Corporate Analysis: Ørsted’s Exploration of a Two‑GW Offshore Wind Project in Taiwan

Ørsted A/S, the Danish renewable‑energy powerhouse, has announced that it is evaluating the feasibility of a large offshore wind farm off the coast of Taiwan. According to a statement issued to MarketWire, the company is examining options for a new project in the Changhua area—tentatively dubbed Dadu II. The proposal is in its earliest conceptual phase and is presently subject to the rigorous environmental assessment procedures mandated by Taiwanese authorities.

Project Scope and Technical Profile

Preliminary documentation indicates that the proposed wind farm would target a net capacity of approximately 2 GW, utilizing 91–143 turbines each rated between 14 MW and 22 MW. This would place Dadu II among the most extensive offshore installations in the region, comparable in scale to the European megaprojects such as the Hornsea 4 and the Dogger Bank developments.

Ørsted already maintains a substantive operational footprint in Changhua through its Changhua 2b and Changhua 4 projects, which are slated to enter full commercial operation later in the year. The company’s familiarity with local permitting processes, supply‑chain logistics, and grid interconnection arrangements could provide a competitive advantage in advancing Dadu II to construction.

Financial Considerations

A 2 GW offshore wind farm in Taiwan would likely command a capital outlay in the US$10–15 billion range, depending on turbine technology, installation methodology, and interconnection costs. Ørsted’s typical cost structure for offshore projects averages US$1.3–1.5 billion per GW of installed capacity. This would translate to a total CAPEX estimate of US$2.6–3 billion for Dadu II, not including grid‑extension and onshore sub‑station expenses.

Revenue projections hinge on the prevailing feed‑in tariff or market‑based power purchase agreements (PPAs) negotiated with the Taiwan Power Company (Taipower). Recent policy shifts in Taiwan have favored a capacity‑plus‑energy tariff model, which could elevate the effective bid‑to‑bid price to US$70–80 USD/MWh for offshore projects of this magnitude. At an average capacity factor of 45 %—consistent with East Asian offshore baselines—annual gross generation would approximate 8.3 TWh, yielding nominal revenue in the US$500–600 million range per year before operating expenses.

Operating costs for offshore wind projects in the region are typically $20–25 per MWh, implying US$166–208 million in OPEX annually. This yields a pre‑depreciation, pre‑tax cash flow of roughly US$300–440 million, translating into a payback period of 6–9 years, contingent upon financing terms, tax incentives, and exchange‑rate dynamics.

Regulatory Landscape

Taiwan’s renewable‑energy policy framework, underpinned by the Renewable Energy Development Act, mandates an incremental wind‑capacity target of 500 MW by 2025 and 1.7 GW by 2030. Offshore wind falls under the jurisdiction of the Taiwan Energy Administration (TEA) and the Taiwan Water Resources Agency (TWRA) for environmental clearance. Ørsted’s ongoing projects in the Changhua region have already navigated the dual regulatory approval process, which includes:

  • Marine Environmental Impact Assessment (MEIA) – assessing effects on marine biodiversity and fishing activities.
  • Coastal Development and Seismic Assessment – ensuring structural resilience against Typhoon‑grade and seismic events.
  • Grid Connection Agreements – securing interconnection rights and determining the necessity of onshore sub‑station upgrades.

Given the nascent stage of Dadu II, the company will likely need to secure Phase I environmental clearance within the next 12–18 months, a prerequisite for detailed engineering design and pre‑construction financing.

Competitive Dynamics

Taiwan’s offshore wind market is attracting a mix of domestic developers and foreign incumbents. Key competitors include:

  • China’s Longi Solar Group and Sinopec – exploring joint ventures to leverage local expertise.
  • Japan’s Mitsubishi Heavy Industries (MHI) – offering turbine technology tailored to high‑wave conditions.
  • Germany’s Siemens Gamesa Renewable Energy – pursuing a strategic partnership with local EPC contractors.

Ørsted’s advantage lies in its established turbine supplier relationships (e.g., GE Renewable Energy) and its global supply‑chain optimization. However, the company faces competition for grid capacity and shore‑land lease space along Taiwan’s west coast, where existing onshore wind farms and emerging solar installations are vying for interconnection slots.

  1. Geopolitical Tensions The Taiwan Strait’s geopolitical sensitivity may impose supply‑chain disruptions or influence regulatory scrutiny, particularly concerning equipment sourced from countries involved in regional tensions.

  2. Technological Bottlenecks The high capacity factor target necessitates turbine designs optimized for the Taiwan Strait’s mixed wind regime (average wind speed ~11 m/s). Ørsted must secure advanced turbine platforms with low cut‑in speeds and high power‑to‑weight ratios to maintain competitiveness.

  3. Grid Integration Challenges Taiwan’s current offshore grid interconnection infrastructure is limited. Ørsted will need to invest in high‑voltage subsea cables and potentially in energy storage to mitigate intermittency, elevating CAPEX.

  4. Policy Uncertainty While current tariffs appear favorable, future policy shifts—such as tightening of environmental standards or changes in the PPA framework—could affect the project’s profitability.

  5. Financing Landscape The macro‑economic environment in 2026 may feature elevated interest rates, impacting project financing costs. Ørsted will need to structure financing with fixed‑rate instruments or hedging strategies to mitigate interest‑rate risk.

Opportunities

  • Strategic Partnerships Leveraging local partners can reduce regulatory friction and expedite grid connection agreements.
  • Technology Licensing Ørsted’s turbine technology could be licensed to Taiwanese manufacturers, creating a secondary revenue stream.
  • Cross‑border Energy Trading Taiwan’s proximity to China and Japan may enable future regional energy trading agreements, enhancing revenue potential for Dadu II.

Conclusion

Ørsted’s exploration of a 2 GW offshore wind project in Taiwan represents a calculated entry into a fast‑growing but complex market. While the company’s operational experience in the Changhua region provides a solid foundation, the project’s success will hinge on navigating a labyrinth of environmental assessments, grid interconnection constraints, and geopolitical variables. Investors and industry observers should monitor the progression of regulatory approvals, financing structuring, and technology selection, as these factors will ultimately determine the economic viability and strategic value of Dadu II.