Geopolitical tensions in the Taiwan Strait have raised concerns over the adequacy of insurance coverage for offshore wind farms in the channel between Taiwan and mainland China, according to an insurer focused on renewable energy.
At stake are wind farms worth at least $22 billion that are expected to be built in the next five to seven years, which face war and asset expropriation risk, said Mr Jatin Sharma, president of California-based GCube Insurance Services, which focuses on insuring renewable energy projects, in an interview with the South China Morning Post.
The current political climate would dictate that international wind farm investors explore financial ways to protect their investments, said Mr Sharma. Since Taiwan President Tsai Ing-wen, from the independence-leaning Democratic Progressive Party, came to power two years ago, cross-strait tensions have been rising.
Other risks facing Taiwan’s projects include higher typhoon and earthquake occurrence and an undeveloped wind farm installation domestic supply chain, which meant their premiums are at least a third higher than similar projects in Europe, he noted.
Taiwan's Ministry of Economic Affairs last month unveiled the results of its first major offshore wind farm construction tender, awarding the rights to build 11 offshore farms by seven developers, with combined generating capacity of 3,836 megawatts.
Taipei is targeting offshore wind capacity to reach 5,500 MW by 2025 from 8 MW last year, making it one of the world’s investment hotspots.