MHI Vestas has still not announced any plans to manufacture its offshore wind turbines in Taiwan. However, to comply with the island's local production requirements, the Danish-Japanese company has opted to outsource certain components such as turbine towers and blade cores. Now the local aspect takes another step forward with the signing of a contract to secure local assembly of switchgear for offshore turbines, MHI Vestas informs in a statement.

"It is clear that we're moving aggressively with our industrial plans in Taiwan," writes MHI Vestas Co-Chief Executive Lars Bondo Krogsgaard.

Contract with Mitsubishi

Well, that engagement could seem less clear upon reading the client's name – Mitsubishi Electric Europe. Formally, this company is not only a sister firm of MHI Vestas' Japanese joint venture partner, it is indeed also its European subsidiary. Although the customer has entered an agreement with Taiwanese manufacturer Shihlin Electric regarding production in Hsinchu, southwest of Taipei.

"We have a very strong historical link with Shihlin Electric. We are confident that Shihlin Electric and Mitsubishi Electric will successfully supply switchgear with our proven technology," writes Mitsubishi Electric Corporate Executive Group Senior Vice President Noriyuki Takazawa in the statement.

This latest contract is still conditional pending the final signature on MHI Vestas' 600 MW orders for Copenhagen Infrastructure Partners' (CIP) projects Changfang and Xidao. Furthermore, MHI Vestas is also nominated as preferred supplier for the 300 MW CIP/China Steel Corporation (CSC) undertaking Ghong Neng. But electrical hardware is set to be delivered to these three projects from 2022. The projects are set to enter operation in 2023 and 2024.

Supply chain plan

MHI Vestas' firm and unconditional contract with CIP seems, however, to be imminent. When the Danish developer announced another local contract last month involving motor maker Teco being tasked with building onshore substations for Chang Fang and Xidao, the head of development for the two facilities, Naiwen Marina Hsu, told local media that the company would try to settle financing in September.

The infrastructure fund also disclosed at the time that a big localization deal with MHI Vestas would be announced in mid-August – an agreement meant to pave the last stretch of road for the supply chain plan awaiting approval from Taiwan's Ministry of Economic Affairs.

The matter of local production on the island has been a central issue up to the installation of the first large-scale offshore wind farms – not least following the domestic political squabbles that played a role in the original power purchase agreement not being signed on time, with revised contracts for reduced tariffs instead entered in February.

The only one localizing

At the time, Ørsted took the lead in expressing the frustration of project developers. But that CIP was pulling political strings on the sly came to light last month. Here, CIP's CEO of CI Wind Power Development Taiwan Co., Jesper Krarup Holst, noted that, despite the company's Asian localization lead, local production requirements for 16 wind turbine components was a tall order due to factors including patent complications.

In connection with MHI Vestas' switchgear contract, the offshore wind OEM and CIP take stock of hitherto local production.

"As a result of our sustainable localization efforts, up to TWD 9.2 billion [EUR 260 million] in economic value and 5,300 clean energy jobs will come to Taiwan," writes Bondo Krogsgaard, while CIP highlights its continued efforts on the same page.

"We are very proud to remain the only project that continues to bring localization efforts," Holst says in the press release.

English Edit: Daniel Frank Christensen

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