Taiwan Today

Taiwan is embarking on an expansive solar energy development program.

Concordia Middle School, a five-decade-old institution in southern Taiwan’s Chiayi County, has embraced modern green energy solutions. Last year, it won a Top Solar System Award from the Bureau of Energy (BOE) under the Ministry of Economic Affairs for a rooftop array it installed in 2014. The school received the honor in the small setups category, which recognizes solar systems with a capacity of less than 30 kilowatts.

“Our senior management is serious about environmental issues and as we’re a private institution, it’s especially important that we make smart financial decisions. That’s why we looked to solar energy,” said Calvin Lin (林益豐), the school official responsible for overseeing the system.

Concordia spent the considerable sum of NT$2.5 million (US$78,615) on the setup, he noted, but in time expects to earn a profit on this investment by selling the electricity it generates to Taiwan Power Co. (Taipower). Under the 2009 Renewable Energy Development Act, the state-owned utility is required to offer green energy suppliers a feed-in tariff (FIT), a premium fixed rate for their electricity, for a period of 20 years.

“We estimate that we’ll break even by 2023,” Lin said. “After that, the system can serve as a revenue source for the school.”

Premium Rates

FITs have spurred significant growth in solar energy production since their introduction in 2010. By the end of last year, the nation’s total installed solar power capacity had reached more than 1 gigawatt, up from 9.5 megawatts at the turn of the decade. Despite this progress, however, solar still accounts for just 0.42 percent of all power generated in the country.

As the world’s second largest producer of solar cells, Taiwan possesses the industrial prowess to rapidly raise this proportion. The administration of President Tsai Ing-wen (蔡英文) has unveiled bold plans to green the country’s energy mix, aiming to generate 20 percent of all electricity from renewable sources by 2025. Solar is expected to provide the majority of the clean power, with the BOE seeking to increase the nation’s total installed solar capacity to 20 GW within this time frame.

To reach its target, the government intends to foster greater levels of private sector investment. As of the beginning of this year, Taipower offers six FITs for solar systems depending on their size and location. Four of these apply to rooftop photovoltaic (PV) arrays, with smaller setups attracting higher tariffs. There is also a separate flat rate for ground-mounted systems.

In addition, the government introduced a new FIT in 2017 for floating solar systems, which were previously awarded the same rate as land-based setups. The tariff for floating systems is about 8.3 percent higher than that for ground-mounted arrays.

While the FITs are declining on average year on year, solar power is becoming increasingly attractive to investors owing to technological advances and falling startup costs. According to Chiang Hao-hsien (姜暭先‬), secretary-general of the Taiwan Photovoltaic Industry Association, today solar cells can typically convert about 20 percent of absorbed sunlight into power, up from 12 percent in 2004. “The growing demand for solar panels worldwide is also driving down the costs of manufacturing and installing the devices,” he added.

As costs fall and efficiency increases, the amount of land or rooftop space required to launch a profitable venture is continuously dropping, an encouraging trend for potential investors in densely populated Taiwan.

Proven Potential

Solar projects have already proven effective in delivering substantial economic and environmental benefits, as exemplified by the achievements of LCY Group. The Taipei City-based chemical producer was among the first private enterprises to construct solar farms after the introduction of the FITs in 2010, establishing several facilities in Jiadong and Linbian townships of southern Taiwan’s Pingtung County on land rendered infertile by a tropical storm.

In August 2009, Typhoon Morakot brought record-breaking levels of rain to central and southern Taiwan, swamping large tracts of farmland in the Pingtung townships with seawater. In an effort to assist those affected, the local government proposed converting most of the impacted sites into solar farms, with LCY winning the bid to install the systems. In exchange for participating in the program, farm owners receive a portion of the revenues generated by the arrays.

Spurred by the success of these ventures, LCY has helped pioneer floating PV systems in the domestic market. A multiple Top Solar System Award winner, the company co-developed Taiwan’s first floating solar farm with Sun Rise E&T Corp., a Pingtung-based environmental technology solutions provider, on a detention pond in Jiadong. This system has inspired a number of similar projects around the country since commencing operations in February 2016.

“Floating PV systems can help alleviate the competition for land resources between solar farm developers and the agricultural sector,” said Lee Kuo-shou (李國壽), director of LCY’s Solar Power Business Unit.

Near-Term Goals

Seeking to build on the sector’s recent momentum, in 2016 the BOE launched the two-year PV Promotion Project. The objective is to add 1.52 GW of new solar capacity nationwide by June 2018, bringing the overall total to 2.46 GW.

To achieve this target, the bureau plans to step up its efforts to identify suitable sites for solar power facilities. It projects that 910 MW of the additional capacity will come from new rooftop panels on agricultural facilities, factories, schools and state-owned buildings, while the remainder will be generated by ground-mounted systems at sites such as landfills and disused salt farms as well as subsidence areas in southern Taiwan.

The BOE is also seeking to encourage the adoption of high-efficiency PV systems. This year, it began offering a 6 percent bonus on FITs for such setups. “Taiwan is already very competitive in the production of high-efficiency solar cells and this policy will further boost sales of these devices,” said Su Jin-sheng (蘇金勝), director of the BOE’s Energy Technology Division.

In addition, the bureau is working to tackle the comparative lack of solar facilities in the heavily populated north of the country. At present, most of Taiwan’s solar farms are located in the sun-drenched central and southern regions. To help address this imbalance, this year the bureau raised a bonus on FITs for PV systems in the northern and eastern regions to 15 percent, up from 12.5 percent in 2016.

Suitable Locations

According to Su, rooftop PV systems currently account for more than 90 percent of Taiwan’s installed solar capacity, so the bureau is expediting measures to identify and reclassify suitable areas for ground-mounted and floating arrays. These efforts will prove crucial to the success of the nation’s renewable energy program since the amount of space required to meet the government’s long-term objective is considerable.

Of the targeted 20 GW of installed solar capacity, the BOE expects 3 GW will come from rooftop panels and a further 17 GW from land and floating systems. To realize the latter goal, the bureau estimates that it needs to identify a total of 25,500 hectares of suitable land and still bodies of water. “The 2025 target can be achieved providing the fundamental issues of land acquisition and financing can be resolved,” the director said.

Besides pinpointing suitable locations, the bureau is seeking to inform banks about the potential profitability of solar projects. “The BOE has been communicating with financial institutions to help them understand that the investment risks are lower than they may assume, particularly as the sector enjoys strong backing from the government,” Su said.

As part of its promotional efforts, the BOE has begun recognizing banks that provide funding for solar projects, adding a new category for financial institutions to its Top Solar System Award last year. Cathay United Bank and Bank SinoPac, noted as early backers of solar initiatives, were selected as the inaugural winners of the prize.

The bureau’s efforts are starting to pay dividends. According to Su, 20 financial institutions in Taiwan now offer financing to solar energy projects, six of which provide loans without requiring collateral. “This is a new business opportunity for banks,” he said. “And it’s one that will only grow in the future.” 

Write to Oscar Chung at mhchung@mofa.gov.tw