Taiwan's offshore wind industry finds itself in the eye of a storm as the European Union's World Trade Organization (WTO) complaint against local content requirements threatens to upend the island's renewable energy strategy. The Ministry of Economic Affairs (MOEA) is considering changing course, potentially relaxing localization rules for Round 3.3 projects – a move that could send ripples through the industry.
Credit: AFP
Localization policy faces potential overhaul
Taiwan's localization policy, aimed at fostering local suppliers, has increasingly drawn scrutiny from international developers. A European major turbine supplier recently suggested that the focus should shift away from rigid localization mandates toward ensuring wind farms are delivered on time. "We're essentially very pro-creating local value. But priority number one is building wind farms. Priority number two is to create local content. That's the opposite way around right now," he stated.
He argued that local value creation would follow naturally if the projects moved forward, rather than being hindered by stringent localization requirements. "Let the market drive localization. If you build the wind farms, local supply chains will develop around them," he suggested, warning that Taiwan's status as a regional leader in offshore wind could falter if the government doesn't take swift action.
Market-driven approach vs. mandatory localization
According to the supplier, Taiwan urgently needs renewable energy, but localization rules are "holding everybody back." "A 100% localized wind farm that doesn't get built is still no localization," he remarked. He also stressed that Europe has long embraced an open-market approach, importing components from around the globe to ensure competitive pricing and timely execution. "This issue is more about investor confidence and creating a level playing field," he added, signaling that Taiwan's offshore wind industry may need to adopt a similar strategy to keep projects on track.
"Globally, many markets have been promising big targets and not delivering large amounts of wind farms. So it's not just a Taiwan problem—it's everywhere. But the reason we're here is because this is a country that gets things built, and that makes it attractive. If that stops, of course we will have to prioritize other markets," he cautioned.
Credit: AFP
In terms of localization policy reform, he suggested lowering or even eliminating mandatory localization percentages, allowing the market to dictate local content. "Forcing localization is doing more harm than good," the developer said, calling for flexibility to ensure projects are delivered on time.
Despite concerns, he remains cautiously optimistic about Taiwan's offshore wind market. The developer emphasized the importance of government action to maintain Taiwan's position as Asia's leading offshore wind market outside China. "We're still focused on Taiwan because it needs this industry, but change is needed to keep moving forward," he concluded.
Delays threaten Taiwan's wind ambitions
International developers are growing frustrated with project delays, particularly in the Round 3.1 phase, where some offshore wind farms have been pushed back to as late as 2029.
Another European developer echoed similar concerns, advocating for more flexible localization requirements, especially for Round 3.2 and beyond. "If the primary goal is a timely grid connection, then localization requirements can potentially be softened," the developer said, pointing out that European and UK projects often import components from across the globe without compromising competitiveness.
Local Industry Calls for Pragmatism
Credit: DIGITIMES
This sentiment resonates across the industry, with local experts arguing that strict localization policies are creating headwinds. A local supplier lamented the soaring costs associated with government-imposed fees, which have placed additional strain on already thin margins. "We've lost hundreds of millions over the past few years," the expert noted, highlighting how port usage fees and other operational costs are making it increasingly difficult for local suppliers to compete.
Local suppliers called for a more pragmatic approach to localization, arguing that Taiwan's government should consider adjusting its fee structures to support domestic businesses. "The government needs to address its own cost structures before pushing for deeper localization," one supplier emphasized, stressing that the current policies are unsustainable for many smaller players in the industry.
Another industry expert echoed these concerns, suggesting that localization should be applied more flexibly across the entire lifecycle of a wind farm project. "Instead of focusing solely on the construction phase, we should look at the full 25-year lifecycle of these projects," they said, emphasizing the importance of long-term operations and maintenance in driving local content.
Global integration or domestic protectionism?
The ongoing consultations in Brussels are expected to play a crucial role in shaping Taiwan's wind energy future. The EU's concerns—echoed by other major players in the global wind industry, including Japan, the UK, and the US—have placed significant pressure on Taiwan to reconsider its approach to local content requirements.
Credit: AFP
The debate swirls around more than just policy changes; it touches the core of Taiwan's renewable energy strategy and its ability to withstand global competition.
As Taiwan's offshore wind industry approaches a critical inflection point, the outcome of these policy debates will have far-reaching implications. A relaxation of localization rules could invite greater international collaboration and investment, but it also raises concerns about the long-term competitiveness of Taiwan's domestic supply chain.
For now, the industry waits. With the Round 3.2 auction looming and localization discussions ongoing, the decisions made in the coming months will determine whether Taiwan remains a regional leader in offshore wind, or if its ambitious plans will be overshadowed by policy missteps and missed deadlines.
As Taiwan charts its course through these choppy waters, the outcome of this policy shift could determine whether its offshore wind sector sails ahead or is left in the doldrums of the global renewable energy seascape.
