore installations have slowed in recent years due to permitting hurdles and he recommends that “in the interest of securing the energy supply, onshore wind farms must be fast tracked through the planning process.” Currently, multiple permits are required from various government agencies before a wind turbine can be built and operated. The list includes an Environmental Impact Assessment (EIA) approval from the Environmental Protection Administration (EPA), an opinion on land use from the Ministry of the Interior, a grid connection agreement from Taipower, approval for construction and land use change from the local government, a land lease or land use agreement from the landowner, an electricity generator operating license and a construction permit from the Bureau of Energy, among others.

The EIA alone entails a broad study which has many facets. It can focus on very different topics, such as the impact on birds and the level of noise, among other factors, but Linssen says that there are technical solutions for all of them. For example, turbines should not and do not need to be placed in the path of migratory birds and, for other instances, technology is available to cause turbines to stop turning when birds are in the area. If there is a disturbing noise and you can identify when it happens (when the wind is coming from a certain direction, for instance), you can programme the turbine to switch off. Shadowing is also a common problem in Europe, whereby the long shadow of the turbine covers a building, and, to inhabitants, the movement of the blades seems like someone is switching the lights on and off every second. Here again, turbines can be programmed to switch off in these instances. While the costs of these technologies add to the price of the equipment, they are not significant compared to the price of the turbines, according to Linssen. The more significant cost to operators, though, is the drop in revenue from the stoppage time when energy is not being produced.

But, much more difficult than the EIA is getting the various local government permits because this requires dealing with local politics. While NIMBYism is a common problem in almost every country, in Taiwan this often takes on the more insidious form of “green cockroaches”, where people, claiming to be stakeholders, object to the citing of turbines or other equipment with the express intention of extorting compensation from developers.

Wind developers always take the time and effort to consult with all legitimate stakeholders, hold meetings to which they invite residents, and then adjust the locations of equipment based on their feedback. Generally, they make agreements with residents that live in the vicinity of turbines. This allows developers to get permit approvals from local governments and proceed with construction. However, green cockroaches often come out of the woodwork (so to speak) after construction has begun (or sometimes even after turbines and equipment are already in place) to claim that they are being affected by the turbines or equipment, regardless of where they live. One onshore wind project on the island of Penghu has been held up for five years because so-called stakeholders have demanded unreasonable compensation. This, despite the fact that the turbines, which are already installed, are nowhere close to the nearest residents.

According to Linssen, some simple steps could be taken to reduce incidences of these types of spurious claims. One simple remedy is to create a legal definition for “stakeholder”. The definition that applies in the Netherlands, for example, holds that a stakeholder is someone who lives within a radius of 10 times the height of the turbine. No one living outside of this radius may claim to be a stakeholder in The Netherlands. Another remedy would be to put limits on the amount of compensation stakeholders can claim. If authorities in Taiwan were to adopt just these remedies, it would reduce the number of bogus claims. Of course, the government could also do more to simplify the approval process and ensure that legal approvals, once granted, are honoured.

Yet, despite all these drawbacks and complications, companies are warming to the benefits of onshore wind energy. Linssen says he had received a large increase in enquiries from companies as well as developers over the past few months about installing turbines for their own use. This claim was backed up by Joanne Lai, a Senior Manager at wpd, a German wind energy developer, engaged in both onshore and offshore wind projects in Taiwan, who said that her firm is receiving growing numbers of enquiries about onshore wind, not only from individual companies but also from an association representing energy-intensive industries.

A train on the railway tracksDescription automatically generated with medium confidence
Getting electricity from wind turbines located on the site of manufacturing facilities is an ideal way to begin decarbonising the supply chain as this casting factory for turbine components in Germany shows

As the image above illustrates, many companies in Europe are already doing this. According to Linssen, he has even been approached by some solar wind developers who are interested in installing wind turbines on their land as a way to increase their generating capacity using the same amount of land, although the best locations for solar are not always optimal for wind.

Linssen is also trying to convince authorities in Taichung Harbour to test out a new business model that provides tenants with space for their facilities as well as power from onshore wind. But to do this, they would first have to agree to replace the existing ineffectual turbines in Taichung Harbour with modern ones that provide meaningful levels of power. Offering some of the power from the existing puny turbines would obviously not be taken seriously by potential tenants which need significant amounts of renewable energy.   

But regardless of whether or not the authorities in charge of harbours, science parks and highways take action, private companies are likely to forge ahead on their own by installing wind turbines on their own land or facilities. This will provide a welcome boost to the previously neglected onshore wind energy developers, equipment and service providers. And in so doing, it will also help to increase the diversity of Taiwan’s renewable energy sources, add much needed capacity at scale and low cost, and thereby play a much more significant role in speeding up Taiwan's energy transition.  


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