Green energy has long been a focal point for Taiwan, and offshore wind power remains a critical component of this strategy. Even amid global ESG headwinds in the Trump 2.0 era, President Lai has recently reaffirmed the goal of maximizing green energy development. The Ministry of Economic Affairs (MOEA) is aiming to formally announce the Phase 3-3 offshore wind zonal development tender mechanism in the first quarter of this year, with developer selection and capacity allocation to be completed by year-end.
Based on the draft framework disclosed to date, the Phase 3-3 mechanism places particular emphasis on developers’ execution and completion capabilities. Its institutional design also seeks to reduce project costs, reshape financing conditions, and enhance bankability to attract long-term capital, ensuring that both offshore wind and broader renewable energy policy targets can be achieved on schedule.
The Phase 3-3 framework responds to the significant challenges faced by offshore wind, including rising supply chain costs, inflation-driven increases in borrowing rates, and funding shortfalls. Additional factors such as low power prices under the previous auction mechanism, as well as difficulties in meeting localization requirements, have also delayed project timelines. Some foreign developers have even exited the Taiwan market.
Against this backdrop, the Phase 3-3 tender will adopt a scoring-based system, with a total of 100 points and a minimum qualifying threshold of 70. Developers will be evaluated across three key dimensions: development track record (35 points), financial capability (30 points), and project execution capability (35 points). The latter includes project readiness (15 points), ESG planning (15 points), and energy resilience (5 points). Penalties will also be introduced for delays, contract breaches, or failure to complete agreements, reinforcing discipline and accountability among developers.
A key departure from the previous phases (3-1 and 3-2) is the elimination of price bidding. Instead, a floor price of NT$2.29 per kWh will be established, based on Taipower’s avoided cost of generation from non-green alternatives from 2018 to 2022. This does not represent a return to a fully regulated feed-in tariff system. Rather, corporate power purchase agreements (CPPAs) will remain the primary transaction mechanism, while Taipower will act as a buyer of last resort for unsold electricity at prices not exceeding the avoided cost.
This minimum revenue floor within a market-based framework improves project revenue predictability. For banks, this provides a clearer basis for assessing downside scenarios where CPPAs are not fully secured, enabling more robust evaluation of baseline cash flows.
Earlier tender phases prioritized price competition, in contrast, leading developers to submit aggressively low bids – sometimes even at zero – and relying entirely on private-sector CPPAs for revenue. While this reduced fiscal burdens on the government and promoted market liberalization, it also exposed developers to risks including slow CPPA negotiations, pricing pressures, and uncertainty over unsold electricity, which increased revenue volatility, and made lenders more cautious.
Table 1: Key Reforms to the Block Development Supplier Selection Mechanism
| Item | Phases 3-1/3-2 | Phase 3-3 |
| Core mechanism | Price bidding | Compliance |
| Evaluation method | Ranking by price | Rating out of 100 (threshold of 70) |
| Penalty mechanism | None | Development performance |
| Zero-price bids | Allowed | Not allowed |
| Power purchase | Market liberalization through CPPAs | CPPAs supplemented by price floor |
| Localization | Mandatory | Not mandatory |
| ESG | Not mentioned | Integrated into scoring |
Source: Compiled by the author based on briefing from the Energy Administration of the Ministry of Economic Affairs
The introduction of a price floor, combined with stricter requirements on developer track record, financial strength, and execution capability, is expected to filter for more reliable participants, and reduce the risk of incomplete or abandoned projects, which are one of the primary concerns for lenders. Banks will thereby be able to focus their due diligence more effectively on borrower capability, and historical performance, as well as credit quality, pricing mechanisms, and default provisions of CPPA off-takers.
Another notable feature of this framework is the shift away from mandatory localization requirements toward ESG-based evaluation. ESG criteria are divided into local economic impact (10 points), environmental sustainability (3 points), and corporate social responsibility (2 points). To obtain full marks in local economic contribution, for example, a 500MW project must achieve at least NT$30 billion in local procurement or investment, covering components, engineering, marine services, or EPC contracts. Environmental and social scores depend on the completeness and feasibility of the proposal, such as construction methods exceeding environmental impact assessment standards, recyclable turbine blades, and incorporation of fisheries communication guidelines.
Incorporating ESG into the selection process is expected to identify developers capable of sustainable operations, aligning offshore wind development with both the energy transition and ESG objectives, while strengthening lender confidence. In practice, however, Taiwanese banks already embed ESG into credit assessments – particularly those adhering to the Equator Principles. Integrating ESG at the tender stage allows potential risks to be identified and mitigated earlier.
However, ESG encompasses a broad range of factors, raising questions about prioritization – especially regarding corporate social responsibility, where evaluation metrics remain underdeveloped. Since the release of the draft rules, stakeholders including developers and NGOs have expressed concerns that these ESG commitments could devolve into a superficial box-ticking exercise. In this regard, banks’ experience in ESG risk assessment may offer useful guidance.
From an environmental perspective, although offshore wind is a low-carbon energy source, emissions still arise across the lifecycle, from turbine manufacturing and installation to operations and decommissioning. Lifecycle carbon footprint comparisons could therefore be incorporated into the evaluation criteria. Marine ecological impacts must also be carefully assessed, as noise from construction and operations can affect biodiversity. Developers should not only comply with existing regulations, but also establish long-term monitoring mechanisms, with standards exceeding the minimum requirements.
Social considerations are equally critical. Offshore wind affects fisheries and the livelihoods of local communities, making stakeholder engagement and compensation mechanisms essential for project success. Lessons from opposition to solar projects highlight the importance of community relations. Developers should propose actionable local collaboration plans, supported by measurable KPIs to ensure implementation. Talent development and employment initiatives such as training programs, internships, and professional certification support for local youth should also form part of CSR.
That said, corporate governance may ultimately have a greater impact on project execution than environmental or social factors. Notably, the current framework includes ESG criteria, but lacks explicit governance requirements. This raises concerns that weak governance could undermine a project’s ability to operate effectively over its 20-year lifespan, which deters financing.
Given that offshore wind projects are typically structured as special purpose vehicles (SPVs), it may be challenging to apply traditional corporate governance benchmarks designed for listed companies. Nonetheless, four key principles can be used to assess governance quality in SPVs: (1) ownership structure, ensuring stable control, and mitigating risks from ownership changes; (2) regulatory compliance, including adherence to contracts and the establishment of internal audit functions reporting to the board; (3) risk management, ensuring effective ring-fencing from parent company risks; and (4) transparency, including regular disclosure of audited financial statements.
Overall, Phase 3-3 represents a significant shift toward a more balanced and finance-friendly framework. By combining a scoring-based selection system with a revenue floor, and integrating ESG considerations, the new framework is expected to reduce policy and social risks, improve project predictability, and enhance financing feasibility, strengthening market confidence in Taiwan’s offshore wind sector.
The Author is Chief Research Fellow at the Financial Research Institute, TABF