summary report_05_02

2017 EU-Taiwan Organic Food Trade Seminar

Taipei, 14 March
Note: This is an abridged version. To read the full report, please click HERE.

The European Economic and Trade Office (EETO), under the framework of the European Business and Regulatory Cooperation (EBRC) programme, co-hosted the seminar together with the Bureau of Standards, Metrology & Inspection (BSMI) under the Ministry of Economic Affairs (MOEA) and the Bureau of Foreign Trade (BOFT), also under the MOEA. The event gathered around 250 participants from Europe and Taiwan, which included governmental officials and companies from Europe and Taiwan with the objective to increase mutual understanding about the issues related to wind power certification. The seminar began with opening remarks by the guests of honour and was followed by presentations from European and Taiwanese experts from both the public and private sectors to share their experiences on four topics: investment and financing issues in renewable energy, offshore wind project certification, due diligence for offshore wind energy, marine warranty surveys and marine operation risk management. The seminar was concluded with closing remarks by Mr Liou Ming-Jong, Director-General of the BSMI. 


Bureau of Standards, Metrology & Inspection (BSMI), Ministry of Economic Affairs (MOEA) 經濟部標準檢驗局
Bureau of Foreign Trade (BOFT), MOEA 經濟部國際貿易局
European Economic and Trade Office (EETO)
European Business and Regulatory Cooperation Programme (EBRC)

Guests of honour 

Ms Madeleine MAJORENKO, Head, EETO
Ms WANG Mei-Hua, Vice Minister, MOEA 經濟部 王美花 常務次 長
Mr LIOU Ming-Jong, Director-General, BSMI 經濟部標準檢驗局 劉明忠 局長


Mr Jan STEINKOHL, Policy Officer, Renewables and CCS Policy Unit, Directorate-General for Energy, European Commission
Dr LONG Pei-Tat, Engineer, Metal Industries Research and Development Centre (MIRD) 財團法人金屬工業研究發展中心 容丕達 博士
Mr Dónal CANNON, Head, Regional Representation for South Asia, European Investment Bank
Ms Eleana YIP, Team Head, Cathay United Bank 國泰世華銀行 葉麗明 資深業務副總經理
Mr Olivier ROUSSELET, Country Manager Taiwan, BNP Paribas Taipei Branch
Mr Allan BAKER, Managing Director and Global Head of Power, Société Générale Corporate and Investment Banking
Mr CHIU Sin-Hau, Assistant Chief, Metal Industries Research and Development Centre (MIRDC)
財團法人金屬工業研究發展中心 邱信豪 副組長
Ms MO Ying-Er (Marianna), Business Development Manager, DNV GL 
Mr Lucas LIN, President, Swancor Renewable Energy Co., Ltd. 上緯新能源股份有限公司 林雍堯 總經理 
Mr Simon COX, Head of Offshore Projects, DNV GL
Mr FENG Chih-Wei, Director, Transaction Advisory Services, EY Transaction Advisory Services Inc. Taiwan 安永交易諮詢服務 馮熾煒 總監
Mr Wayne Cheng (Wei-yuan), Project Manager/Surveyor, CR Classification Society 財團法人中國驗船中心 程維淵 驗船師/專案經理
Captain Mike FRAMPTON, LOC Renewables
Mr Clive LIN, Chief Technical Officer, AON Taiwan 台灣 林彥碩 技術長

Mr Dónal CANNON, Head, Regional Representation for South Asia, European Investment Bank
Dr TSUI Hai-Ping, Assistant Professor, National Central University 國立中央大學 崔海平 助理教授
Mr CHEN Yen-Haw, Deputy Director, Taiwan Institute of Economic Research (TIER) 台灣經濟研究院 陳彥豪 副所長
Mr JHAN Yu-Ti, Director, CR Classification Society 財團法人中國驗船中心 詹育禔 組長

Opening remarks

In her remarks Ms Wang referred to the EU’s long history of developing renewable energy and as a pioneer in offshore wind energy. Since Taiwan is moving ahead with an ambitious plan to revamp its electricity mix, she said that the EU is the best and most natural partner for Taiwan. She noted that, over the past few years, a few European developers have been teaming up with local partners and taking active actions in entering Taiwan’s offshore wind market and that many of them are now ready to take further steps towards their development in Taiwan. 

The solution to tackling the problems of air pollution and the goal of phasing out nuclear energy free solution is simple, according to Ms Wang: increase the share of renewables to 20% by 2025. Ms Wang said that Taiwan’s west coast has the potential to generate more than six gigawatts (GW) of installed capacity and Taiwan is also committed to promoting what could become a major new industrial sector, given all the upcoming projects. The development of offshore wind power is a huge undertaking, involving project certification, financing, environmental protection, marine engineering and construction, electrical grid transmission as well as the harmonization of laws and regulations and close coordination and cooperation among government agencies. However, governmental actions are not enough. Expertise in technology and financing from the private sector are also needed for success, which is why this seminar is important to gain knowledge and learn from the experience that has been built up in the EU and around the world. She concluded that she hoped to develop a long-term and stable partnership by jointly building supply chains for the wind power industry, thereby making Taiwan a base for further exploring wind energy markets in the Asia Pacific region. 

In her remarks, Ms Majorenko stated that for more than two decades, the European Union has been at the forefront of global renewable energy deployment. This was owing to pressure from the European population and political will. The adoption of long-term targets and supporting policy measures has resulted in strong growth in renewable energy consumption across the region from a 9% share in 2005 to 16.7% in 2015 and the EU is currently on track to meet its 20% target established for 2020. The share of renewables is now close to that of nuclear energy. She continued to say that offshore wind energy continues to grow more indispensable to Europe’s energy mix and that Europe remains the undisputed leader in offshore wind. Europe now has a total installed offshore wind capacity of close to 16GW. This corresponds to 4,149 grid-connected wind turbines across 11 countries. In 2017 alone 3.1GW of new offshore wind capacity was installed, the equivalent of Taiwan’s target for the next seven years and an increase of 25% in just one year.

Ms Majorenko went on to stress that the EU and Taiwan share a mutual interest in developing the offshore wind energy in Taiwan. Taiwan has committed to become the Asian front-runner in offshore wind energy and Europe is ready to offer its expertise and know-how to emerging high-potential markets like Taiwan. The maturation of the European offshore industry will greatly benefit Taiwan. European companies will also be able to collaborate with the regional supply chain combined with technology adapted to local conditions and an experienced workforce. This implies many opportunities for both European and Taiwanese players as well as regulatory, financial and technical challenges, which can best be addressed by working together. 

Keynote presentations

Topic: Offshore wind policies in the EU
Speaker: Mr Jan STEINKOHL, Policy Officer, Renewables and CCS Policy Unit, Directorate-General for Energy, European Commission
The European Union set itself ambitious energyy and climate targets: by 2020 the EU aims to achieve a 20% reduction in greenhouse gas emissions (GHG), have a share of 20% of renewable energy in its final energy consumption and improve energy efficiency by 20%. Targets for 2030 are a 40% GHG reduction, 27% of energy from renewables and a 30% improvement in energy efficiency. The target for 2050 is to reduce GHG emissions by 80-95%.  

The Commission’s energy strategy aims to improve energy efficiency since the best way to prevent problems associated with the production of energy is not having to produce it in the first place. Switching to renewables will also improve energy security as it reduces dependence on fossil fuel imports. Other key components of the strategy are creating a fully-integrated energy market, decarbonizing the economy and focusing on research, innovation and competitiveness because the European Union wants to be the global leader in renewables.

It is important to note that the EU’s target for renewable energy refers not only to electricity generation but also includes heating, cooling and transportation. Currently only a small portion of heating and cooling is powered by renewables (largely in the form of bioenergy) while the transportation sector is still dominated by fossil fuel-powered vehicles. According to Mr Steinkohl, models used by the EU show that in order to reach its overall target of 27% from renewables by 2030, almost half of the EU’s electricity generation needs to come from renewables, rising to 66% by 2050. This means that changes need to be made to the electricity infrastructure and market rules to handle a larger portion of intermittent supply from renewable sources smoothly.

Currently there is 16GW of offshore wind capacity installed, most of which is located in the North Sea where wind conditions are good. It is noteworthy that capacity has increased rapidly (it has tripled over the past seven years). It is estimated that 25GW will be reached by 2020. At present the EU has 84% of global offshore installed capacity and China has another 15%. Europe has become a world leader in wind energy technology, helped by cost reductions, improved planning and accumulated experience. Given cost reductions, offshore wind is now cheaper than gas. Besides the environmental benefits, the wind energy industry has created a lot of jobs in the manufacturing supply chain, finance, operations and maintenance. 

A key element in this success has been a stable investment framework which has provided investor confidence. The EU therefore aims to strengthen further the stability of financial support, increase visibility for investors, and ensure a steady market development and simple administrative procedures. A crucial factor is transparency and visibility, especially since the largest expenses for wind energy come at beginning of the projects. Unlike the oil and gas industry, it is very difficult to adjust the cost structure of a wind project in later years. Long-term visibility is necessary to build a supply chain, which is why Member States are asked to layout the available support for renewables three years in advance.

There are three main types of support schemes for offshore wind: Feed-In Tariffs (FIT), green certificates and market premium schemes. The type of support scheme employed has an impact on risk. It is necessary to find the right balance of risk between public and private sector players. Pushing too much risk onto the private sector can make projects more expensive since higher risks mean higher capital costs. FITs over the life of the project have traditionally provided the highest level of comfort to investors, provided the government carries through on its commitments. To ensure promises are met, the EU has proposed legislation to ensure that support, once granted, cannot be retroactively changed. Green certificates, whereby the government obliges market participants to get a portion of their energy needs from renewables, and market premium schemes have had mixed success. 

Levels and types of support in Europe are not uniform. In some support schemes, for instance, the grid operator is responsible for the onshore connections whereas in other support schemes the project developer bears this responsibility. However, there is a convergence in Europe on how support is granted: a gradual move towards a tender system for wind energy projects, whereby developers are asked to submit bids and the lowest bid wins, can be observed. The advantage of this approach is that it avoids oversubsidising. 

The speaker went on to talk about other policy areas. Europe is fairly liberal in terms of certification. All machinery has to be shown to be safe. While this is usually done by following standards, standards are not compulsory in the EU in order to not block innovation. Nevertheless, manufacturers usually choose to get certification from third parties in order to increase confidence in their products. 

He noted that maritime spatial planning has become an important topic given competing demand for space in some areas (especially the North Sea), since it is a busy space for shipping, cables, pipelines, fishing and aquaculture. For this reason the EU is seeking to coordinate maritime planning policies among all the stakeholders. In terms of financing, given the low interest rate environment and growing appetite for project financing business by financial institutions, financing is not a big issue at the moment. 

The speaker concluded with some thoughts about guarantees of origin (GOs), a system that serves as a tool for consumer information but is not used as a support scheme to provide funding for investors. Electricity suppliers wanting to sell green electricity can buy certificates, so-called guarantees of origin. These contain information about the power source but are traded separately from the megawatt-hours produced in a renewable power plant. This means that electricity as ‘green’ without having a direct link to a renewable power plant. This system can ensure that no green claims are used twice. They are well understood and used by large corporations to disclose their carbon emissions. They can also be used for public private power purchasing agreements. However, the way the system functions is not necessarily well understood by household consumers and in itself does not provide enough of an incentive to invest in new renewable capacity.

Topic: Offshore wind energy development policy in Taiwan
Speaker: Dr Long Pei-Tat, Engineer, Metal Industries Research and Development Centre (MIRD)
Citing estimates from Industrial Technology Research Institute’s (ITRI) 2011 Wind Resource Assessment Handbook, Taiwan has offshore wind potential of 9GW of capacity in shallow water (5-20 metres) of which 1.2GW is “feasible”, a potential of 48GW in deep water (20-50 metres), of which 5GW is feasible and 90GW of potential in deeper water (over 50 metres), of which 9GW is feasible. 

Guidelines on energy development were announced in April 2017 to serve as the “superior policy guidance” for national energy development, energy policy programmes, standards and action plans based on Paragraph 2 of Article 1 in the “Energy Administration Act” (能源管理法). There are four main development objectives to ensure balanced development in: 1) Energy security, 2) Green economy, 3) Environmental sustainability, and 4) Social equity so that the goal of a nuclear-free homeland can be achieved by 2025 and sustainable development in energy can be attained. 

There are 5 complementary policies: 1) Complete legislation and regulations for the energy transition; 2) Comprehensive low carbon administration; 3) Diversified complementary mechanisms; 4) Climate change adaption and 5) Deepening communication and education on energy risks.

A four-year plan for wind energy was announced in June 2017. The main objective is to promote wind energy development according to the “onshore ahead of offshore” principle. The short-term goal is 814 megawatts (MW) of onshore and 520MW of offshore capacity by 2020. The long-term goal is 1.2GW of onshore and 3GW of offshore capacity by 2025. The goal for annual electric power production is 14 billion kWh by 2025, which would result in an annual carbon dioxide reduction of 7,100,000 tonnes by 2025. Additional goals are to create 10,000 jobs and attract investments of NT$613.5 billion by 2025. The plan will be executed under MOEA’s Wind Energy One-Stop Service Window. 

Currently 30 onshore wind farms in Taiwan have a total installed capacity of 684MW while there are only pilot offshore wind projects currently operating with a capacity of 8MW. 

Under the "Renewable Energy Development Act” the "Offshore Wind Power Demonstration Incentive Program" was formulated to encourage the industry to build offshore demonstration wind farms in 2012. The programme offered incentives for demonstration wind farms and turbines, subject to conditions. 

In Phase I of the development plan, three entities applied for and were granted approval for the Demonstration Incentive Programme. They proceeded to first conduct data analysis and later install turbines. 

Under Phase II of the programme, announced on 2 July 2015, the BOE announced the “Directions of Application of the Offshore Site Selection” based on the depth of water and average wind speed. Some potential sites were rejected on the grounds of interring with marine traffic or environmental protection. 64 potential sites were identified of which 36 “Zones of Potential” were revealed for preparation in advance of zonal development. Applications were then invited for the development of wind farms with capacities of more than 100MW and more that 5MW per square kilometre with a deadline of 31 December 2017. Applicants were also required to finish Environmental Impact Assessments (EIA) of their wind farm sites before the same deadline and prepare permits by 2019. In the event of multiple applicants for the same site, it was specified that the BOE would grant approval depending on which applicant finished its EIA first. The EIAs of many applicants were approved while others were rejected. Most of the approved sites are near Changhua. 

The next phase (Phase III, Offshore Zonal Development) will entail marine spatial planning together with installations of offshore turbines and the development of the domestic industry. 

The BOE will allocate 5.5GW of installed capacity by 2025. There will be a selection procedure for the first 3.5GW (the first 0.5GW to be commissioned in 2020 and the remaining 3GW to be commissioned between 2021 and 2025). The remaining 2GW of capacity will be subject to an auction procedure based on FIT price and awarded to the highest ranked projects. Applicants were advised to submit their bids by 30 March 2018. The scoring criteria are as follows: Technical capabilities (60%, divided into construction, 25%, engineering design, 20%, operation and maintenance planning, 15%) and financial capabilities (40%, divided into financial soundness, 30%, and associations with domestic financial institutions, 10%).

Applicants are also each required to commit to providing a substantial supply chain plan with elaboration, proof, and a letter [of approval] issued by the IDB before 31 December 2018 which should include the following items and schedules for the domestic supply chain: 
Pre-stage (2021-2022): towers, foundations, onshore electric devices and construction vessel manufacturing.
First Stage (2023): Nacelle assembly, wind turbine parts (transformers, switch gear, UPS, nose cones, cables, hub forged parts and fasteners), underwater cables, construction vessel manufacturing and all items in the pre-stage.
Second Stage (2024-2025): wind turbine parts (gearboxes, generators, converters, blades and resins, nacelle covers, main frame forged parts) and all items in pre-stage and first stage.
Projects planned to be connected to the grid connect during the pre-stage are required to submit their plans to the IDB before 15 November 2018. Projects planned to be connected to the grid during the first and second stages are required to submit their plans to the IDB before 15 November 2019.

The government’s objective is to promote the development of the offshore wind power industry, construct an industry supply chain and seize Asia-Pacific market share. In line with this objective it is developing strategies including promoting domestic supplier alliances, international cooperation, the development of offshore wind industry parks and key subsystems and components. Mr Long also mentioned attracting international wind industry manufacturers to Taiwan with market incentives, establishing cooperative relationships between domestic and foreign companies in wind turbine, foundation and maritime engineering and ship building to develop the industry supply chain.

In terms of domestic supplier alliances, the Wind Team, launched in September 2016, under the auspices of the IDB, includes 16 major potential wind turbine component suppliers. The Marine Team was launched in November 2016 and includes state-run Taiwan Power Company (Taipower), China Steel Corporation, Chunghwa Telecom, the Steel Industries Research and Development Center, the Ship and Ocean Industries R&D Center, ITRI, the CR Classification Society as well as several local marine engineering companies. 

Mr Long concluded that Taiwan has great potential for developing wind energy but also faces challenges such as strong typhoons, earthquakes and poor seabed conditions. To overcome the challenges, Taiwan needs support from abroad.

Keynote presentation Q&A session
On a question about local content, Mr Steinkohl noted that European Member States do not generally allow local content requirements. Moreover, the issue is less relevant because much of the value creation is in operations and maintenance, which is mostly locally sourced. 

On a question of energy security and localization, Mr Long said that local developers will need to meet certain standards and that further cooperation with Europeans will be needed to meet the government’s renewable energy targets.

On a question as to what margins would be reasonable given the higher risks associated with offshore wind energy, Mr Steinkohl said that this is up to individual Member States in the EU but that transmission operators take into account erratic weather, other adverse environmental factors and potential grid connection problems in their models. 

On a question as to the local supply chain in Taiwan, development is still in the early stages. Mr Long said that some suppliers could meet requirements but there will be challenges to meet stricter requirements for offshore wind parts and components. However setting targets would serve as motivation for local suppliers to work to meet the requirements.

Session 1: Investment and financing issues in renewable energy
Moderator: Mr Dónal CANNON, Head, Regional Representation for South Asia, European Investment Bank

Topic: EU-Taiwan offshore wind certification – Catalyzing private sector investment
Speaker: Mr Dónal CANNON (see title details above)
There has already been a huge investment of €83 billion in wind energy. Over the next 10 years this amount will need to be increased eight-fold to over €600 billion. 50% of cost is in the cost of financing which is why it is important to get it right.

The European Investment Bank (EIB) is the financing arm of the EU set up 60 years primarily to fund reconstruction in the EU after WWII. It is an institution that is part of the EU and therefore applies EU standards and policies in everything it does. Today, one of the EIB’s main objectives is to support European energy objectives. The EIB provides support both inside and outside the EU area.

The EIB’s annual budget is about the same as the Taiwan government’s annual budget. The EIB raises money in capital markets as is therefore not dependent on the EU for funding.

The EIB is largest issuer of green bonds, which are used to finance green projects. The EIB is not involved in policy development. It analyses projects to ensure feasibility, bankability and that they are structured correctly. 

From 2013-2017, the EIB lent €65 billion to energy-related projects. 38% of this was in renewable energy, a further 23% in electricity networks and 18% in energy efficiency. €1.5-2 billion per year was invested outside the EU. 

Offshore wind is an important emerging sector in which the EIB is investing, both in projects as well as R&D related to offshore wind.

The EIB has lent to more than 30 projects across 5 Member States amounting to about 7GW of installed offshore generation capacity. Since there is currently about 20GW of installed offshore capacity globally, this means that the EIB is financing about one third of offshore projects globally. 

Initially funding was provided to large corporates. Now the focus has shifted to lending to projects. This is because projects are much larger with more players, including many financiers. The EIB provides project finance, corporate lending, hybrid structures, innovation facilities, project bonds and equity funding. Risk assessments include feedback from ongoing projects and lessons learnt are implemented in new operations. 

The government of India has invited the EIB to support the country’s wind energy sector. The Indian government has a target of 5GW of capacity by 2022, with much higher long-term targets. Like Taiwan, the Indian government also wants to create jobs and skills in the wind energy sector. 

Structures need a tight legal framework and reliable owners. The EIB takes into account what happens in the event of project delays, offtake risk (power agreements), the legal framework and technology (for example, they are now looking at the new technology of floating platforms for deep water wind turbines), the complexity of the operating environment (such as multiple farms competing for grid access), technology reliability and maintenance. Investments go to civil works, the cost of finance, equipment, transmission and project management. Owners are generally expected to put up about a third of financing while debt accounts for about 60% and remainder comes from grants. No one bank will take on the entire risk, which is why special legal arrangements are needed and financial models should be validated independently.

The EIB does not just look at individual projects but the entire sector. For example, it is tracking trends, such as how falling prices and subsidies are affecting industry development. For example, the last three projects in Germany have had no subsidies. There is a very narrow supply chain and complex contractual requirements and very heavy pressure on the industry to meet demand for 100GW of capacity by 2030 and 350GW by 2050. By 2023 offshore wind is expected to be competitive with thermal power sources owing to standardization, for example of jacket or floating platforms, vessels and the economies of scale of turbine manufacturing in terms of numbers as well as size. For example, there is already talk about 15MW turbines. The supply chain is also expected to expand in line with growing demand. Another factor is the reduction in the cost of financing. 

The cost of electricity continues to fall after rising to a peak in about 2011 on the back of supply chain bottlenecks and limited competition early on and high investments in original technology (originally onshore turbines were used offshore, which proved unsuitable). Now the supply chain is well developed and technology has resolved many difficulties. It has been found that simply making bigger turbines is not always the optimal solution for a given location. According to the speaker, in some cases the amount of power generated actually falls when larger turbines are used. 

A new generation of greenfield offshore wind projects is set for financial close in 2018 and 2019. Competitive auctions are driving subsidy levels down. The focus has shifted from risk mitigation to subsidy reduction. Nevertheless, offshore wind is still a high risk sector. One project, for instance, almost failed and required restructuring given the need for a new turbine design and foundation. Construction was delayed by over four years leading to higher costs and lost revenues, which wiped out suppliers and equity. The four factors in this case were: 1) weak project management, 2) non-performing and insolvent contractors had to be replaced, 3) there was a lot of new and untested technology and 4) 33 different project sponsors made decision-making difficult. 

Given the complexities of wind energy projects there needs to be continued focus on adequately mitigating implementation risks and achieving completion in time and within budget, which is why the EIB now carefully looks at the reliability of project sponsors in addition to other factors such as offshore grid capacity. It is important for the viability of projects that the grid can handle all capacity available.

Topic: Investing and financing issues in renewable energy
Speaker: Ms Eleana YIP, Team Head, Cathay United Bank
Cathay United Bank (CUB) started financing solar projects in Taiwan in 2010. CUB’s Project Finance Department was established in 2015 as the first specialized project finance department in Taiwan. The department brings together international project finance experts combined with extensive local knowledge to service CUB’s customers throughout Asia. CUB has financed the largest solar project in Taiwan to date. It is working with international banks. Most projects are funded in Taiwan dollars. Only about 9% of financing is construction related. CUB acted as the mandated lead arranger, facility agent, and security agent for the syndicated loan to fund Phase I of the Formosa I Offshore wind farm (of two 4MW turbines).

Local banks are still not willing to take on construction risks but they are comfortable to lend to small-scale projects (such as solar rooftop projects) for longer periods. They are also comfortable with local power purchase agreements (PPAs), even though foreign banks are wary of PPAs given their lack of sophistication. PPAs in Taiwan are only 15 pages long. In particular, foreign banks are concerned about the lack of clarity or provisions in terms of curtailment, step in rights, termination events, force majeure or changes in law.  

Liquidity is not an issue for local banks. However, there is a constraint placed upon local banks in the form of a single borrower limit regulation that limits unsecured lending to 5% of net worth. Local banks also lack experience in risk evaluation. For their part, foreign banks have the necessary experience but lack Taiwan dollar liquidity and are concerned about currency and interest rate risks. They need central bank approval to convert currency and hedging market options. There is still no market product to hedge for more than five years. For their part, insurance companies are willing to take long term risks but are prevented by regulations from doing so – insurance companies are not permitted to get involved in project financing because it is unsecured and there is no government guarantee. Other risks that have to be taken into account are energy and grid policy and regulatory approval times.

Panel discussion
For the panel discussion the two speakers were joined by:
Mr Olivier Rousselet, Country Manager Taiwan, BNP Paribas Taipei Branch and 
Mr Allan Baker, Managing Director and Global Head of Power, Société Générale Corporate and Investment Banking
On a question as to why local banks are comfortable with PPAs, Ms Yip replied that it was probably because Taipower is a state-owned company and banks therefore perceive risks as low. In addition, tenors tend to be short term and, to date, the size of transactions has been quite small. Now, because the size is larger and tenors are longer, local banks are more wary and less willing to take risks. Other panellists later added that it might be difficult to get changes to PPA terms and that this is just one of the risks. One concern is the scale of debt needed. A lot more banks will be needed to come on board to meet the volume requirements. Given that local projects will be financed in Taiwan dollars and the problem of convertibility for foreign banks, it is necessary for local banks and foreign banks to work together. 

While there will be a steep learning curve for local banks, it is urgent that they get on board soon because most of the financing for the offshore wind sector will be needed within the next five years. In addition the regulator would have to relax restrictions on Taiwan dollar bonds. 

Mr Rousselet made the point that it took 10 years to arrange Europe’s first project financing so it is reasonable to expect arrangements in Taiwan to take some time. However, he added that things are moving quite fast. The cost of debt will be an issue but experience from Europe shows more and more willingness to take construction risks. Hopefully the local industry can learn lessons from Europe, he said.

On a question for the potential development of the local supply chain, panellists said that this is feasible given Taiwan’s existing competence but the only concern is managing the costs and the timing of development. Mr Rousselet said it is important that the local industry development meets international standards. A related point was made that when a supplier goes bust, it causes huge disruptions which are very difficult to recover from given how difficult it is to find a replacement. In addition developing a supply chain depends on volume. For these reasons localization has to develop gradually to ensure confidence on the part of financiers. Another panellist made the point that localization is inevitable because it is impractical to transport large parts and components from overseas. One panellist said development will be regionalization rather than merely localization, which is what has happened in Europe. In Taiwan’s favour, Mr Rousselet said that the local regulatory framework is one of the best in the region and Taiwan is well placed to play a regional role in the wind energy industry supply chain.

Panellists expect financing of large projects to happen within months. They noted that there is a strong appetite on the part of foreign banks in Taiwan, which have extensive experience. There is also growing interest on the part of private banks in Taiwan to initiate the first project finance in Taiwan with fully non-recourse long-term finance. Ms Yip said that CUB is supportive but stressed that the right structure has to be in place and there are a lot of constraints to be overcome first.  

On a question as to how applicants can get more favourable terms, panellists replied that they need to demonstrate solid supply chain capability and that they understand their risks and obligations. One panellist expressed concern that there are even bigger risks associated with the auction process. There is a risk that some players may underbid and be unable to deliver. Another panellist stressed the importance of choosing supply chain partners carefully. Mr Cannon said that the EIB looks at certification as one of the important factors in ensuring quality and reliability. 

In his concluding remarks to wrap up the session, Mr Cannon said that confidence in the local regulatory framework is very encouraging. There are issues relating to foreign currency but there is a lot of liquidity and therefore financing potential available locally. There are opportunities for corporates to issue bonds but Europe is also developing project bonds with long term structures which allow large institutions like pension funds to get involved. It is also encouraging to see increasing interest on the part of local banks.

Session 2: Offshore wind project certification
Moderator: Dr TSUI Hai-Ping, Assistant Professor, National Central University

Topic: Offshore wind farm certification in Taiwan
Speaker: Mr CHIU Sin-Hau, Assistant Chief, Metal Industries Research and Development Centre (MIRDC)
The purpose of establishing third party certification bodies is to ensure the quality necessary to meet energy needs in Taiwan given the government’s decision to phase out nuclear energy, attract green finance, increase confidence given the high risks associated with offshore engineering, environmental challenges from earthquakes and typhoons and power grid issues (the need to ensure a stable electricity supply). Given Taiwan’s current stage of development, there is clearly a need for help from international experts.

The Executive Yuan has instructed the BSMI to set up a third party renewable energy and testing certification centre for various parties involved in the renewable energy sector. The president has issued instructions for a budget to be set aside for the centre. It will be set up as an independent entity in line with global standards. The BSMI will create the platform and it will be regulated by the Bureau of Energy. Suppliers will be able to get certified through the platform and use this to apply for finance.

The scope of the certification will include project certification, due diligence and Marine Warranty Surveys (MWS). Project certification will cover site condition assessments, design evaluation and analysis, manufacturing surveillance, transportation and installation surveillance. Due diligence will entail project risk assessments for offshore wind farms and will cover legal, financial, insurance and engineering requirements and documents. The MWS scope will cover assessment and investigation of safety issues of maritime work to protect the interests of insurers and the insured and will include loading, transportation, hoisting, installation and cabling.  

Besides the BSMI, other bodies will provide certification. The MIRDC and the CR Classification Society will conduct wind turbine and site assessments. The CR Classification Society will also handle MWS (together with the Ship and Ocean Industries R&D Center, SOIC). The Taiwan Accreditation Foundation (TAF) will provide accreditation. Power grid and quality will be certified by the Taiwan Electric Research and Testing Center (TERTEC). The Electronic Testing Center (EMC) will certify CMS, EMC and electronics aspects.  

The certification centre plans to cooperate with international bodies in order to accumulate knowledge and experience. MOUs in this regard have already been signed with TÜV SÜD, DNV-GL, DEWI-OCC, LOC Group, Global Maritime, K2 Management and Green Giraffe. After learning from international bodies, the centre will work with new wind farm developers to learn about best practices. 

Typhoons and strong winds in winter necessitate the construction of a local nacelle test bench which can help local suppliers to drive research and development for domestic wind turbines and components.

Topic: Risk management in offshore wind certification
Speaker: Ms MO Ying Er (Marianna), Business Development Manager, DNV GL
[Det Norske Veritas (DNV) was founded in Oslo, Norway in 1864 and merged with Germanischer Lloyd (GL) in September 2013.] 
While the wind energy industry is constantly working to reduce costs and introduce new technologies, anything new carries risks. Certification is one of the key tools in managing risk. Adopting international standards can provide a level of confidence to investors and operators, which is why a lot of financiers ask for third party certification. According to DNV GL’s own surveys, 65% of their onshore customers and 82% of offshore floating turbine customers say that certification adds value by verifying quality.  

There are many challenges to offshore wind in the design, construction and operational phases, including deep water, severe weather conditions, cable failures and choosing between cost reduction and quality. In addition, many locations, including Taiwan’s west coast, have relatively short periods of time that are suitable for installing wind turbines. Conditions are especially difficult during winter given strong winds and choppy seas. It is also difficult to balance risk and quality when it comes to choosing vessels. Using cheaper vessels may cause delays if they can’t operate properly in adverse weather and ocean conditions. 

DNV GL has learnt a lot of lessons from over 80 offshore projects which, if used as a reference for Taiwan developers, could avoid a lot of the kinds of mistakes that were made in Europe in the early stages. The company collected a lot of data over the course of more than 30 years active in wind energy which it has used to feed back into and strengthen standards. In 2014, DNV GL performed the first project certification service for Taiwan first two turbine installations and is now working with Swancor in its second project. DNV GL is also working on project certification services with Ørsted and WPD on their Taiwanese offshore wind projects.

The project certification covers five phases: design basis, design, manufacturing, transport and installation and commissioning. Further certification services related to offshore wind are available as well. Obtaining certification, for example, in the conceptual phase can be used to secure financing. It is also possible to get certification for later stages of projects such as in service/periodic monitoring, lifetime extensions, decommissioning and repowering. DNV GL’s project certification scheme DNVGL-SE-0073 details and clarifies the evaluation activities within IEC 61400-22 scheme and utilizes DNV GL standards to fill gaps in the governing IEC standards. The application of the IEC or DNV GL Certification scheme depends on the customer’s needs and preferences.

DNV GL certifies a full range of assets such as the wind turbine components, substation components, power cables and control station systems, according to DNVGL-SE-0190. 

During the design basis phase, the evaluation is to examine that the design basis is sufficient for a safe design and execution of the project. Site conditions (especially geotechnical, sea & wind conditions) are evaluated in order to choose the right turbines for the site. The next phase (detailed design) includes integrated load analysis, design evaluation of site-specific turbine and foundation, electrical systems and substations. The following phase (III) certifies the manufacturing process. DNV GL performs manufacturing surveillance in order to verify compliance between the approved design and the product. Inspections focus on wind turbines, substations, support structure, power cables. The company also reviews the documents and certificates of suppliers of main components. 

Phase IV checks transport and installation (TII) procedures and execution plans. For wind power projects, the transport and installation surveillance starts with loading at the manufacturers’ production sites and ends at the wind power plant site. Transport and installation covers the surveillance during transport and installation of the project related assets. Prior to the start of TII, detailed method statements have to be provided and checked. T&I checks must be performed to ensure that marine operations are implemented in accordance with the design criteria. To check if vessels have enough capacity to install turbines and hauling and installation work will be performed by MWS companies. The project certification body focuses on quality aspects during transportation and installation for the project developer. MWS companies focus on safety and technical aspects during load out, transportation installation and cable laying according to the insurer requirements.

In Phase V (commissioning), DNV GL performs surveillance to verify that the main systems and equipment commissioned are in compliance with approved documentation and commissioning procedures.

An appropriate service specification and the related standards are key to the future of the renewable energy industry. But ensuring specifications and standards meet the current and future needs of all stakeholders requires insight and know-how from across the energy value chain stakeholders and beyond. The company chairs the “Committee of Experts” of approximately 30 members. The committee and further industry experts participate actively in the continuous improvement of DNV GL’s service documents.

Session 2 Q&A panel session
Panellists noted that only Germany requires certification. Other countries do not have detailed guidelines for offshore wind. There are no fixed standards for engineering designs and standards and only references are provided. The only exception is Germany. Ms Mo said that DNV GL has been working with government agencies and international technical commissions to develop the most suitable standards for local conditions. DNV GL considers current market needs and specific environmental conditions in developing certification specifications and standards. Countries like Denmark, The Netherlands and US have similar requirements for third party certification of projects. Many countries don’t have appropriate technical standards for offshore wind and therefore DNV GL standards, developed in cooperation with industry stakeholders, are used and accepted. In 1986 DNV GL issued the first wind guideline, before IEC published wind standards.

With respect to earthquakes and typhoons Ms Mo said that DNV GL has some standards for the certification of wind turbines for tropical cyclone conditions that could serve as a useful reference with regard to guidelines for typhoons. DNV GL is currently working with Taiwanese research centres to develop structure design guidelines for earthquake resistance. A research center in Taiwan has facilities to test earthquake resistance for structures and this organization has done a lot of studies in this field. The results of this research can be applied in the local requirements. 

On a question as to the difference between certification and verification, Ms Mo said that the former has a fixed scope and assessment criteria according to international and industry standards. To be independent the certification body may not participate in design work. Certification means, in short, confirmation for compliance of a product (such as a wind turbine or wind farm) or service with defined requirements (such as a standard) by a third party. According to ISO 17000 the definition is that certification is a third party attestation. The attestation is performed by issuing a statement/certificate based on a review for compliance. The latter’s scope and assessment criteria are decided by the client and may not certify the product. 

In answer to a question as to the failure rate of offshore wind projects if a third party has carried out project certification, according to DNV GL’s certification experience, Ms Mo stressed that the probability of failures is reduced after developers have gone through the whole certification process.

As to the total investment amount for product certification, Ms Mo said that a rough estimates for a 400 MW wind farm for the full scope of product certification (including design, manufacturing, installation and commissioning) might vary between 0.025% - 0.060% of the total net present value of the offshore wind farm (CAPEX + OPEX, estimated using €140/MWh LCOE and 50% capacity factor for the farm), although these should serve only as a reference because certification costs strongly depend on the specific needs, configuration and maturity of the project.

Session 3: Due diligence for offshore wind power
Moderator: Mr CHEN Yen-Haw, Deputy Director, Taiwan Institute of Economic Research (TIER) 

Topic: Due diligence in Taiwan offshore wind energy
Speaker: Mr Lucas LIN, President, Swancor Renewable Energy Co., Ltd 
The speaker introduced the status of his company’s wind energy project. Phase I of the Formosa I project, which has 8MW of installed capacity, has been operating for a year. According to Mr Lin, it has produced better-than-expected electricity generation. 

The support scheme, a 20-year power purchase agreement (PPA) and interconnection arrangements with Taipower based on fixed FITs is a huge advantage for investors. In the case of Formosa I, phase I of the project provides an FIT of NT$7.1085 per kWh for the first 10 years and NT$3.4586 for the next 10 years. Phase II of the project provides an FIT of NT$7.4034 per kWh for the first 10 years and NT$3.5948 for the following 10 years. 

The group’s contract structure takes into account risk mitigation. It has a complex workflow management scheme which breaks down to account for every half hour of work. In Mr Lin’s view, having too many contractors increases risks and makes workflow management even more complex. He expects costs to fall in Phase II of the project due to economies of scale. At present only one contractor is in charge of installation but in future they may add an onshore contractor and a local foundation designer. The group is talking with reinsurance companies in Europe with a view towards spreading risks. 

In terms of due diligence, Mr Lin views analysis of wind resources as the most important aspect. He said that Swancor had collected 100 years of typhoon data to determine that only 3 types of typhoons (out of 12) pose a danger to wind turbines from wind speed and water depth. 

In terms of legal risks, the contract structure is the most important as it defines who should assume what portion of the risk. The contract can shift some of risk to contractors and insurers. 

Part of technical due diligence should be to factor in potential downtime as a result of adverse weather conditions, such as construction interruptions on account of typhoons. Swancor has developed detailed models to account for these types of variables.  

Project financing poses a number of challenges. This includes estimating cash flow. In terms of PPA bankability, Taipower’s Renewable Energy PPA is a standard version for all the renewable energy facilities which has not taken into account the particular risks faced by offshore wind energy. The current PPA has very limited protections for project sponsors and lenders on issues such as force majeure and changes in laws. 

In terms of loans, lenders are not used to non-recourse loans and hope to obtain guarantees from sponsors or the government. Lenders are also not willing to offer tenors to match the lives of project assets and contractual arrangements, which means funding sources for long term tenor loans are limited. At the moment the Taiwan dollar hedging market and long term interest markets are thin and expensive. In terms of EIAs, local environmental regulations are also deemed insufficient by lenders. 

Topic: Taiwan offshore wind – risks and opportunities
Speaker: Mr Simon COX, Head, Offshore Projects, DNV GL
DNV GL provides advisory and third party services across the whole value chain of offshore wind and power transmission projects, combining overseas and local expertise. Its accumulated experience in the wind, electrical engineering and maritime industry, has led to improvements in delivering projects on time and within budget. 

The company projects that renewables will account for 72% of global electricity generation by 2050 with solar accounting for 36%, onshore wind 24% and offshore wind 12%. 

The introduction of a new supply chain always comes with risks. In the case of offshore wind, the local supply chain will have limitations in terms of turbine supply, fabrication facilities (such as offshore substations) and installation vessels. In terms of installations and operations, risks include wind and waves from typhoons and ground conditions (the Taiwan Strait has weak and under-consolidated soil which is prone to liquefaction). 

DNV GL’s approach looks at all aspects from operational expenditure, capital expenditure, project delivery schedules and project teams for the duration of projects, which now can run as long as 35 years in Europe.

A particular problem for Taiwan’s offshore wind parks is weak under-consolidated soil that is unable to support turbines. For this reason foundations have to be as deep as 65 metres to be able to extend below the soft upper soil to reach lower granular alluvial deposits or decomposed rock. Site conditions determine the amount of steel needed but, given the need for deeper foundations, more steel will generally be required, therefore adding to costs. In addition, extreme weather conditions could lead to downtime both during installations and operations. It is important to make the right assumptions based on the right data.

In terms of capital expenditure, DNV GL uses an advanced modelling tool and expert support to provide an integrated and comprehensive approach to answer difficult design and cost questions regarding wind turbines, support structures, electrical systems, installation and operations and management. 

In terms of the availability and capability of installation vessels, the speaker said that they can be built quite quickly, although quite a number will be required to meet the demands of Taiwan’s build-out schedule. The vessels and cranes will need to handle large turbines and platforms. Project schedules will need to take into account the fact that some wind farms are located far from the shore, the availability of vessels and weather conditions. Potential delays should be dealt with in contracts and budget contingencies should be made for poor weather. 

Accurate measurements of wind conditions are necessary to determine the bankability of projects. This requires reliable measuring equipment such as meteorological masts, platform liDAR, mesoscale wind mapping and floating LiDAR. Moreover, data gathered should be publically shared. It is also important to get yield estimates correct. Things could go wrong if assumptions are not correct, which is where yield analysis, such as that provided by DNV GL is useful. 

Topic: Due diligence in offshore wind
Speaker: Mr FENG Chih-Wei, Director, Transaction Advisory Services, EY Transaction Advisory Services Inc. Taiwan, in cooperation with Dr Burkhard Seif, Hamburg
Due diligence is a reasonable investigation or audit of a potential investment in a project, to assess the project’s feasibility. Qualified due diligence flags risks and concerns and provides mitigations to minimize their potential impact.

For wind energy projects to be feasible, they need be workable, bankable, insurable and profitable. Ascertaining whether the requirements for all four of these aspects are met requires a combination of product certification, due diligence and MWS. 

Comprehensive due diligence is challenging because it requires cooperation among many different stakeholders and the completion of hundreds of contracts in a short period of time. The more contractors are involved, the more complex and risky the project becomes.

There are a number of risks associated with offshore wind projects. The speaker categorized and summarized them as follows: 
Political risk: Stability of the regulatory framework is key to project planning and the reliability of assumptions in project development. Stability in the regulatory framework translates into lower risk margins. Regulation on localization has to take into account the maturity and learning curve of the industry in the given time frame.
Market risk: Lifting targets for renewables and reducing Taiwan’s carbon footprint may boost Taiwan’s attractiveness but could increase competition amongst projects for early grid connection. The build-up of enough capacity in the onshore grid is key to avoiding delays in project timelines.
Financial risk: Liquidity in project finance increases as renewables become mainstream, leading to higher value deals. International players are well acquainted with offshore wind in Europe but not familiar with the Taiwan market, which is why a winning combination would be experience from the EU coupled with Taiwanese players in Taiwan banking market. 
Other risks: The scarcity of experienced personnel may affect development, or at least put pressure on the Taipei offshore wind HR market. There are also risks associated with seismic and typhoon activity which will have an impact on costs. This is why certification and marine warranty surveyors need to be brought in at the design and tender stage. 

Things have improved a lot in the past few years in Europe. Many lessons have been learnt from the experience of grid delays related to export cables and transmission system operators (TSOs), suppliers going bankrupt, extra costs from delays in the installation process, sub-optimal contract execution and the transition to auction schemes. Developers have improved their ability to avoid cost overruns in development, construction and operations as well as recognised the need for harbour and infrastructure reinforcement and strict regulatory conditions (such as on noise emissions and piling restrictions). 

Issues that Taiwan will need to overcome by 2020 include non-negotiable PPAs (regulations for
curtailment, legal changes etc.), establishing a risk management framework for financing (preferably based on Equator Principles), fierce competition for grid access at the individual project level, downward FIT pressure, onshore grid insufficiencies, the immaturity of the local supply chain, a lack of skilled labour for the offshore wind industry, regulatory issues (especially permitting), fishing rights and compensation, piling restrictions and noise emission limits. Compensation for the fishing industry may not be large but if they hold protests it could cause problems and delays. There are unknown parameters in this regard as it is not known how much of an impact offshore wind turbines will have on the fishing industry and who would be eligible for compensation. 

Wind yield is one of the key elements in the success of a project. Yields are affected not only by the wind speed but also by the turbine design and park layout. The better the wind yield prediction, the lower the uncertainties. Physical wind measurements and models can reduce uncertainties. Models need to extrapolate the wind yield for the next 20 years. If estimates are off, it could have a major impact on the project. 

Managing uncertainties is key to project viability. Some factors must be borne by developers but some can be shifted to insurers. Other risks can be mitigated by sound project management. For example early involvement of marine engineering and marine warranty surveyors to conduct site investigations, comprising soil investigation and the monitoring of typhoons during construction, combined with the use of local maritime knowledge and local harbour and supply chain players can help to mitigate risk. 

Moreover, counterparty and interface risk can be mitigated by selecting reputable contractors with track records and experience in addition to having strong contractual provisions, including provisions for damages and delays.

The speaker concluded that due diligence is highly customized work since there are no standardized procedures. Due diligence teams need various types of expertise. Conducting due diligence is better done sooner rather than later. It helps to learn from others, both good and bad examples, which is why European players are ideal partners for Taiwan. Comprehensive due diligence is one of the keys to a project’s success. Without due diligence you just have data.

Session 3 Q&A session
Mr Feng emphasized that due diligence depends on specific site conditions. Sometimes there is missing certification of site specific data. Getting due diligence right requires expertise from a variety of experts in different areas.

To prevent conflicts of interests, projects need to be reviewed and evaluated by independent parties. Mr Feng said that reports from EY always fully disclose the sources of information, specifying which information was provided by which parties.

Session 4: Marine warranty surveys and marine operation risk management
Moderator: Mr JHAN Yu-Ti, Director, CR Classification Society (CR)

Topic: Offshore wind farm construction and risk management
Speaker: Wayne Cheng (Wei-yuan), Project Manager/Surveyor, CR Classification Society
The CR Classification Society was founded in Taipei in 1951. It is the only classification society authorized by ROC government. It is recognised by eight flag states and in 2004 it was recognised by the US Coast Guard to perform ship surveys in the United States. Its past business focused on vessel inspections of 386 ships. 

Wind turbine structures can now reach as high as 200 metres while structures can weigh up to 2,000 tonnes. Underwater structures can be in water up to 50 metres deep and over 60 metres into the substrate. Taiwan is hit by an average of 3-4 typhoons per year during the summer (from June to October), a period which happens to be the best time period to install turbines. Typhoons vary in size, strength and path. Those that pass over the island tend to lose strength while those that miss land can be particularly strong. Sometimes, it is not safe to dock vessels in harbours during typhoons. Port authorities can actually restrict access to the ports for fear of vessels hitting others. It may actually be safer to be anchored in the open sea. This is why sound contingency plans are needed for typhoons and other contingencies. Cheng cited estimates that a 400MW capacity offshore wind farm, will require approximately 80 vessels and 660 workers at peak time and the construction of each wind farm will take from 1.5-2 years. 

According to Taiwan’s Occupational Health and Safety Act, employers need to take measures to prevent falling objects and to have people to check that safety measures are in place. There are also additional regulations governing public construction. However, since developers are working offshore, it is not clear if these regulations or provisions in the Electricity Act apply. 

If vessels are not loaded properly they could capsize. Marine Warranty Surveys (MWS) play the role of an independent third party between the construction team and insurer/re-insurer. MWSs focus on engineering and technical issues with the aim of reducing risk as far as reasonable practical. MWSs benefit developers, insurers and authorities because they eliminate the need for developers to train their own personnel. All risks needs to be written down and included in contracts. Surveys are conducted using international guidelines. 

Marine Warranty Surveys look at three aspects of safety: human, vessel and operational safety. Human safety covers lifesaving training, work training and accident awareness. Vessel safety covers seaworthiness, suitability (fit-for-purpose) and safety management. Operational safety covers procedures, engineering and weather restrictions. 

Topic: MWS and marine operational risk
Captain Mike Frampton, LOC Renewables 
LOC has provided marine advice, consultancy, technical due diligence, support, MWS and vessel survey and approval for wind farms and wave and tidal projects. The company’s principal role has been in MWS where it has warranted and approved many load-outs and load-ins in ports around the world and offshore installation of arrays and inter-connector cables, monopiles, jackets and floating foundations, offshore substation platforms and wind turbine generators. LOC has been chosen as the partner to the CR Classification Society to provide advice on marine aspects.  

According to the speaker, the company has worked on 60 offshore projects in 14 countries involving 1,800 turbines and with many different players. 

The objective of the MWS is to reduce the transport and installation (T&I) risks. Doing so benefits the underwriter by reducing claims, the developer by enabling affordable insurance and on time construction, the contractor, by checking on T&I methods and the regulator by providing confidence that consent conditions are observed. An effective MWS confirms that the T&I risks are being properly managed. To work effectively and be credible the MWS must be independent. 

LOC has started the process of running courses for the CR Classification Society to train surveyors from Taiwan in London. 

The key objective is to drive down risks to As Low As Reasonably Practical (ALARP), not only in terms of design but also operational risks from construction problems and reputational risk to developers if they don’t deliver. Even if a good level of ALARP is achieved there is still a need for insurance. 

Projects have a number of insurance policies against general risks, delays, business interruption risks and third party liability risks. All insurance risk policies require MWS and for participants to follow established procedures. 

The role of the owner/principal is to procure insurance on behalf of all parties and pass the benefit of insurance excess deductibles to contractors. The role of the insurer is to take risk from the balance sheet and instruct the owner/MWS in the scope of works. The role of the warranty surveyor is to advise best industry practice or standards and issue certificates of approval. The role of contractors is to deliver on time and within budget and work safely in accordance with the MWS’s issued certificates of approval (CoA). The role of the owner’s representative is to act in place of the owner as the supervisor to contractors and to ensure there is no breach of certificates of approval. 

The role and responsibility of a marine warranty surveyor is to review procedures and to attend marine operations to satisfy an insurance warranty clause that states that the operation shall be approved by and conducted in accordance with the recommendations issued by a named surveyor. In particular, the surveyor may perform the following tasks: Review and approve vessel and project specific documents; comment on the contents of the documents and issue recommendations; issue a statement of project approval in principle (subject to on-site inspection) on completion of the document review and issue CoAs for the proposed location(s) for the jack-up.

There are five main steps in the MWS process: 1) Approval in principle; 2) Document review; 3) Suitability survey; 4) Attend to witness and approve and 5) Issue CoAs. There may be hundreds of documents to review. When reviewing documents, surveyors may write comments, especially on the method statement. Errors occur if the method is not followed correctly. When reviewing vessels to check suitability, surveyors may give approval in principle and later observe loading, preparations and actual installations. Generally they observe only the installation of the first turbine before granting CoAs. Sometimes hundreds of certificates are required. 

Vessel suitability surveys aim to confirm that vessels are safe and seaworthy, confirm that a jack-up can operate and survive when elevated and confirm their suitability. Jack-ups are the most complex vessels since they are a combination of a vessel and a factory. They can be dangerous if they capsize which means that the vessel and the site of intended use need to be checked. 

Operational approvals are given by the attending MWS surveyor when all of the preparations are
complete. Approval is confirmed with the issue of a CoA. 

Lessons learnt from Europe are to engage early. If you have MWS approval in principle first it will save time later on in the project. In addition attention should be paid to jack-ups, other vessels and cables. Finally, the speaker stressed the importance of understanding the environmental limits that vessels and
operations can work in.

Topic: Marine warranty surveying
Speaker: Clive Lin, AON Taiwan 
Note: While the speaker’s presentation contained a number of slides on the purpose and benefits of MWS, scope of qualification and nomination, he skipped these slides since they had been covered by previous speakers. 
The speaker began by citing some lessons learnt from the chairman of Swancor, which outlined some of the difficulties encountered in getting MWS certification and the technical difficulties of setting up its first offshore turbines. The process is complex, rigorous and expensive. Any minor incident may result in failure. In spite of the difficulties, the company had to persevere and attain MWS since without it it would not be possible to get insurance or financing, except in China where insurance companies do not require MWS. If MWS approval is not provided prior to the commencement of a particular scope-defined operation, or it is rescinded during the course of that operation, then the insured can be found to be in breach of their warranty, which would allow the insurer to withhold paying out a claim. Given the complexity of the process, Mr Lin recommended engaging an MWS surveyor in the early stages of a project. 

There are only nine approved MWS companies, eight of which are in Europe and one in Japan. 

Session 4 panel discussion
The final panel discussion was cancelled owing to a lack of time. 

Closing remarks
In his closing remarks, Mr Liou Ming-Jong, Director-General of the BSMI, said that, unlike in Europe where the evaluation of project financing and underwriting is carried out by impartial third-party verification agencies, things will be done somewhat differently in Taiwan. In March last year, the Executive Yuan decided to establish a third party testing and verification centre for renewable energy. 

The centre will provide local financial institutions with reliable risk management assessment information.
The BSMI commissioned the CR Classification Society together with other partners to form a technical team to make plans for the centre. One of the objectives is to cultivate domestic verification talent for the banking and insurance sector. In the process, the centre will cooperate with internationally-renowned third-party verification agencies and wind farm developers to bring advanced certification technologies to Taiwan. The goal is to be up and running in 2019 and to have the necessary facilities and capacity to provide MWS and inspection of wind turbine nacelles and components. There are plans to construct offshore turbine testing labs. In addition the process has begun to revise Chinese National Standards for wind turbine standards, which will eventually include earthquake and typhoon resistance requirements in order to meet the needs of local conditions. 

Mr Liou said that in the course of the establishment of systems, capabilities and regulations, advice, suggestions and ideas from European experts will be welcomed. Mr Liou concluded by quoting former US President Franklin Roosevelt who said that the only restriction to realize the ideal of tomorrow is the doubts of today. Following the quotation he emphasized that the government has no doubt that Taiwan will develop offshore wind power and that the ideal of Taiwan’s pursuit of sustainable energy will be realized through the joint efforts of various industries, officials and researchers.