Offshore wind player Orsted eyes Taiwan Straits crisis after China fires missiles
Danish offshore wind developer Orsted (CPH:ORSTED) is at risk of getting caught up in a potential Taiwan Straits crisis as tensions in the region rose steeply following the visit of US House of Representatives Speaker, Nancy Pelosi, to Taipei, on 2-3 August.
Orsted, which operates wind farms offshore Taiwan, confirmed that it was monitoring the situation after China launched ballistic missiles to areas north, east, and south of the island following Pelosi’s visit, reported Recharge.
“Clearly, missiles are not good for business, but the larger geopolitical risk is the primary threat,” Steve Vickers, CEO of Steve Vickers and Associates (SVA), a specialist political & corporate risk consultancy, based in Hong Kong, told Energy Voice.
“Any form of blockade would make business very difficult and would result in shipping, aviation, and other restrictions. We think this to be more likely than an all-out military campaign on the main island,” he added.
Beijing’s response to Pelosi’s visit was immediate and strident. “Large-scale military exercises in the Taiwan Straits highlighted how deteriorating Sino-US relations are buffeting international companies right across the Asia Pacific region,” SVA said in a note.
“Those companies that act early to identify and mitigate risk to their businesses, in what is a pan-regional scenario, rather than a Taiwan issue alone, will better weather this storm,” warned SVA.
The People’s Republic of China (PRC) military exercises around Taiwan included the firing of several Dong Feng missiles over the island, as well as five into Japan’s Exclusive Economic Zone.
As a result, “the risk of another Taiwan Straits crisis (as in 1954, 1958 and 1995/6) is now significant. To date the exercises did not appear geared towards an Island wide invasion, which still might be a stretch for the People’s Liberation Army (PLA), but the Chinese military has maintained momentum, and could, with relative ease, seize offshore islands, such as Kinmen or Matsu, on the coast of Fujian, or Pratas Island in the South China Sea,” added SVA.
“Perhaps of more note to the international business community however, the exercises highlighted China’s claim to the waters around the Taiwan Straits and demonstrated an ability to choke off the island’s economy, almost at will. Of course, no side want an overt war, but the risk of an accident or a miscalculation escalating into something much nastier is now significant,” said SVA.
No missiles struck near any Taiwanese offshore wind farms, but Orsted said it was aware of heightened tensions in the Strait of Taiwan.
“Despite heightened tension in the Strait of Taiwan, Orsted remains focused and engaged with building our projects, managing our assets, and taking care of our personnel. We will continue to monitor the situation and maintain close dialog with authorities,” the utility told Recharge.
In early August, Orsted announced it had opened what it said was the largest offshore wind operations and maintenance (O&M) hub in Asia Pacific to support its Greater Changhua wind farms offshore Taiwan. Significantly, it is the first operations hub it has built outside Europe.