“Some projects are just unlucky” 

That’s what a fellow developer said of the 640MW Yunlin offshore wind farm, originally developed by Germany’s wpd and now developed by wpd’s spun-off offshore division, renamed Skyborn Renewable Energy. Well, it certainly seems that everything that can go wrong have gone wrong with Yunlin. Phase 1 was supposed to join grid in 2020 and Phase 2 in 2021. Now it’s Jan 2023 and less than a fifth of the turbines have been connected. Completion date 2023? Impossible. 2024? If we are very lucky. 2025? An unfortunate but distinct possibility.

Or can it be even worse than that? What if Yunlin is teetering on the edge of failure, and could take down the 1,044MW Hai Long Offshore Wind Farm and even all Round 3 projects down with it?

The Hairiest Haircut

It’s now been widely reported that Yunneng Offshore Wind Power Co, the Special Project Vehicle (SPV) for Yunlin OWF is looking to restructure its debt obligation with the bank consortium that is backing it. “You don’t do this. You don’t ask the banks, oh hey, by the way, can you take a haircut,” said a senior executive not connected to the matter but in the Taiwan offshore wind market. The local banks are beyond spooked. They are preparing for the Yunlin-related debts to go bad, according to a United Daily News (UDN) report

“The key point for pessimism,” said the report, “is that Yunneng Offshore Wind Power Co. is so short on funds it has been unable to sign 2023 EPC contracts.” 

Now I’m pretty sure that can’t be all true because I know folks wearing hard hats who are mobilizing soon on the Yunlin project for season 2023. But just the fact that banks are saying things like that to the press is scary. How much of a haircut are the banks being asked to take? The figure of a billion New Taiwan Dollars have been mooted. But it’s not about whether or not it’s worth it to the bank to take a haircut. It’s about the perception that Yunlin has become a bottomless pit for money. 

New boss, not the same as the old boss

Yunneng has run out of funds before. Every single time, wpd has managed to get more cash by selling equity. The first chunk went out to a Japanese consortium, the second to Thai Independent Power Producer EGCO Group, then France’s Total Energy took about a quarter. Then, the infrastructure fund Global Infrastructure Partners (GIP) came in and just bought all of wpd’s offshore wind portfolio. From what I heard, the Skyborn team is now a lot stronger than it used to be, especially from an engineering point of view. But if GIP is willing to beef up the engineering talent, it’s not clear that they are willing to capitalise Yunlin to the extent that would get “the turkey to fly.”

I really don’t know what even happens at this point. The same insider who said “you just don’t ask banks for a haircut” told me cost overrun is reaching 100%. And as bad as things are, they could go steeply worse. He’s calling on somebody…anybody who care about Taiwan’s offshore wind development to steady the Yunlin ship ASAP. “We need to get it back to horizontal. Because if we dont…” 

He then made the “nosedive” gesture with his hands. 

I’ve asked around and nobody can remember an offshore wind project where the original sponsor of the project gets booted. This doesn’t mean it hasn’t happened. But I do wonder what the standard operating procedure would be in such a case. I mean, banks know how to repossess a house, how would they repossess a windfarm? Especially one that is only one-fifth completed?

Stop attacking the patient!

At this point the developer above started describing a complicated scheme to save Yunlin involving government intervention that I didn’t quite understand and tuned out to anyhow because I just don’t think there is any way. As another senior executive said, the Taiwanese government would do very well just to stop attacking the patient: because Yunlin is so far behind schedule, the Bureau of Energy is constantly threatening to dock its performance bond if it can’t show to the BOE’s satisfaction that the delays are related to COVID and thus Force Majeure. 

“For a start, don’t pull the performance bond and don’t reduce the Feed-in-tariff. Accept completion in 2025, then pray to the banks that’s they don’t walk away. Not sure theirs is much more they can do.”

The way I see it, Yunlin OWF is in the operating room getting emergency surgery right now. Maybe it hasn’t been faultless. It certainly has not delivered on its promises. However, with jumpy banks and a an uphill battle to complete construction, this is not the time to be making its fiscal outlook worse if you want the patient to live. 

The Contagion Theory

Those who think we must save Yunlin center their theory on the concept of contagion. “It’s all the same banks.” Do you think they would be delighted to put more money into Taiwan projects if Yunlin goes down? Hai Long, it’s been said, including from local bank sources to the media, has had a hard time reaching financial close precisely because Yunlin is on the rocks. “If Hai Long fails to financial close, none of the Round 3 projects will be able to make it. They all have worse business cases.”

While Hai Long bid comically low for the auction portion of its wind farm, we all know this is Taiwan and auction prices don’t matter. They would have signed a Corporate Power Purchase Agreement with a company in the same creditworthiness league as TSMC for approximately NT$3.5. But unlike Round 3 projects, it would not be required to do localization on the auction price portion of its wind farm, and the other part where localization is required is supported by a Feed-in-Tariff. Round 3 projects will have the worst of both worlds. They will be required to localize, but that would not be supported by any FITs. 

“I sometimes wonder on what basis the government is requiring those localizations,” said yet another developer, “we are not given a FIT. We are not even selling to Taipower. We have our own power purchase agreements.”

If anything, Round 3.1 project are subject to heavier localisation requirements. The logic goes, if Yunlin jeopardizes Hai Long, and Hai Long has a stronger business case than the rest of the Round 3.1 projects, then the fall of Yunlin is in a position to take down all Taiwan projects on the table as far as the eye can see. 

“Ringfence it and let it burn”

Unlike just about every other source for this story, industry veteran Kimberly Asher is on the record. “There’s no ‘saving’ the Yunlin project. We need to ringfence it and let it burn,” said Asher. There is no reason for one bad project to take down other projects, said Asher, as long as developers are clear about communicating why their projects are not like Yunlin. 

“If we somehow keep it going to keep up appearances, it is just going to poison the well,” said Asher. The Yunlin OWF has suffered two slipped pile incidents that subcontractor Sapura said is due to inadequate soil data studies by wpd. After slow progress and a slipped pile and amidst other disputes, Sapura walked away from the project and was replaced by Abu Dhabi’s NPCC in the 2022 season. Monopile installation was not in NPCC’s scope. They simply took the monopile to location and hoisted it. Norway’s Havfram Subsea was brought in to do the project engineering. But the monopile installation is also not in THEIR scope. At this point, I don’t know whose scope the monopile installation was in. I just know yet another monopile was lost in the 2022 season and installation went very slowly after that. All in all, the DLS-4200 installed less than 10 monopiles in 2022. And I don’t know how installation can speed up dramatically without the risk of another pile-slip. (The remedy put in place after the second pile-slip is to allow the pile to self-penetrate for a longer amount of time before pressure is applied by the hammer.)

“Why would one project affect all future projects in Taiwan? The reason for Yunlin’s failure are one-off events,” Said another industry insider, “Perhaps Hai Long can’t reach Financial Close because of cost escalation and financing cost increasing due to US interest rate increase. It’s no longer profitable enough to entice the banks.” 

The Dunning-Krueger Effect?

If you are following the Yunlin drama, the LinkedIn of Warren Kuo of MCT Engineering has been a “must read”. There has been many ‘hypothetical’ conversations he has posted that seem to shed interesting light on the planning part of the Yunlin project. The biggest question has to be: did the decision to use monopile construction doom the project? Monopiles are preferred to jackets for many reasons: ease of construction and installation, simplicity, cost. Why would anyone want to deal with jackets and pinpiles when you can just do monopiles? The answer is “you don’t” if you can help it. 

But After the 128MW demonstration Formosa 1, just about every project in Taiwan have selected jacket construction, with the exception of Yunlin. 

At one point wpd was contracted with Dutch offshore construction company Van Oord as an EPCI who would manage the project on a turnkey basis. Unclear what happened, but Van Oord and wpd went their separate ways on the project. Instead of securing another EPCI, wpd decided to project manage Yunlin themselves. 

It is my understanding that most developers don’t have the capability to be their own project managers for offshore wind projects. How was it that wpd had the confidence, though it was arguably backed into a corner, to take on this complicated task? In Kuo’s opinion, it was “optimistic ignorance, lack of experience, [and] baseless confidence” that ultimately lead to Yunlin’s current predicament. 


It must simply be recognized that if a wind farm project fails, it will be a big black eye for Taiwan’s offshore development. Of course, banks are not so unsophisticated that it cannot recognize the project-specific flaws. However, they will be much more cautious going forward with Taiwanese projects, which are incidentally also the most expensive in the world with their local content in any case. Remember now there is a plethora of new projects to invest in also, in the wake of the Ukraine war unlocking many European projects and the Investment Reduction Act (IRA) in the United States unleashing so much potential there. 

The question in my mind is where was the quality control? You have to remember back in 2018 when the Round 2 selections came in Yunlin came in at Number 1. Sure, selections are always a bit of a beauty contest, but how did the Bureau of Energy see so much beauty in a project that now seem to be full of warts? And have there been consequences? Not the pointless consequences of docked performance bonds or the threat thereof, but actual consequences, such as not continuing to award the developer to be awarded more projects until they proved they can fix the last one. Nope. Skyborn was awarded both a last Round 2 project and also in Round 3.1. 

Of course, it is my hope that Skyborn can find a way to continue with Yunlin and bring it to conclusion. But if it does not, Taiwan’s offshore wind development will go on, but necessarily with more caution, less leverage and a whole lot more scrutiny. As Ms. Kim Asher said, “We need offshore wind projects to be about engineering, not financing!” Indeed, a new insistence on proven ability to execute over optimistic projections might be medicinal. 

The thing that keeps me up at night is…did wpd somehow get away with it? After all, despite setting the wheels into motion at Yunlin, it is now 100% out of the project, having sold its offshore division to GIP. It’s just the last in a series of divestitures, and without knowing the details of the sales, it’s hard to tell if the originator of the project somehow gained while offloading their flawed creation to investors. If they somehow did make a payday out of Yunlin, there is something seriously wrong with this industry.