GE Renewable Energy’s Grid Solutions Experiences and Challenges in Taiwan
By WindTAIWAN / 2020-07-27
GE Renewable Energy’s Grid Solutions Experiences and Challenges in Taiwan
Taiwan has big dreams of becoming a green energy hub in Asia, but to do so, the island will need to develop a better skilled workforce and also loosen “local content” requirements to make it easier for international companies to develop wind and other renewal energy resources in a timely and cost-efficient manner.
This is the view of GE’s Grid Solutions Project Director, Frederic Hong, an industry veteran with over 20 years’ experience in areas ranging from high power transmission and nuclear, solar and wind. Hong also revealed details of a private power northbound transmission plan that GE proposed to state－owned Taiwan Power Company (TPC), which would improve the reliability of power supplied from offshore wind farms in the south to Taipei and surrounding areas in the north.
Currently, GE’s Grid Solutions Taiwan’s (GE-GS Taiwan) businesses include power transmission to TPC, generator systems and renewable energy, as well as assisting in power plant projects undertaken by other GE divisions. Globally, GE’s Grid Solutions is focused on bringing together technologies and decades of experience to help solve the toughest power system challenges, accelerating the global transition to greener, more resilient and reliable grid.
In an exclusive interview with WindTaiwan, Hong said GE-GS Taiwan has been involved in the development of Taiwan’s wind industry since its early days in 2015. Most of the wind developers operating on the island have collaborated with the GE unit at one time or other due to the latter’s wide range of experiences and competencies.
“Here in Taiwan, we play the role of an EPC (engineering, procurement and construction) contractor, integrating design, installation and end-user services to provide all-in-one grid solutions,” he said. Hong has been working with many developers and companies even from the bidding and tendering stage of the offshore wind farms in Taiwan and helped the developers and many international players understand and met the tender requirements.
“On the other hand, many international players of offshore wind industry have found the going tough in Taiwan wind market, primarily due to the difficulty in finding local partners who have the knowledge and experienced in offshore wind that can meet their relatively matured requirements, as well as a shortage of local talents.
“The real challenges begin from the very moment of having the contract awarded,” he said.
Environment, Health and Safety issues
Taiwan hopes to generate 20% of its electricity through renewable energy by 2025 by developing new wind and solar power sources, even as it reduces its dependence on nuclear plants. The target capacity of around 20 gigawatts from renewables by 2025 is nearly five times the 2018 levels.
After 2025, the territory intends to increase the installed capacity of its offshore wind turbines by another 10 gigawatts over 10 years. While Taiwan Government has allowed
international companies to enter the fray, it has also imposed stringent local content requirements in an effort to develop homebased players who can compete at home
In the interview, Hong said that while he understood the Taiwan government’s desire to build up domestic capabilities in the offshore wind industry, authorities must bear in mind that there is currently a wide gap, in terms of technology and financing management, between the mainly European multinational companies that dominate the wind industry and the island’s domestic players.
While GE is an American conglomerate, its Grid Solutions business, following the acquisition in 2015, comes under GE Renewable Energy, which is headquartered in Paris.
GE has relatively long experiences cooperating with European companies and tries to make use of relevant development experiences when conducting assessment and execution of Taiwanese projects.
However, Hong pointed out that we can learn from European experiences but we still need a lot of adaptation to meet the environmental conditions in Taiwan. “First, EHS (Environment, Health and Safety), I believe this is a critical issue for all the stakeholders involved in an on-going offshore wind farm construction,” he said. “Especially, most of the wind farms and renewable energy projects are located in the central and southern Taiwan, where the conditions of EHS are usually less consolidated than those in northern Taiwan.
This has brought a serial of challenges to every section of industry, and it is unlikely to be solved in a short term.”
As wind developers value their reputations, safety is a major requirement when appointing subcontractors and many Taiwan companies have not yet reached the required standard in the offshore wind industry.
Currently, construction and safety standards and practices in central and southern Taiwan are not as high as in the north where the capital Taipei is located. Hong takes large onshore substation construction as an example, the contractor normally hires workers who have received little EHS training, the work safety challenges are tougher.
“Although we can expect Taiwanese companies to improve the quality of safety, it is relatively hard to manage subcontractors downstream to reach the same level in a short time,” Hong said. He added that it is possible to find high-quality construction contractors in Taiwan, if the scale is large enough. Even so, safety and construction standards still lag those of more advanced European countries such as Germany with many years of experience in the offshore wind.
“It is only possible to find high-quality construction contractors in Taiwan if the scale of the construction is large enough. The scale of onshore substation in Taiwan is not as large as those of MRTs or power plants, the investment value is relatively small and first-rank building contractors are less willing to participate in.” Hong said.
“The scale of project is relatively small,so we could only select mid-range subcontractors, which could only provide mid-range construction quality,” he said. However, Hong emphasized that, since GE is involved in power generation as well asmany other relevant businesses across the energy industry, it can find relatively higher ranking companies for constructing.
Hong further pointed out that, the European companies will use their standards while executing projects. Since developers significantly value their reputations, they consider EHS issue as the top priority while constructing. In other words, the quality of construction management is correlated with the scale of projects and the capabilities that contractors possesses to adapt the requirements of international standards.
In other words, the quality of construction management is correlated with the scale of projects and the capabilities that contractors possesses to adapt the requirements of international standards.
Other Skills Gap
Part of the reason for this skills deficit lies in the poor management tools used, as well as the lack of skilled schedule controllers, which in turn makes it more difficult for companies to make the correct investment and management decisions. According to Hong, internationally used management tools are not yet common in Taiwan.
Although GE-GS Taiwan has demanded its subcontractors start rectifying the skills gap step by step, this is not something that can be accomplished overnight.
“The personnel needs to be sufficiently qualified to operate these management tools, but relevant training in Taiwan is still limited. From the experiences of project management and integration, GE-GS Taiwan has been working together with its local partners and has started its training programme. Building a pool of expertise take times.” Hong said.
Hong further pointed out that Taiwan also faces challenges regarding the course design. So far there is no independent discipline designed specifically for power generation, nor university departments nurturing talents for “Power Industry”. In other words, Taiwanese power industry does not possess a corresponding talent pool.
Therefore, Hong emphasized that the ratio of different subjects in educating and training the local talent. Although some training programs are established for offshore wind industry in Taiwan, such as the GWO training centres in Taichung and Kaohsiung, most of people still focus on offshore tasks rather than “power connection”, or the grid.
Elaborating, he said that while Taiwan’s government believes the local industry has accumulated some capabilities in the construction of onshore wind farms, companies need to understand the entire power generation and transmission process in order to be successful. In Hong’s opinion, only TPC in Taiwan possesses such knowledge when conducting Taiwan grid network studies.
“Skill training is currently a bit fragmented such that nobody can comprehend the whole process with an integrated approach yet,” he said. (“Skill training in this segment
is currently fragmented and there is no training programme designed to fully train personnel on end-to-end grid connection, an Integrated approach?) He added that there is still a deficit of personnel for designing and forecasting the power to be generated under an integrate framework.
“While conducting system studies for power generation, the behavioral analysis, management and prediction for power generation of the wind farms must be included. It is not just about onshore or offshore construction, but also include the ‘network knowledge’” Hung said.
In international markets, managing the grid to deliver the right amount of electricity tothe right recipient at the right time of the day involve commercial contracts that must
be strictly adhered to if companies are to prosper. This is why most project directors for the wind farms in Taiwan come from foreign countries because of their vast experience in technical and environmental conditions.
Hong summarized that developing an alternative energy industry extends beyond the construction of offshore wind farms and requires a “big picture” understanding of the electricity transmission network, as well as the ability to effectively forecast and manage demand and supply. Taiwan still has a way to go before it can develop expertise who understands the entire power generation process.
The Chicken and the Egg Question
Turning to localization policies for offshore wind development, Hong said that while the government wants to give more opportunities to homegrown players, the end result has to be the creation of a “national team” that can compete in international markets. Finding the right balance between protecting potential domestic champions and raising standards by allowing foreign investments is therefore very tricky since both processes involve managing various trade-offs.
For example, although GE has a longestablished presence in Taiwan, it cannot meet several of the government’s localization requirements for its largest 12-megawatts wind turbines, denying the island the use of
some advanced technologies. Hong cited the construction of German developer’s onshore substation that GEGS Taiwan undertook as an example. For starters, all heavy electrical equipment as well as cables and wires had to be purchased locally. For most other equipment, the assembly took place in Taiwan.
“The project demands a very high level of localization in accordance with government policies to engage domestic suppliers, and nearly 96% of the contract value being invested within Taiwan.” Hong mentioned.
The local sourcing requirement added to the complexity of the project since control systems and protection relays – which are at the heart of offshore wind farms- are still scarce in Taiwan. Hong also pointed out that, aside from giving opportunities to local companies, it was also important to nurture their ability to compete in the international arena, as many Taiwanese businesses still have the traditional OEM (original equipment manufacturer) operating style that involved focusing on just one part of the entire value chain. “Even if the government wants to help domestic companies, they might worry about the cost of investing in plants, or whether or not they can balance their monetary flows.” Hong said.
This hinders the development of a whole industry, since companies are reluctant to invest heavily in plants and other capabilities despite government support, creating what he terms a “chicken-and-egg” problem
Is the Taiwan Market Big Enough?
Hong added that it is unclear if Taiwan’s current renewable energy market is large enough, and that the government might want to consider the potential advantages of “not localizing” the wind market.
Citing the government’s latest rollout plan for the wind industry, he said the release of 1 gigawatt of capacity every year from 2025 translates to around 100 turbines, which is relatively small by global standards. Returns from this investment could take as long as 10 years in total, since the construction phase alone could take five years.
Without localization policies, investing in Taiwan would become more attractive since wind farms can be completed in three years and at lower costs – translating to a massive boost in terms of investment returns. Based on this scenario, it is unclear how domestic companies competing in an inefficient market can grow to become international suppliers.
On the other hand, if Taiwan were to follow the UK to first allow wind technologies and foreign capital to enter freely into the market, the local market would grow a lot faster, potentially creating conditions whereby
investors would seek out specialized domestic manufacturers to replace some of their imports.
Hong cited the example of GE Power Taiwan, which has been steadily increasing the locally sourced content in its power plant constructions projects. TPC has also started demanding the selection of more domestic
companies in its projects, further increasing local participation. “There will be a snowball effect if such a mode can be implemented. If the market opened up enough, considerable foreign investment would be seen. After reaching enough market share, quantitative change would turn into qualitative change, with local chain reactions occurring..” said Hong.
GE-GS Taiwan, he added, has been active in Taiwan’s wind market because it could piggyback on its years of experience working with TPC. But for other turbine manufacturers without a history in Taiwan, entering the market would be a much less attractive proposition since they could win much bigger orders from other countries and fulfil them at a lower cost. Hong estimates that 1 gigawatt of capacity might require 1.3 to 1.5 times the investment if done in Taiwan compared to leading wind markets like the UK.
Offshore HVDC Stations
Turning to a related topic, Hong said Taiwan needed to build a network of high-voltage direct current (HVDC) stations to help carry power generated by offshore wind farms
along the coast of central Taiwan to the north, easing transmission bottlenecks. Part of the investments could come from the private sector, if government provided the
The situation is further complicated by Taiwan’s geography, which requires the transfer of offshore wind and other renewable energy generated in the middle and south of the island to the north where demand is highest. As Taiwan is prone to earthquakes, the transmission system needs to be highly robust to prevent disruptions to the electricity supply.
“The current wind power production is concentrated in central Taiwan and existing systems face transmission bottlenecks that are difficult to solve in the short term. The making of large amounts of transmissible power would need ten to twenty years to lay down the cables.” Hong indicated.
“We proposed a ‘Private Power Northbound Transmission Plan’ to one of the utility company in Taiwan. The idea was to build an HVDC offshore substation that directly connects to the step-up substation of Nuclear Power Plant IV (with 1.5 to 2 gigawatt capacity) through sea cables,” he said.
Building a HVDC “highway” would be more reasonable than distributing the incremental power generated via existing networks, based on the additional capacity of 1 gigawatt per annum during the third phaseof Taiwan’s offshore wind expansion after 2025.
The HVDC transmission system can also act as backup in the event of a major disruption, such as when an earthquake struck Taiwan in September 1999 resulting in massive power failures across the island due to the collapse of transmission towers in central Taiwan.
Hong agreed that Taiwan’s electricity transmission systems needed to be managed by the state since it is an issue of national security, but he added that renewable energy could be an exception since the sector has already been opened to outsiders.
Based on current trends, TPC would need 10-20 years to simply lay down the cables due to Taiwan’s countless land problems.
Currently, Taiwan uses a Distributed Transmission System (DTS) where power is transmitted piecemeal – by 1 gigawatt at a time - to large-scale step-up stations in the
Hong said GE has constructed large offshore HDVC connections for Korean and German utility corporations and is therefore confident that a 250-kilometer network connecting central to northern Taiwan can carry as much as 2 gigawatts with high transmission efficiency.
“In terms of wind power, we can see Taiwan has already well-established in East Asia, and we believe it could be promoted more in global market.” Hong said. He also explained that, from a practical perspective, related cases must be explored through policies, and one possible way forward is to build an HVDC “highway” for pumping green energy generated into the existing grid.
Education and Training
Looking ahead, Hong said Taiwan will have to address the lack of talent in wind energy if it hopes to become a significant player in the renewable and green energy space. This would involve introducing new university courses and retraining older engineers and workers, as well as improving ties between government, academia and companies.
Currently, while universities in Taiwan have courses in construction management, they offer only few modules that are related to power generation. Hong estimates that only around 5% of the Taiwanese workforce truly understand the power generation industry, which is a constraint on growth.
He added that Taiwan can find inspiration from its past success in building a worldclass semiconductor industry, which involved initiatives on many fronts including the setting up of research institutes and the recruitment of scholars who studied overseas.
For its part, GE-GS Taiwan wants to cultivate students from local colleges, he said, although he acknowledged recruitment will be a challenge due to the popularity of semiconductors and other electrical engineering fields.
And in face of the drastic competition of talents acquisition within the industry, instead of poaching, Hong focuses more on attraction and long-term solution. “If we cannot find enough talent in the short term, I suggest bringing in talent from abroad to fill the gap, while ramping up training for locals. This really takes time and patience, but it will pay off in the end,” he added.
Despite its many challenges, Hong believes Taiwan can be a front runner in green energy in Asia, as it is ahead of many of its neighbours in the development of offshore wind energy, like the government’s successful containment of the Covid-19 virus through the use of various technologies and clever policies, Taiwan is in the spotlight and many people have a positive perception of
At the moment though, many big players in the global offshore wind industry do not see Taiwan as particularly attractive, despite the market being more open compared to Japan or India. The perception will change, however, if Taiwan relaxes its local content requirements.
Policymakers must therefore “think outside the box” and strive to make the wind industry “so big and loud that nobody can catch up with Taiwan,” said Hong. This will help Taiwan stand out on the international stage and create a platform comparable to what the island has achieved in the semiconductor space.
/Xin-En Wu, Ren-Hao Wang