Maritime engineering becomes new battlefield for offshore wind industrial relevance

During the zonal development phase of offshore wind energy, the industry expects to see tenders priced at zero. As Industrial Development Bureau finalized the Industrial Relevance Program (IRP), guidelines for localization bonus points became clear. How developers form collaboration with local supply chain before the due date of business selection on August 31, 2022, and thus secure grid connection qualification is widely heeded. The following paragraphs discusses guidelines regarding maritime engineering in the IRP and projects future competitions. 
 

Changes to guidelines for maritime engineering service 

Comparing to draft issued in July 2021, the finalized version revised the original “100% of applied capacity shall meet localization requirement” to “Taiwanese vessels shall take priority for maritime engineering.” Additionally, under the regulation on the use of vessels of key development items, developers are allowed to use foreign vessels when necessary, but must submit certification from the T-Wind Marine Association and follow legal procedures mandated in guidelines announced by the Maritime and Port Bureau. 

The amendments provide more flexibility for developers, making it less likely for the construction of wind farms to delay, reduce pressures of scheduling for developers, and ramp up the development of offshore wind farms in Taiwan.

Acquiring maritime engineering techniques requires in-person operating experiences. However, owners of vessels belong to foreign companies or joint ventures seldom let Taiwanese crews operate themselves, in fear of damaging vessels. Therefore, allowing developers to use foreign maritime engineering service or vessels may sacrifice learning opportunities of Taiwanese crews.  
 

Factors affecting maritime engineering services competition

The above table shows companies with portfolio of maritime engineering services.

Among these items, Taiwan is the weakest in terms of construction vessels for underwater foundation installation, wind turbine installation, and cable lying. Presently, Green Jade, a heavy lift vessel being built by CDWE is the only Taiwan-owned installation vessel. It has been contracted with Changfang Xidao, Zhongneng, and Formosa wind farms for the transportation and installation of wind turbines and foundations.

There are two cable lying ships, each purchased by High Tien Offshore and DFO (Hunghua). However, Yunneng Phase-1 (360 MW) mobilized two underwater foundation vessels, one wind turbine installation vessels, and four cable lying ships. Therefore, Taiwanese vessels are still insufficient for the complete localization of maritime engineering services. 

Taiwan has its own supporting vessels, some of which are still under construction. The vessels are sufficient to satisfy the need of zonal development. However, Taiwan does not have fallpipe vessels. Companies possessing dump barges, such as Hunghua and HwaChi, are using grapple bucket or back hoes in replace of fallpipe vessels.

This is unacceptable for developers, who believes only fallpipes can protect dumped stones from ocean currents, have better accuracy, and thus less likely to damage underwater foundations. As a result, Taiwan may need to purchase, construct, or modify ships into fallpipe vessels for maritime engineering services, in order to meet requirements for developing wind farms.  

For bonus points, using Taiwan-made underwater foundation installation vessels, wind turbine installation vessels, and cable lying ships bring developer 3 points for vessel construction and 2 points for vessel usage. CDWE, subsidiary of CSBC Corporation, has thus become the most sought-after company for developers to cooperate with.

However, cable lying ships cost around TWD 1 billion, and jack-up barges and heavy lifting vessels costs around TWD 5-7.5 billion, placing huge financial pressures on developers. Staff transportation cost TWD 1.5 million, which also earn developers three bonus points. Therefore, most developers will choose these ships over other items. Presently, Lung Teh Shipbuilding and CSBC Corporation from the offshore wind supply chain and other local ship makers who are capable of building working vessels, such as Jong Shyn, are expected to be highly regarded among developers. 
 

Conclusion 

For now, maritime engineering capacity in Taiwan is not enough to fulfill localization. As zonal development wind farms enter construction phase, there will be three wind farms under construction within a year, mobilizing three vessel fleets. Therefore, besides some supporting vessels, wind turbine installation vessels, underwater foundation installation vessels, and cabal lying ships will be the major bottleneck, for they acquire huge financial investment and are less beneficial, comparing to smaller ships, in terms of points. Staff training is another crux. In most potential wind farm sites, Taiwan does not have primary working vessels. As a result, after the construction of vessels, the crew will need some time to accumulate experiences, and then work in the zonal development phase.