Nearly two years ago, farmer Xie Rong-hua (謝榮華) made one of the biggest investments of his life, spending well over NT$1 million (US$30,770) on the photovoltaic (PV) equipment that now sits atop the building in Tainan City’s Guiren District in southern Taiwan where he raises goats for milk and meat. The setup includes 81 modules, each of which is 193 centimeters long, 99 cm wide and capable of converting sunshine into 230 watts of clean electricity. But Xie admits he embraced solar energy for financial rather than environmental reasons. As soon as the PV array was complete, he signed a contract with Taiwan Power Co. (Taipower) that commits the state-owned utility to buying all the electricity produced on his farm at an attractive feed-in tariff (FIT) premium. FITs are designed to boost investment in renewable energy by offering guaranteed pricing and a reasonable rate of return.
The Renewable Energy Development Act, promulgated on July 8, 2009, requires Taipower to offer such incentives. In Taiwan, as in Germany and other countries, FITs have led to a surge of private-sector interest in renewables. “The accumulated installed capacity of PV systems was 9.5 mW at the end of 2009, and 728.5 mW by October 2015. Solar is thus the fastest-growing source of energy in Taiwan. Our promotion of PV systems is bearing fruit,” says Linda L.H. Chen (陳玲慧), deputy director and spokeswoman of the Bureau of Energy (BOE) under the Ministry of Economic Affairs (MOEA). According to the bureau, all but 2.3 percent of Taiwan’s PV systems benefit from some kind of subsidy.
Taiwan has abundant sunshine and is a leading manufacturer of PV equipment, but prior to the Renewable Energy Development Act, few PV systems were generating electricity in the country. Between 2007 and 2011, Taiwan rose from the world’s fifth to second-largest producer of panels that convert sunshine into power. Since then, the country has trailed only mainland China. Taiwanese companies make both mono- and polycrystalline silicon material—substances used in the manufacture of PV cells and electronics—as well as the cells themselves, modules and solar trackers, which rotate and tilt PV arrays to maximize their efficiency.
The accumulated installed capacity of photovoltaic systems in Taiwan experienced a 75-fold increase from 2009 to 2015. (Photo courtesy of AU Optronics Corp.)
Data compiled by GeoModel Solar, a Slovakia-based company that offers data, software and consultancy services for solar-energy forecasting and planning throughout the world, illustrates Taiwan’s suitability for solar electricity generation. The western plain between the Dajia River near central Taiwan’s Taichung City and Kenting National Park in the far south is the country’s “sunbelt.” Much of this area receives more than 1,700 kilowatt hours per square meter of irradiation in an average year. The only landmass within 1,500 kilometers that receives more is the Philippine island of Luzon.
Allen Cheng (鄭喬倫) is trying to bolster the popularity of PV technology in this region. “About half the people I meet who want to add solar cells to their buildings are interested in the money they can make. The other half do it to help the environment,” says Cheng, a supervisor at the Tainan branch of KY Solar Co.
KY Solar, which is based in northern Taiwan’s Hsinchu County and specializes in installing small-scale PV arrays, has six sales offices around the island. The Tainan branch was established in October 2014, and its sales team signed 18 contracts with property owners in its first 13 months. One was for a 320 kW array on top of a yet-to-be-completed factory in Kaohsiung City’s Luzhu District in southern Taiwan. Most projects are much smaller, however. A typical setup consists of 32 modules producing up to 8 kW, Cheng says.
Since 2012, as part of its “Million Rooftop PVs” project, the BOE has been promoting solar energy through consultancy services, seminars, digital media coverage, exhibitions, websites, technological conferences and lectures. Yet Cheng feels the bureau’s efforts are insufficient. “Some people don’t know the government is pushing solar energy. We really hope they can promote this policy on TV,” he says.
Like some of its competitors, KY Solar offers two financing options. The first requires no capital investment on the part of the property owner. KY Solar pays all equipment and installation costs, and handles all the paperwork. In return, the building’s owner receives a fixed share—typically between 6 and 8 percent—of the revenue generated by selling electricity to Taipower for a period of 20 years, which is the standard duration for a contract between the energy firm and private suppliers. According to Cheng, an 8 kW array is likely to bring the owner of the roof space around NT$4,200 (US$130) per year. KY Solar retains ownership of the array for the 20 years of the contract and beyond. The contracts also bind future owners of the property. For KY Solar, the break-even point is between seven and nine years into the deal.
The second option is outright purchase. For around NT$600,000 (US$18,460), KY Solar will install and connect to the grid an 8 kW system. Once it is up and running, the owner keeps every dollar paid out by Taipower. Some KY Solar customers have been able to get a bank loan for up to 80 percent of the cost, Cheng adds. If clients ask what happens when the original 20-year deal expires, he tells them the utility may well seek a second contract, because no one expects demand for clean energy to fall in the long term. Alternatively, the owners can use the electricity themselves.
Because installation costs are steadily declining, the BOE has cut the FITs offered to new suppliers of solar energy each year since 2010. “The drop is why there’s always a big rush to finish projects before the end of the year, before the tariff falls again,” Cheng says. FITs for rooftop PV systems completed this year range from NT$4.6679 to NT$6.4813 (US$0.14 to US$0.20) per kWh, with smaller systems attracting more generous subsidies. “If the tariff for ordinary homes goes below NT$6 [US$0.18] per kWh, it’ll be hard to find new customers,” he predicts.
Despite the dual advantages of favorable weather and domestic solar cell production, PV is still one of the most expensive power-generation technologies in Taiwan. In some U.S. cities, solar energy has already achieved grid parity, meaning the unsubsidized cost of power from sunshine is no higher than the retail price of electricity. Taiwan, where households were charged an average of NT$2.91 (US$0.09) per kWh in 2015, is some distance from any such tipping point.
The installation costs for PV systems have been steadily declining in recent years. (Photo courtesy of AU Optronics Corp.)
“Over the past 10 years, the market price for a rooftop PV system has declined from around NT$300,000 [US$9,230] per kW to NT$60,000-70,000 [US$1,845-2,155]. Because PV systems are getting cheaper, we expect grid parity for large-scale PV arrays in Taiwan by 2020, but this depends on future fossil fuel prices,” says the BOE’s Chen. “Despite the cost, the MOEA is striving to harness renewable energy, to increase our indigenous energy capabilities, diversify our energy sources, reduce carbon dioxide emissions, improve the environment and facilitate the growth of the domestic renewable energy industry,” she adds.
In September 2015, the BOE lifted its target for countrywide PV capacity from 6,200 mW by 2030 to 8,700 mW. However, this target may be raised even further in the future since the Executive Yuan has approved the construction of solar power plants on 2,519 hectares of land in the sun-drenched counties of Changhua, Yunlin and Chiayi. About half of the land is no longer suitable for farming due to land subsidence. Other plots are adjacent to the nation’s high-speed railway line. If fully exploited, these “agricultural PV zones” should add well over 1,000 mW to Taiwan’s solar capacity.
In a November 2015 op-ed for the Chinese-language newspaper Economic Daily News, Taiwan Institute for Sustainable Energy Chairman Eugene Chien (簡又新) argued that accelerating the development of renewable energy would stimulate the economy and create jobs. Noting Taiwan’s excellent wind and sun resources, Chien, a former foreign minister, described the government’s 2030 target as a “trillion New Taiwan dollar [US$30.8 billion] business opportunity.” But he added, “Of course, behind these huge opportunities, there are issues that must be addressed, such as reforming the tariff structure, raising the vast sums needed for investment, and the need to cultivate industries that can solve the problem of intermittency [the inability to collect energy due to resource unavailability, such as when solar panels sit idle at night].”
Among the major companies eying these opportunities is AU Optronics Corp. (AUO). Like several other Taiwanese firms active in the solar energy sector, much of AUO’s experience was gained overseas. “We’ve successfully cooperated with numerous partners to build solar power plants in Europe, the U.S., Asia and Africa. Now, we’re applying this experience to our business in Taiwan, where we fully support the government’s policy to help Taiwan gradually achieve energy self-sufficiency and sustainability,” says James C.P. Chen (陳建斌), general manager of AUO’s Solar Business Group.
In Taichung City’s Xitun and Houli districts, AUO has used its own rooftops to set up the Sungen Solar Power Plant, which has 72,124 modules spread over 184,618 m2. With the completion of its fourth and final phase at the end of 2015, the plant’s capacity reached 21 mW. This is roughly equivalent to the output of 10 wind turbines, and more than the total capacity of all 16 solar power stations directly operated by Taipower.
In April 2014, AUO helped establish Star River Energy Corp., an investment platform for solar power plants. “We hope it’ll bring stable and long-term returns for those keen to invest in renewable energy,” Chen says. “It’s also hoped this investment platform will bring AUO green business opportunities and contribute to Taiwan’s green energy development.”
Many houses built in Taiwan since the 1960s have flat roofs suitable for PV arrays, and the sun is sure to keep shining. Technological breakthroughs could make other electricity-generating options more attractive, but until that happens Taiwan’s solar energy boom looks set to continue. Within a generation, rooftop PV systems may well be as common a feature of local homes as air-conditioning units.
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Steven Crook is the author of Taiwan: The Bradt Travel Guide.
Copyright © 2016 by Steven Crook