Q&A: Are the DPP's Renewable Energy Efforts a Sham?

The target set by Taiwan's Democratic Progressive Party (DPP) government to raise the proportion of Taiwan's energy generated from renewable sources to 20 percent from the current 5 percent by 2025 is drawing closer. As the government scrambles to fulfill its obligations to voters and phase out nuclear power, and ahead of national anti-pollution protests set for this weekend (Dec. 17), The News Lens sat down with Anton Ming-zhi Gao (高銘志), a Ph.D in Energy Law from the KU Leuven in Belgium and secretary general of the Taiwan Environmental Law Association, to discuss the realities of the DPP's energy policy.

TNL: You sent me an article you had authored suggesting that Taiwan’s energy transition was a ‘renewable scam.’ What was your motivation for writing that piece?

Anton Ming-zhi Gao (AMG): After the election last year, the government talked a lot about renewable energy. At first I was very excited because I was a big fan of this kind of energy. But observing law and policy development over the last two years I found the government actually did nothing to promote this energy transition. I was depressed and this turned to anger so I wanted international investors to know the situation.

Credit: Green Impact Academy

TNL: You mentioned that in 2009, the Ma Ying-jeou (馬英九) government implemented a Renewable Energy Act that was making good progress. What was in that legislation and how did it work?

AMG: Ma Ying-jeou wanted to mobilize parliament to pass this bill because it was effective in promoting renewable energy. The concept tried to follow the German renewable energy model. Since 2000 or even as far back as 1991, the German government had introduced a very effective tool to promote renewable energy. The main concept is feed-in tariffs, which provide a secure framework for investment, particularly in solar panels, to join the market by setting a very favorable rate for purchasing renewable energy for 15 to 20 years.

That’s why the 2009 Renewable Energy Act introduced this feed-in tariff scheme and why in the past few years you have seen big growth of renewable energy that has particularly benefited the solar panel sector, as well as onshore wind. The stats show that installation capacity of onshore wind turbines grew from 346,900 kW in 2009 to 642,300 kW in 2015 before the change in ruling party. The growth of solar photovoltaics grew more than 10 times to 668,500 kW by the end of 2015. So it was working fairly well, but during the presidential campaign the DPP described the Electricity Act [amended in January 2017) as a cure for all ills. They made a lot of commercials on the internet about the potential achievements of this bill. They didn’t mention the Renewable Energy Act of 2009. They tried to avoid mentioning President Ma’s achievements.

TNL: Do you think the DPP is united behind a renewable energy push?

AMG: In the DPP campaigning since 2011, after the Fukushima accident, and around the first time Tsai ran for president, she said she was very supportive of renewables because of their importance to replace nuclear energy. But in the interim, inside the DPP, they have a split opinion. They hold a negative view on renewables. They didn’t support onshore wind. They launched a large-scale protest against some projects in Miaoli in 2013.

Source: Amazon

Another important development is the grid connection. If you want to adopt renewable energy on a large scale then you need to have sufficient a grid connection. A DPP legislator, Lee Ying-yuan (李應元), is now minister for the Environmental Protection Administration. He launched a huge attack against a proposed grid connection from Penghu Island. Yet without this kind of connection it is impossible for Taiwan to benefit from wind energy produced on Penghu. Inside the same party they have those who strongly support renewable energy but some of them protest against it, and they have become key people in determining the future of energy development. Now the person in charge of offshore wind environmental impact assessment is someone opposed to it.

TNL: How much will renewables have to increase to make up for the winding down and taking offline of nuclear power by 2025?

AMG: The target is 20 percent of renewables in the electricity mix by 2025. Now we only have about 5 percent. It took 50 years to get here and we even had some legacy help from the Japanese because they built several large hydropower stations. I like to say this is not even “mission impossible” because when you watch the movie, it always turns out to be possible. Instead, it’s an impossible mission. The most important is offshore wind and solar, but they both face opposition from citizens. It’s controversial to put solar panels on farmland [which is why the government has launched the subsidy scheme for households to install solar panels]. There are protests in rural areas. For offshore wind, the government is trying to force foreign investors to do technology transfers to Taiwanese companies to manufacture offshore wind turbine components locally, but they don’t want to give away the technology.

TNL: What kind of companies are involved?

AMG: Giants like [Denmark’s] Vestas Wind Systems, Siemens, GE, etc.

TNL: When the DPP came to power and announced this radical renewable target, how did they develop the policy framework?

AMG: In the last two years, investors and experts have attended numerous meetings to discuss how to put such an ambitious plan into practice. Foreign investors need the support of local Taiwanese banks, but these lenders are not familiar with this kind of technology and so are reluctant to make loans. In the last few months there have been about a dozen such meetings, but during the process the government would give opening remarks and then just leave, so they miss the conference. They skim from one topic to the next, loans to grid connections, without addressing industry’s concerns.

TNL: What is the situation with feed-in tariffs now?

AMG: It is still in force and the incentive is high enough to attract investment. Foreign investors are urging the government not to abolish this as it provides a stable investment environment and cheap prices. The new Renewables Act gives extra freedom. You can choose to sell direct to the market or to Taipower. Renewable NGOs, businesses and others were against this idea and said all that is necessary is to increase the feed-in tariff. They don’t want to sell on the open market because the price for consumers will be higher and therefore they will lack demand.

TNL: Would the government have been better served to address the issues with Taiwan’s grid?

AMG: Applications for offshore wind projects from foreign investors total about 10GW. The problem is the Taiwan’s grid cannot absorb such a high volume. By 2025, the grid might be able to absorb 3-4GW. There is a bottleneck.

TNL. The government expects some of those applications to fail environmental impact assessments. In any case, the Electricity Act is an attempt to encourage liberalization of the market. How much of problem is having just one company, Taipower, operating the grid?

AMG: The DPP pushes the idea that Taipower is monopolistic and that is one of the reasons why renewables haven’t developed so well, but if that’s true, how come renewables have already increased so much? Even in Germany they force the grid operator to enforce feed-in tariffs. In the past, the government has asked Taipower to invest in renewables but forbade them from passing on the costs to the customer. In Germany and France, the situation is different.

TNL: Where does this leave us – how many renewable developers to take up options under the amended Electricity Act and sell direct to the market?

AMG: Maybe zero? The cost issue is most important. On the supply side, they want investment security. If they sell electricity direct to the market, maybe they can get a better deal but it is difficult to do the analysis. They would face financing difficulties. For us as consumers, we only care about the price, which even for solar is still about double the price offered by Taipower.

TNL: Premier William Lai (賴清德) has asked the Executive Yuan and developers to provide more accurate renewable forecasts, and has relaxed rules on green energy financing to account for this. Are things are improving under his stewardship?

AMG: I don't think the situation has improved even after Lai became premier. He has allowed the Ministry of Economic Affairs to proceed with tendering 3GW worth of offshore projects, even though the developers are against it under the current financing constraints. The government needs to reduce the investment risk associated with such costly projects and play the role of banker in providing credit guarantee mechanisms.

TNL: What is the solution for Taiwan to meet its renewable targets?

AMG: There could be a way. Of course Taipower tries their best, but they are a state-owned company. It is difficult for them to have the flexibility to implement grid projects and even generation projects, that's why we are trying to introduce private generators into the market – people see Taipower coming an want more compensation for their land – that's also a problem. I'm not sure if Taiwan can follow the model established by the UK and the Netherlands, where they tried to attract new grid operators into the market to resolve grid bottleneck problems. Such new players are very small but maybe they can help resolve the bottleneck issues, and it fits with the idea of new renewable generators being able to sell directly to consumers through their own grid. Maybe it is time to think about new, private grid operators entering the market to solve Taiwan's transmission problems.

TNL editor: Morley J Weston