Taiwan’s government-run utility Taipower announced on May 6 that it has been granted the license to operate as a retailer of renewable electricity. This development is expected to give a major boost to the island’s green energy market. On the whole, renewable electricity has been bought and sold freely in Taiwan through various arrangements such as direct supply, wheeling, and contracts with renewable electricity retailers. Amendments made to the country’s Electricity Act and Renewable Energy Development Act are responsible for the recent market liberalization. The first wave of wheeling transactions for green energy has been initiated with 13 buyers that include several major domestic technology enterprises like TSMC, Foxlink and E Ink. One agency in Taiwan’s government estimates that the scale of transactions with these buyers could slightly exceed 110 million kWh this year. Moreover, Taipower’s entry into the market as a retailer could dramatically raise the island’s supply of green energy by 840 million kWh.
Passed by the Legislative Yuan in 2017, the latest amendments to Taiwan’s Electricity Act opened up the domestic electricity market and started the diversification of the domestic energy mix by allowing renewable electricity producers to sell power directly to end users. The Renewable Energy Act, the revision of which was finished in mid-2019, aimed to raise the share of renewables in the domestic energy mix from 6% at the time to 25% by 2025. To achieve this, the total installed capacity of various types of renewable generation in Taiwan have to reach 27GW by the target year.
The latest version of the Renewable Energy Act also mandates that large end users (mainly enterprises) have to source a part of their electricity supply from renewables. In terms of implementation, end users that have signed a supply contract with Taipower that exceeds a capacity limit (currently set at 5MW) are required to have green energy account for a percentage of the purchase (currently set at 10%). Here, the definition of green energy covers not only renewables like solar and wind but also energy storage equipment and renewable energy certificates (RECs). Alternatively, large end users that are unable to fulfil this obligation will have to pay a special levy to support the development of the green energy market. The green energy rule, which has come into effect this year, is anticipated to bring approximately NT$60 billion in investments related to renewable generation, energy storage, and RECs.
The Bureau of Standards, Metrology, and Inspection (BSMI) under Taiwan’s Ministry of Economic Affairs (MOEA) has reported that trading in the domestic renewable electricity market could surpass just slightly over 110 million kWh in scale this year. This figure corresponds to around 110,000 RECs or five solar (photovoltaic) power plants with a respective generation capacity of 90.4MW. The 13 participants that have been providing the demand include globally renowned semiconductor manufacturer TSMC, leading EPD supplier E Ink, and PC parts supplier Foxlink.
Regarding the issuance of the license for selling renewable electricity, Taipower has stated that it now plans to contribute to the growth of the domestic market through sales of power produced from its own renewable generation facilities. According to the latest projection, Taipower could inject as much as 840 million kWh into the market and become the largest green energy supplier on the island.
Committed to supporting the government’s goal of transitioning away from fossil fuels, Taipower has been building solar power plants and wind farms in the recent years. It built and put into operation the island’s largest ground-mounted solar power plant that is located in Changhua Coastal Industrial Park. In the waters off the site of this solar power plant, Taipower is also developing a multi-phase offshore wind project. Additionally, green energy technologies are also being deployed in existing fossil fuel power plants and substations as part of the ongoing infrastructure upgrade. Going forward, Taipower plans to construct an even larger solar power plant on the salt flats of Cigu District in Tainan.
The MOEA approved Taipower’s proposal to expand its business portfolio to include retail sales of renewable electricity in November last year. Following that, the license for the business was granted in April this year. Related amendments to Taipower’s articles of association will be reviewed at a regular shareholders’ meeting this May. Once the operational changes are approved by the shareholders and the new business is registered, Taipower can begin selling renewable electricity on a green energy trading platform established by the BSMI.
Since Taipower is now one of the competing suppliers in the renewable energy market, it will have to end the feed-in tariff agreements that it previously made with local operators of renewable generation systems. Taipower has stated that it adheres to two principles when terminating these contracts. The first principle is that Taipower will share the financial risk of contract termination with the system operator. The second principle, which has been especially emphasized, is that Taipower will make sure that scrapping these contracts will not affect electricity bills of consumers at large. So far, the utility has terminated agreements with five system operators and will proceed to phase out its feed-in tariff program while seeking wheeling arrangements with prospective customers.
(News source: TechNews. Photo credit: Gerry Machen via Flickr, CC BY-ND 2.0.)
