The recent circulating rumor regarding how the COVID-19 pandemic disrupted the construction progress of Taiwan’s Formosa 2 offshore wind farm project has derived concerns from the lead bank of syndicated loan, and may impact the implementation of renewable energy policies as well as the stability of subsequent power supply. In response to the rumor, the Ministry of Economic Affairs has explained that the construction progress is currently controlled and managed by the administrative contract, and unfulfillment will be penalized. The team behind Formosa 2 also commented that they are preparing for the application of project extension review.
Having been appointed 376MW in 2020, Formosa 2 was supposed to complete all underwater foundation in 2020, then finish construction and connect to the grid at the end of 2021. However, the progress of offshore power has been significantly affected by the pandemic; the Ministry of Economic Affairs has also confirmed that the delay of Formosa 2 is caused by the force majeure of the pandemic. The ministry has approved on a 6-month extension for the construction of the underwater foundation from the previous application of project extension, and asked Formosa 2 Wind Power to propose a refined catch-up plan in order to fulfill the progress stipulated in the original contract.
The establishment of underwater foundation had been extended to June, and Formosa 2 is ready to apply another extension.
Formosa 2 commented that the severe pandemic status starting from 2020 has introduced concrete impact to the supply chain of offshore wind power, and resulted in production postponement for critical components. Formosa 2 continues to coordinate and communicate with relevant units, and had applied for a project extension at the same time, which was approved subsequently. The team is now prepared to apply for a second project extension.
Formosa 2 pointed out that onshore construction has achieved active progress, of which onshore cables and the Taichung maintenance center have been completed. In addition, Formosa 2 Wind Power had completed the first delivery of wind turbine blades, cockpits, and towers back in March, while the underwater foundation is currently in the midst of implementation. The company will remain on close cooperation with various agencies, and exert all efforts on the project construction.
In terms of the fulfillment of the wind farm, the Ministry of Economic Affairs had previously explained that operators who are unable to complete engineering according to the agreed schedule will be deducted 8% of the performance bond each month according to subsection 2 of item 1 from act 10 of the administrative contract. The subsection 3 will be enforced if the delay is accumulated to 12 months and more, which stipulates that the avoidable cost or the low tariff adopted when the developer signed for the electricity purchase and sales contract will be incorporated into the 20-year FiT duration starting from the last day of the electricity purchase and sales contract.
The ministry also added that Formosa 2 has an installed capacity of 376MW, and conforms to the progress of power supply if it is able to complete grid-connection this year. The supply of power will not be affected even with postponement in the project, which indicates that the single wind farm occupies a relatively restricted ratio in the overall power supply, and will not influence the stability of power provision.
(Cover photo source: Formosa 2)
