Taiwan Business in Brief – February 2019

Photo: Matthew Fulco

Tariff Rate Set for Offshore Wind Energy

The Ministry of Economic Affairs in late January announced a new feed-in tariff for offshore wind power – a 5.71% reduction from the previous level but a smaller cut than the 12.71% previously proposed. The Ministry had been feeling pressure from two sides. Critics argued that the government was being too generous to the developers, offering rates substantially higher than found in other markets. Industry responded that comparisons with mature markets are unreasonable, as an offshore wind power sector cannot be built from scratch without offering sufficient inducements to attract investment.

Economics Minister Shen Jong-chin urged the industry to engage in more public communication to convince citizens that offshore wind energy is reliable and economical. Taiwan is seeking to increase the share of renewable energy in the power-generation mix from the current low single digits to 20% by 2025.

Earlier in January, one of the leading offshore wind developers, Denmark’s Ørsted A/S, announced that it was suspending operations in Taiwan after failing to obtain a key permit before the deadline to obtain a power purchase agreement at last year’s rate. The company said it would “pause and revisit” its involvement in four projects off Taiwan’s western coast.

Google Signs Agreement to Buy Solar Energy

As part of its worldwide effort to rely on renewable energy, Google announced the signing of a long-term agreement to purchase the output of a 10-megawatt array at a solar farm in Tainan in southern Taiwan. The deal is the first to take advantage of a recent amendment in Taiwan’s Electricity Act to allow non-utility companies to buy renewable energy directly. The power will be used by Google’s large data center in Changhua County.

The project – being carried out together with Google’s development partners Diode Ventures, Taiyen Green Energy, J&V Energy, and New Green Power – will maximize land-use efficiency by elevating the solar panels on poles mounted into commercial fishing ponds. The arrangement will also bring economic benefits to the local fishing community.

KKR Completes Deal with LCY Chemical

A private equity consortium led by KKR has completed its acquisition of a majority stockholding in Taiwan’s LCY Chemical Corp. The share swap and purchase agreement was first announced in July last year. LCY, a leading producer of polypropylene, performance plastics, and other products, will now be privatized and delisted from the Taiwan Stock Exchange. The deal has been closely watched by the investment community as the first major transaction by private equity firms in a number of years.

BASF Employees in Trade Secret Case

Six current and former employees of BASF Taiwan, the local subsidiary of the German chemical company, were arrested in January for allegedly passing the company’s proprietary technology to a Chinese competitor. The Criminal Investigation Bureau said the technology, used to make high-purity ammonia for the semiconductor industry, has an estimated market value of more than US$100 million. “We have taken immediate steps to support the investigation led by local law enforcement officials,” BASF said in a statement.” It said it was also taking measures to strengthen its information protection procedures.

Car Sales Decreased by 2 Percent in 2018

Automobile sales last year totaled 435,135 units, a drop of 2.1% from 2017. Toyota continued to be the top-selling brand, with market share of 27.8%, with China Motor (which markets under the Mitsubishi brand) second with 11.3% and Honda Taiwan third with 8.9%. Mercedes-Benz led the market for imported models. It reportedly registered a 4.1% increase in sales from 2017 to take an overall market share of 6.7%.

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