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Offshore wind IRP: electrical system items see polarized difficulties in earning points

February 21, 2022 Wind InfoLink

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Changes in key development items of electrical system 

 Offshore wind industrial relevance program: electrical system

In the official version published on December 2021, onshore substation, originally a key development item in the July 2021 draft, becomes a bonus item. This means that developers are no longer required to have at least 60% of their capacity be locally made offshore substation anymore. Also, transformer, switch plant, and distribution board made in Taiwan can earn developers as much as three points, and PCS two points. Cap of bonus point for cable is cut to five points.  

Power generated from wind farms has to go through step-up substation that increases voltage to ultra-high before being connected to Taipower’s grids. There are two types of step-up substations, offshore and land ones. Offshore substations are constructed in the midst of offshore wind farms, while land substations are built near seashores. Offshore substation is favored, given issues regarding electricity loss, residents’ protests, leading in submarine cable, and onshore cable burial. However, it is hard to access, difficult to maintain, situated amid harsh environment with high salt injury, high humidity, and sea wind waves. Therefore, most offshore substations are customized to minimize the need for maintenance, taking into account environmental factors in the design phase. 

InfoLink believes the Bureau of Energy made these revisions out of concerns for the stance of developers and the lack of intention of Taiwanese manufacturers. 

Firstly, developers want to hedge all the risks for offshore substation. As the heart of an offshore wind farm, any accident occurring to substation impacts the return of wind farms. Taiwan has no experience in manufacturing offshore substations. Taipower offered to build offshore substation for some wind farms, but was rejected by developers, for they wished to have control over design and progress, as the desired specs and construction schedules vary among wind farms. 

Secondly, developers and manufacturers hold different attitudes toward certification. Developers and their insurance agents certainly want every component to be certified, for the highly corrosive environment on the ocean may lead to some equipment failures (e.g. sensor). On the other hand, Taiwanese manufacturers are reluctant to do so, partly because of their lack of awareness for the impacts environmental factors can have on equipment in the sea, and thus doubts over the necessity of certification, and partly because of lofty inspection costs. 

Electrical system items see polarized difficulties in acquiring bonus points

Local manufacturers with actual performances in key development items for electrical system

The chart above shows that Taiwan is well-experienced in manufacturing land-based electrical system, with TECO, Fortune Electric, and Star Energy, subsidiary of Taiwan Cogeneration Corp., having been turn-key contractors for land-based electrical system.  

Taking Changfang & Xidao wind farm for example. Sinotech Engineering Consultants oversees the FEED of land substation and wire for CIP in the Changhua Binhai Industrial Zone. TECO is the turn-key contractor for land substation. Not only distribution board, switch plant, and transformer that are required for localization, TECO in also in charge of designing and purchasing. This underlines developers’ confidence in local manufacturers. Therefore, it is expected that most developers will choose Taiwan-made onshore power systems for bonus points. (Transformer, switch plant, distribution board, onshore wire: deployment over 60% translates to one bonus point for each item.) 

Quite differently from land-based power systems, Taiwan has no manufacturing experience of offshore substations and their steel structure, owing to above mentioned difficulties in construction. The structure of offshore substation is similar to that of wind turbines, but their weights differ a lot. The weights of offshore substation upper platforms vary in accordance with their installed capacity. A 300-MW AC substation weighs 2,000 MT, a 400-MW HVDC substation weighs 3,000 MT, while a Siemens new-gen 14-MW wind turbine only weighs 500 MT. Taiwan has never been involved in the construction of these facilities. Therefore, it is relatively difficult for developers to earn points in this category. 

The localization of submarine cable manufacturing can hardly bear fruit in the short term. Originally, Ta Ya had signed MoU with English submarine cable manufacturer, JDR, in the Zone Application for Planning phase. But the cooperation was canceled due to the lack of optimal ports. Before joining the supply chain, other local cable makers should consider the lack of hinterland and high costs for setting up plants. Therefore, it is relatively difficult for developers to earn bonus points in this category.  

Taiwan has energy storage grid capacity, but the cost of construction is too high. A wind farm with 600 MW of capacity needs to have 4%, namely 24 MW, of ESS deployment, to get the max of three points for this item. Presently in Taiwan, ESS costs NT$ 15-20 million/MWh on average, and NT$ 720-960 million/MWh, provided two hours of discharge time. Yet, the construction of energy storage facilities can be assisted with bank financing, relieving financial pressures for developers. Also, ESS price has been declining continually in recent years. Actual cost of construction may sit lower than current estimations. 

Conclusion

In the Zonal Development stage, acquiring points from items in the electrical system category can be very easy and very difficult. It is easy for land-based electrical systems, which Taiwan has abundant manufacturing experiences. Yet, it is difficult for submarine cable makers, due to difficulty in finding optimal location and high cost for constructing plants, reluctance of offshore substation facility manufacturers to acquire certification, and lack of steel structure capacity. There is no technical barrier for energy storage facilities. As costs are high, whether developers will invest in this item hinges on market competitiveness. 

 

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