Fish Hook in Taiwan's 'Green' Energy Reforms

Fish Hook in Taiwan's 'Green' Energy Reforms
Photo Credit: Chuck Coker @ Flickr CC By ND 2.0

What you need to know

Taiwan this week passed new legislation to deregulate the electricity market and boost the uptake of clean energy. But do the changes go far enough?

Taiwan’s attempt to boost the renewable energy sector may be hindered by strict reserve requirements placed on independent power providers, critics say.

Taiwan’s parliament, the Legislative Yuan, this week passed a swathe of changes to its Electricity Act. One of the main components of the new amendments is to enable renewable energy companies to sell electricity directly to consumers. This will potentially be a big change for Taiwan’s electricity market, which has long been dominated by fossil fuel and nuclear generation supplied by state-owned monopoly Taipower, and has been welcomed by local environmentalists.

However, one article in the new law states, “In order to maintain the stability and safety of electricity supply, the energy providing company must be equipped with appropriate energy reserves.” Environmental groups fear that smaller-scale renewable energy companies will not be able to meet the requirements nor compete with larger corporations.

President of the Taiwan Environmental Protection Union (TEPU) Liu Jun-xiu (劉俊秀) said that the reserve margin requirements will be impossible for new, smaller companies to meet. Given that renewable energy only makes up 4 percent of electricity generation in Taiwan, a rapid increase in supply will prove challenging, Liu said.

With the passing of the law change the government aims to liberalize the electricity market to encourage green energy production and consumption. Critics argue that if small-scale energy companies are unable to meet the energy reserve margin requirement themselves, they may have to revert back to Taipower to guarantee their power supply.

TEPU Founder Shi Xin-min (施信民) predicts that renewable energy companies will eventually have to purchase from existing power plants to meet the requirements, dampening the benefit of having the new renewable suppliers in the market.

Under the amendments, within the next six to nine years Taipower will be split into a parent company with subsidiaries for power generation and distribution.

Still, Xu Guang-rong (徐光蓉), current director of Moms Love Taiwan, an environmental group concerned with nuclear waste, expressed concern that new renewable energy companies will be too small-scale to compete on price with larger corporations.

Uphill task

Taiwan has committed to phasing out nuclear power by 2025 and reducing greenhouse gas emissions to 20 percent of 2005 levels by 2030. It has also pledged to lift renewable-based electricity generation to 20 percent of supply, with the majority expected to come from new solar and offshore wind facilities.

As the American Chamber of Commerce in Taipei (AmCham) noted in its 2016 Taiwan White Paper, 78 percent of Taiwan’s power demand is met by fossil-fuel plants, 17 percent by nuclear, and 5 percent by renewable sources. To reach its targets, “Taiwan would have to greatly reduce its reliance on fossil fuels power and greatly increase its capacity for power generation from other energy sources.”

Taipower last year announced NT$400 billion (US$12 billion) for renewable energy projects over the next 15 years, with most of that earmarked for installing wind turbines off the nation's western coastline. Advisers have been selected for the first large-scale project, which is to be located off the coast of Changhua.

However, questions remain as to how Taiwan’s offshore wind projects will fit into the wider energy system. When the wind doesn’t blow the turbines don’t spin, so wind typically has to work in conjunction with other energy sources rather than simply replace them; doing this effectively will be particularly important if Taiwan is to meet its carbon reduction goals.

The cost of offshore wind appears to be decreasing significantly but it remains, on a purely economic basis, substantially higher than non-renewable options, like gas, coal and nuclear.

Higher prices aside, Taiwan’s carbon reductions goals – reducing greenhouse-gas emissions by 20 percent by 2030 and 50 percent by 2050 - remain a difficult proposition. Taiwan is hoping to have three offshore wind farms with a total capacity of 300-megawatts in operation by 2020; that is still much less than the nation's three active nuclear power plants.

Editor: Edward White