Posted on July 10, 2024
TAIPEI — Taiwan’s biggest stainless steel maker is building the island’s first submarine power cable production facility for offshore wind farms as it moves to tap into the renewable energy boom.
Walsin Lihwa, also Taiwan’s leading maker of terrestrial power cables, is teaming up with the NKT Group, Denmark’s leading power cable supplier, through a joint venture dubbed Walsin Energy Cable System.
“We think it’s extremely critical to have a local supply of cables for the offshore wind farms that Taiwan is building for its renewable energy transition,” Justin Wong, COO of Walsin Energy, told Nikkei Asia. “The industry worldwide is seeing a shortage of cable supply as demand picks up so quickly for all the offshore wind farm construction driven by the global green energy push.”
The first plant, in the southern Taiwanese city of Kaohsiung, is scheduled to start test production in the second half of 2025. Mass production will be ready in 2027. One goal is to help Taiwan meet its goal of expanding offshore wind capacity from the current 2.25 gigawatts to more than 20 GW by 2035.
Wong said Walsin Lihwa has more than 50 years of experience supplying terrestrial power cables, and the joint venture’s top priority is to meet demand in Taiwan, one of Asia’s most important markets for wind energy.
The Kaohsiung plant could also serve as a foundation for capturing demand elsewhere in the Asia-Pacific region over the next decade, the executive said.
“We definitely won’t rule out expansion [to meet other] Asia-Pacific demand as renewable energy will be a key market for the next decades,” Wong said. “We have talked with NKT about expanding later, but we do not have any concrete plan for now.”
Asia-Pacific, including China, Japan, South Korea, Taiwan and Vietnam, is one of the world’s leading growth drivers that bet big on offshore wind farms, with a commitment to 2050 of around 263 GW. This is more than what the Americas have committed to, according to energy data and intelligence company TGS.
With the growing importance of energy security, more power-hungry data centers coming online and more electrified vehicles being driven, supplies of submarine power cables used in offshore wind farms are falling short, Wong said. This is despite makers in Europe, South Korea and Japan expanding capacity, the executive added.
Underwater electricity cables transmit electricity generated by offshore wind farms back to land and must be extremely durable. They are heavy, weighing up to 10,000 tonnes, and are placed in demanding environments. As such, only a handful of companies qualify as tier-one suppliers. These include NKT, Nexans of France and Prysmian of Italy.
Being close to seaports is critical for cost-effective deployment, as transporting such massive cables over land is impractical.
Walsin Liwah’s foray into submarine power cables comes as Taiwan undertakes a major energy transition to phase out nuclear power and increase its use of renewables, which accounted for less than 10% of the island’s total electricity supply in 2023, according to state-owned Taiwan Power Company. Coal-fired and natural gas-fired power contributed more than 80%.
Ensuring access to enough energy, particularly from renewable sources, is critical to attracting more semiconductor-related investments and AI data center servers to Taiwan. However, most of the offshore wind supply chain is controlled by foreign companies.
Wong said a key challenge to building submarine electricity cables is a lack of talent; Taiwan does not have much experience in this area. Walsin Energy, of which Walsin Lihwa controls 90%, is working with NKT to dispatch personnel to Europe for training to build up a seed team, which is expected to help fill a talent pool over time.
The company sees all of the offshore wind farm developers involved in projects in Taiwan as potential clients, as they are all looking for domestic supplies in line with the Taiwanese government’s policy push, Wong said.
Several foreign and domestic offshore wind farm developers — such as Orsted and Copenhagen Infrastructure Projects of Denmark, and WPD of Germany, and Shinfox Energy of Taiwan — have indicated they intend to invest further in Taiwan and bid on additional projects in the coming years.
