Taiwan Initiates Energy Transition
Feb 05, 2011 - Andrew Lee - renewableenergyworld.com
London, UK -- Taiwan is set to blaze a trail in renewables development with
its major policy initiatives that are designed to at last exploit the country's
extensive renewable resources.
The island state of Taiwan sees renewables as an important route to greater
security of supply than is possible through its current heavy reliance on imported
Security and independence are live issues for many reasons in Taiwan, which
is still the subject of a long-standing sovereignty claim from its giant neighbour
China, even though relations between the two have improved and trade links
are healthy – not least in the area of solar equipment.
After a delay of some eight years, in June 2009 Taiwan finally passed its
Renewable Energy Development Act (REDA), the key legislative framework that
it hopes will kick-start a boom in renewable development in the nation of 23
million people. The act consists of a familiar mixture of obligations and incentives
that are designed to achieve a 16% share of installed capacity for renewables
by 2025 against an estimated 8% (dominated by hydropower) in 2010, according
to figures from Taiwan's Bureau of Energy (BoE), part of its Ministry of Economic
When it was launched, REDA set a range of feed-in tariffs for renewable power,
including a generous tariff of around TWD11 - 13/kWh (US$0.37 - 0.45/kWh) for
PV systems and TWD4.2/kWh ($0.14/kWh) for offshore wind.
This reflected the fact that the most startling expected growth figure cited
in the BoE's long-term renewables targets is in PV capacity, which it expects
to increase from just 19 MW in 2010 to 2 GW 15 years later. Taiwan is in the
curious position of being one of the global powerhouses of PV technology manufacturing,
while generating relatively little solar photovoltaic electricity in its own
backyard. The REDA incentives are intended to enable a PV build-out that would
create a domestic infrastructure more worthy of its status as a producer of
cells and modules (see box panel).
However, the solar feed-in tariff has already been the subject of controversy.
The 2010 tariff was originally promoted on the basis that a project would qualify
for the 20-year guaranteed rate provided an agreement with Taipower, the dominant
state-owned utility operator, was signed last year. The BoE caused consternation
among developers in late 2010 by announcing that the feed-in tariff payable
would now be determined by when the project actually begins operations, leaving
many facing the prospect of a significantly less generous 2011 rate that could
be up to 30% lower, depending on the project's size.
Taiwan's Kaohsiung solar stadium marks a domestic move towards new solar development
(Source: World Games)
The government said the reduced tariff reflected a downturn in solar equipment
costs and claimed that the previous rate would amount to an unjustifiable level
of subsidy. Solar investors – some protesting outside parliament – argued
that the about-face would leave them saddled with start-up costs that were
calculated on the basis of a guaranteed return that no longer exists, unfairly
delaying a return on investment. They also claimed that delays in completing
projects were due to factors beyond their control, not least the amount of
Whatever the merits of both sides of the argument, the controversy reflects
the slower than expected progress in solar since REDA was enacted.
As little as 10% of the MW capacity of project agreements signed is estimated
to have actually been installed last year, says Thomas Maslin, a senior analyst
specialising in solar power for IHS Emerging Energy Research.
Maslin says the slower than hoped-for progress of Taiwan's domestic solar
build-out will disappoint its policymakers, but is perhaps not altogether surprising.
'Based on what has happened in similar situations elsewhere, my guess would
be that even though the high feed-in tariffs should have been attractive, there
just wasn't the capability on the downstream side to build-out as hoped, especially
when starting from scratch,' he says.
Even the central role of Taipower could not make up for the fact that the
pre-existing local project design-and-build capability struggled to match the
stellar success of its export-led technology giants, adds Maslin.
'Manufacturing cells and wafers far upstream at a very industrial scale is
a very different thing to building capability for large-scale deployment downstream.
Part of the initial rationale may have been that they could offset some of
the risks to technology suppliers in Taiwan of foreign markets, which are very
volatile for PV,' he says.
The reduction of the feed-in tariff for solar makes any sharp upturn in domestic
build-out less likely, argues Maslin. 'Cutting it was not an unusual thing
to do right now, as prices have fallen across the entire supply chain. They
seem to be mimicking what has happened in Europe and trying to keep the returns
on projects to a reasonable level. The problem is that even the very generous
feed-in tariffs they had in the past weren't stimulating the kind of activity
expected, so if they cut it by another 30% you wonder if they're going to get
the momentum they want behind build-out.'
All of this does not detract from Taiwan's ongoing success story as a technology
producer for PV installations across the rest of the world, and Maslin believes
that the island will continue to rely on demand in Europe and North America
for the foreseeable future.
Even though he observes a slight price disadvantage to Chinese competitors,
Maslin says Taiwan remains competitive in the global market and has a lot going
for it. 'Its approach has been to build on its long history in the sector with
names such as Motech, the fact that they have long-term agreements with module
manufacturers and that the technology is generally seen as higher quality than
a lot of what it coming out of China.'
This has allowed Taiwan to develop a useful 'in-between niche' in the market,
says Maslin, and a resulting price premium that its producers are becoming
more adept at protecting.
If Taiwan's PV success is likely to stay centred around exports, it has significant
ambitions for its most obvious natural asset – the oceans that surround
it and the winds that blow there.
Offshore wind power is central to Taiwan's renewable energy project, says
a spokeswoman for the Industrial Technology Research Institute (ITRI), the
Taiwanese government's technical arm. 'Renewable energy in Taiwan for the most
part will be offshore wind power,' she adds.
The nation's industrial sector announced its offshore ambitions at the end
of 2010 with the formation of the Taiwan Offshore Wind Power Alliance – made
up of 18 companies from the region's energy, engineering and manufacturing
sectors – and plans to set up Taiwan's first offshore wind farm in Changhua
County, according to local reports. Commercial operations are due to begin
in the second quarter of 2013 with its first two 5 MW turbines. If all goes
to plan, these will be joined by a further 122 machines by the end of 2016.
Late 2010 also saw the Taiwanese government unveil its own plans for an 8
MW offshore wind demonstration project off the Penghu Islands, to be operational
by the end of 2012. Penghu – a cluster of 90 small islands off the western
coast of the Taiwanese mainland – is set to become something of a showcase
for the country's renewable and low carbon credentials.
The government has pledged support to turn Penghu into Taiwan's first low-emission
county by 2015. Plans include 96 MW of onshore wind capacity, solar energy
initiatives and the creation of recharging infrastructure for electric mobility.
According to Taiwan's Council for Economic Planning and Development, this should
enable 56% of Penghu's energy needs to be met from renewable sources by the
end of the five-year programme.
Penghu will also play a major role in Taiwan's efforts to harness ocean energy,
a high priority technology for the government and ITRI. The national target
is for a 200 MW installed capacity by 2025.
With around 1500 km of coastline and a sub-tropical environment, Taiwan has
been investigating two main strands of ocean energy development since 2005,
when its National Energy Conference formally decreed it a priority.
One is Ocean Thermal Energy Conversion (OTEC), in which the country is at
the forefront of global research thanks to ITRI's collaboration with Lockheed
Martin of the US. The second focus of Taiwan's ocean push is to unlock the
considerable potential of the waves and tidal currents around its shores. According
to ITRI, studies have shown that the north-east offshore region of Taiwan has
a wave energy potential of several hundred megawatts, while the east coast's
Kuroshio path and the Pescadores Channel (off Penghu) have tidal current energy
that could theoretically be tapped at gigawatt scale.
The BoE was impressed enough by this potential to fund ITRI to carry out a
three-year study of the detailed requirements and impacts of installing wave
energy conversion systems.
Preparatory activity has included site selection, environmental impact assessments
and preliminary design evaluation. ITRI says it will be ready this year to
deploy a wave device near Keelung Harbour, site of the National Taiwan Ocean
University, another key partner in Taiwan's marine energy research effort.
ITRI's wave energy investigations have included close co-operation with the
UK, a fellow island nation. The Taiwanese organisation has worked closely with
Aquatera, an environmental and renewable energy consultancy based in Orkney,
Scotland, site of the European Marine Energy Centre. Taiwan and the UK have
also held several joint workshops dedicated to marine renewables. Indeed, ITRI
has built a significant portfolio of external collaborations in the renewable
energy sector, many building on Taiwan's expertise in the PV technology sector.
International initiatives include work with DuPont on PV-conductive paste,
with Nissan Chemical Industries on module materials and Reifenhauser of Germany
on optical film.
Collaborations such as these serve to underline Taiwan's strong position as
a technology and equipment supplier to the world's renewables industry. This
may not yet be matched by its domestic infrastructure but the country does
boast a number of flagship projects either completed or in progress.
One is the 59 MW concentrating photovoltaics (CPV) plant under development
by Ya-Fei Green Energy and Guascor Solar of Spain. The new facility, due to
begin operation later this year, is the most ambitious CPV plant in the world
and would be the main contributor to a sharp growth in Taiwan's PV capacity
in 2011 if it comes on-stream as planned, said analysts Frost & Sullivan.
Other Taiwanese landmarks include the Y.S. Sun Green Building Research Centre,
the country's first zero-emissions building, which was officially opened in
January at the National Cheng Kung University (NCKU), Tainan.
The building, also known as Magic School of Green Technology, boasts 13 distinct
sustainable design approaches and technologies which contribute to an energy
consumption reduction of up to 65% compared to standard alternatives, according
These include a distinctive roof that features a leaf-shaped solar array and
is designed to act as a 'sunshade' for the main structure beneath. This blocks
the majority of the direct solar radiation from entering, allowing the air
conditioning system's power consumption to be significantly reduced, said the
The Taiwanese project to achieve the highest international profile so far
is the main stadium used for the 2009 World Games in the port city of Kaohsiung.
More than 8800 solar panels are integrated into the stadium's roof, providing
up to 75% of the venue's energy needs when an event is held and feeding electricity
to the grid when it is not in use. Total output of the stadium is up to 1.14
GWh a year.
They are unlikely to be Taiwan's last showpiece projects, now that a country
with such a formidable record as a manufacturer has turned its attention to
its own renewable energy credentials.