OffshoreEnergy:TaiwanRecognizesOpportunitiesand
ChallengesBarbaraKates-Garnick,Ph.D.
TheFletcherSchool,TuftsUniversityConferenceonMaritimeChallengesandMarketOpportunities:Facilitating
CooperationintheAsia-PacificAugust30,2017
Today’sPresentation
• Framingoffshoreenergyissuesforwind,waveandtidalenergy• USmodelandexperienceasacomparisonpoint• OffshoreWindinTaiwan• OtherOffshoreEnergy• IntotheFuture
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FramingtheIssues
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ContextofOffshoreEnergy
• Althoughlocatedoffshore,strongtiestoonshoreissues,environment(oceanandgreenhousegasreduction),connectiontothegrid,costs,stakeholders,policyandpolitics• Developmentofenergytechnology- bothrenewableandconventionalrequireencouragementofinvestment;jobdevelopment(offshorewindcouldsupportUS600Knewjobsby2050)• Impactofongoingderegulationofthepowersector- competitioninpowergenerationandmovementtowardsSmartGridandnewtechnologies• Markettransparencyanddatakeycomponentsofchangeaswellasmultiplestakeholdersupportforchangingenergydynamics
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RevisinganEnergyFrameworkforOffshoreDevelopment• Combiningprocessandfinancialincentives• Offshoreenergyrequiresclear,simplifiedandimprovedpermittingandfinancialincentivesfordevelopment
• Sitingoftenacontroversialportionofanyenergypermittingprocess,particularlyforoffshorefacilities• Offshoredevelopmentfacesgreaterchallenges• Offshorewind- cranesinhundredsoffeetofwateronenormousstilts;toweronsteelfoundationanchoredtoseafloor;bladesneedtowithstandgutsof200mph• Offshorewindoperatesat45%ofcapacityfactorsoissuesofreliabilityandcapacity
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USLegalEnergyFramework
• Clearandseparaterolesforstatesandfederalgovernmentraisesissuesofjurisdictionandregulation• Regulationoflanduseandnaturalresourcesprimarilywiththestateswhichthendelegatestolocalgovernments• Resultsinapatchworkoflocalordinances,stateandfederallaws• Startingin1970sstatesadopted“siting”lawstocoordinate,expediteandstreamlineregulatoryandlicensingprocessforlargescalepowerplants– thresholdbasedongenerationsize
• Difficulttoapplytraditionalsitingtorenewablessincenotlargeenoughtoqualifyforexpeditedprocess;renewabledevelopmentthusfaceslocalapprovalwhichcanbelengthy,costlyandunpredictable;movementunderwayinmanystatestoexpeditepermittingandsitingforrenewables(importantforTaiwantoconsider)
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OverArchingLegalandRegulatoryFramework
• UNConventionontheLawoftheSeagovernsuseofoceans:territorialwaterupto12nauticalmiles/territorialwatersaresovereignterritoryofstateandgivefullrightsoverwater,seabedandsubsoil/thenexclusiveeconomiczoneextendingupto200nauticalmilesfromterritorialseabaselinewhereacountrypossessrightstoexplore,exploit,conserveandmanagethenaturalresourcesofthewatercolumnandseabed.
• Mostoceanenergydevisesinstalledinterritorialwaters• Legalandregulatoryuncertaintyaremajorissuestooceanenergydeployment
• inUSmorethan23federalandstateregulatoryagenciesinvolvedinoceanenergyprojects• Asthistalkwillshow,multiplejurisdictionsengagedandinvolvedinoffshoreenergydevelopment
• ImplicationsforNationalSecurity
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USFrameworkandExperience
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USFederalLegalFrameworkforOffshoreResources• Over60yearsoflegalframework
• SubmergedLandsAct(1953)givesstatesrightstonaturalresourcesnomorethan3nautical(5.6kilometers)milesoffcoast
• OuterContinentalShelfLandsAct(OCSLA)authorizedDOItoleasesubmergedlandsforeconomicdevelopment
• OilPollutionActof1990givesauthorityforoilandgaspipelines• EPACT(2005)– forissueofleasesoncompetitivebasis
BureauofOceanEnergyManagement(BOEM)tomanageOCSenergyandresourcesinenvironmentallyandeconomicallyresponsiblewayComplex,multistageprocesstoacquire25yearrenewableenergyleasetoconstructandgenerateelectricity- BOEMultimatelydecideswhetherornottoproceedcompetitivelyornot- offshorewind,oceanwaveandoceancurrentExampleofMABOEMwindlease-12nauticalmilesoffshore;awardscompetitivebidsof700,000acresfor$14.5million- companieshave5yearstosubmitbidsforapproval
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USFederal TaxCreditsKeytoRenewables
• Concept:Taxcreditsreducethepriceatwhichenergysold- forwindimpactbetween22- 50%• ProductionTaxCreditappliestowindprojectsandoriginatedunderEnergyPolicyActof1992andthenlapsedin1999;2016OmnibusAppropriationsBilldeterminedplannedphaseout• Cycleofexpirationandreinstatementcausedinstabilityanduncertaintyforinvestment
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FederalTaxIncentives(2)
• PTCcurrentlyunderplannedphaseoutbasedonprojectsinconstruction:• 2015/16- fullPTCof2.3cents/kwh• 2017at80%offullvalue• 2018at60%offullvalue• 2019at40%offullvalue
• Investmenttaxcredit(ITC):orderlyphasedown(mainlyforsmallwind)• 2015/16- full30%ITC• 2017- 24%ITC• 2018-18%ITC• 2019- 12%ITC
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LegalFrameworkforRenewables:MassachusettsasExample• Requirementsthatloadservingentitiesenterlongtermrenewablecontractsthroughcompetitivebiddingprocessestoensurecompetitionandgetthe“bestprice”• Establishmentof“GreenCommunities”toreduceenergyconsumptionandcosts,reducepollution,facilitaterenewablesandcreatejobs• Netmeteringforsolarwhichenablesunusedpowertobesentbacktogridat“fair”marketpriceasopposedtofeedintariffswhichareinplaceinTaiwan• Whenenergygoalsset,thenneedprocessesinplacefordevelopment-projectsrequirecertaintyaboutprocessbutnotoutcome• CreationofEnergySitingBoard• Guidelinesforpermitting,coordinationamongregulatoryagencies,hearings,needtimelimitsfordecisionmakingandregulatoryprocesses(delayisenemyofdevelopment)
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EnergyDevelopment:RenewableEnergyCertificates• RenewablePortfolioStandards(RPS)- stateestablishesrequirementthatretailelectricitysupplierspurchasecertainamountofpowerfromrenewables• TradableRECertificatespresentproofthat1MWofelectricityhasbeengeneratedfromeligiblerenewableenergysuppliers;pricesdependuponyearRECsgenerated,supplyanddemandsysteminstate,typeofpower• RPSsystemin29stateshascreatedRECMarket;MassearlyRECstate• DeterminewhatgeneratingentitiestheRPSapplies• Determinerateofincreaseofrenewablegenerationovertime• Bothcomplianceandvoluntarymarkets
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OffshoreWindinMass/NE:CaseStudy
• UStechnicaloffshorewindpotentialhuge- 2000GW;EUhas41terawatt-hoursofwind,accountingforonly1.5%ofEUelectricityproduction• FirstUSoffshorewindfarmoperationalinRhodeIslandinMay2017-- 30MWBlockIsland,DeepwaterWindwith5GEturbines(589feettall);costof$300million;price24cents/kwhcontrastedto14cents/kwhforRIaverage;• MA“ActtoPromoteEnergyDiversity”-2016- section6ofchapter25AMGL15-20yearcontractforoffshorewindprojectbeyond10mileslocatedinOCS• By2017distributionutilitiesrequiredtosolicit1600MWofoffshorewindtobeoperativeby2027;staggeredprocurementsofnolessthan400MW;procurementsregulatedbypublicutilitycommission;• transmissioncostsaspartofbidbutrecoveredthroughfederaltariffs• Rulesaboutlongtermcontractsandthecosts;rulesaboutRECsandtrackingofcertificates
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RenewablesandOffshoreWindasEconomicDevelopment• Offshorewindasgreatestsourceofinstateenergy- thusatoolofandforeconomicdevelopment• WindTechnologyTestCenter- testswindturbineblades• NewBedfordMarineCommerceCenter– tosupportofshoreindustry
• Keyopportunities:stakeholderengagement,environmentalcharacterization,metaocean data,supplychain, portsandinfrastructureinvestment,workforcedevelopment,transmission,research• Endgame- creationofanoffshorewindindustry
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General ProjectOverview
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ExamplesofProjectIntegrationofEnergyandEnvironmentalInitiatives
DevelopmentoftheNewBedfordMarineCommerceTerminal
BenefitsofthePort•Createsafirst-in-the-nationpurpose-builtfacilitytosupportassemble&constructionofoffshorewindproject.•Providesforconstructionof1,000footlongbulkheadcapableofsustainingloadsof4,000lbs/PSF.•ProvidesNewBedfordwithnewopportunitiesforheavymarinecargo.•SignificantincreaseineconomicactivityforMassachusetts&SouthCoastarea.
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• Removalof244,600cubicyardsofcontaminatedsediments.
• Environmentallyresponsibledisposalofcontaminatedsoils.
• Creationofresourceareasforwinterflounder,shellfish,&wetlandhabitat.
Benefits:Environmental
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Taiwan’sOffshoreOpportunities
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Taiwan’sCurrentGenerationMix
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PotentialRenewableGeography
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Taiwan’sEnergyPicture
• Taiwantotalelectricpowercapacityis40GW(compareUSat1000GWorChinaat1200GW)• GenerationMix:Coalat38.4%;LNGat31.1%;Nukesat13.8%
• Goaltobenuclearfreeby2025whichcompletelyaltersenergydirectiontowardalternativeenergywhichmeanssolarandwind- keyissue• Goaltoreplacenukeswith20GWofsolarand3GWofoffshorewind-
• 2015GHGReductionandManagementActcallsfor50%emissionsreductionby2050,TEPAandEnergyandCarbonReductionOffice(ECRO)• Dependenceonfossilfuelstiedtosecurityconcernsbutnowenergysecuritythroughrenewabletechnology• RenewableEnergyAct(2009)– developersreceivea20yearPPAandFITforoffshorewindof18.5771cents/kWh
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Taiwan’sArticulatedGreenEnergyPolicy:RecognitionofMultipleAspects• StepOne:Integrationoftalent,communication,innovationconnectingcorporateandacademictalent– offshorewindenergyinTaiwanStrait,solarinsouth,geothermalineastandocean/tidalinPacificOcean• Taiwanalreadyworld’slargestproducerofsolarcellsin2015- providingnearly20%andalsooneofleadingsolarwaferandmodulemakersalthoughowninternalmarketisunderdeveloped
• StepTwo:Increasegreenenergygenerationasawaytoattractinvestment• StepThree:Exportgreenproductsandturnkeyrenewablesolutionsintoanincreasinglygreenglobalmarket
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FocusonOffshoreWind:PlanninginPlace
• OffshorewindrecognizedasTaiwan’smostattractiverenewableenergyoption• ThousandWindTurbinesProjectinTaiwanStraits,oneofworld’sbestoffshorewindsites2016-2030• 600offshoreturbines/450onshoreturbines- 4000MWoffshoreby2030• ThreeRounds:One- InitialDemonstration;Two- PotentialShallow;Three-CommercialandZonalDeepwaterDevelopment• Involvesinfrastructureconstruction,environmentalassessments,fisheriescompensation
• RoleforgovernmentsubsidiesbyFITs,loansanddirectgrants;incentivesinclude50%ofinstallationexpenditures
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TaiwanWindPotential(fromNetherlandsTradeandInvestmentOffice)
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CurrentTaiwanWindProjects
• FORMOSAI• Phase1twoturbinesof8MWinstalledin2016/Phase2120MWtobeinstalledin2019offMiaoliCountyinNWTaiwan• DONG(35%)asadvisors,MacquarieCapital(50%)andSwancor (15%)forsitedevelopment
• DONG’sotherinvestments– 4offshorewindsitesinChanghuafortotalcapacityof4MWforconstruction2012-2024• EarlystagecollaborationwiththeNetherlands- proofofexperienceandrecognitionofopportunity
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RecognitionofOpportunitiesandChallengesofCollaborationwithForeignCompanies• OpportunitiesofDutchandDanish• Beyonddemonstrationprojects• Recognitionofenvironmentalissues- navigation,fisheries• Experiencewithengineering,projectspecificrisk,marineconstruction
• Challenges• Typhoonsandearthquakes• Specificenvironmentalissues• Technologygaps• Financingissues• Locationofwindfarms
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OpportunitiesforMarineEnergy:TaiwanasPotentialTestbed
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OffshoreEnergyOpportunities
• Taiwanasislandnationtolookforotherformsofoffshoreenergy-tidal,wave,andcurrentallofwhichinR&Dorearlyprototypestage• Allrenewableenergycontributestosustainableenergysupplybutarenotenvironmentallyfriendlyperse:Impactonthebenthiccommunity(oceanfloor)duetoalternationsinflowpatterns,wavestructures,sedimentdynamics;species-specificresponses- willbeaffectedbysubseacables,flowalteration.Sedimentandhabitatchangeneardevices• Challengesincludetechnologydevelopmenttoproverobustnessandreliability,toreducecosts,todeployandtoreducerisks
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FairlyRecentOffshoreEfforts
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OtherIssuesrelatedtoOceanEnergy,DevelopmentandManagement• Gridintegration
• Canbeexpensiveduesubsystemandsubmarinecables;gridproximitytoremoveareas,griddevelopmentperseandvariabilityofoceanenergy- eg tidesvariableonanhourlybasis,canbehighwhilewavecanbelowandthengreatonaseasonalorannualbasis;highcoststointegratewithgrid
• Alsoissuesofpowerqualitylikevoltagecontrol;thusconvertersandarrayswillbeimportant
• Installation,operationandmaintenance• Willbeexpensive– upto3.4-5.8%ofcapitalexpenditurescomparedto2;3-3.7%foroffshorewind
• Arrayconfigurationisimportant- hydrodynamicsandlocationwillaffectpoweroutputandcosts
• Operatinginharshenvironments
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SocioEconomicImpactofEarlyStageOffshoreEnergyProjects• Howdevelopmentrightsaffectsocietyasawholeandlocalpopulations:• Employment,incomeandeconomicpower• Visualimpacts;impactonusersoftheoceanenvironment- measurementtoolsincludebudget,householdincome
• Socialimpactonnewjobcreationv.negativeimpactonexistingindustries,bothOPEXandCAPEX• Operationalcostsneedtobeestimated– gridconnection,AVvDCtransmission,offshoresubstationcosts,cablecosts,maintenancecosts,energylosses
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MovingintotheFuture
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OffshoreMarineTechnology:SpecificTechnicalRequirementsforTaiwan• AdvancedModelingshouldincludecompetingusesofmarineenvironmentasfishing,shipping,offshorewind,habitatprotectionandgridconnection• ComprehensiveLifeCycleAssessmentsofoceanarraysshouldincludefluctuationofpoweroutput,storage,gridintegration• Gridintegrationstudiesneedforpowerquality,areaofcontrolforpotentialcostreduction,spatialarrays• Reformedlegalandregulatoryaffairstomeetenergysectorrequirementsandshoulddefineoptimumstakeholderprocess
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OffshoreEnergy:KeytoFuture
• BottomLine:OffshoreEnergyshouldreceivegreaterfocus• Clearimplicationsforenergy,environment,economicdevelopment,socialcontext,gridintegration• Broadperspective:technologydevelopmentandenergysecurity• KeyimplicationsforTaiwanintheglobalcontext
• Offshoreenergyasconflictpointorcooperation?• Broadersecurityinreducingfossilfuelimports- coal,LNG,oil• Waytoattractforeigninvestment,foreignpartnerships
• PositiveoutcomeintermsofbringingTaiwanoutofisolationandacleaner,technologydrivenenergyfuture
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