TAIPEI (Taiwan News) — Taiwan must face the stark fact that its energy ambitions for 2025 are simply not obtainable.
Taiwan's plans to generate 20% of its energy from renewable energy by 2025, up from 5% in 2020, are slipping. Except for the decommissioning of nuclear energy, all of the 2025 goals have been delayed. Some commentators believe that the 2025 goals are more likely to be met by 2027, but this will require resilient action from the government, Taiwan’s financial institutions, and the renewable energy industry.
With wind turbines very visible, it is too easy to believe that Taiwan’s energy market is limited purely to wind and particularly offshore wind. However, Taiwan already has at its disposal thermal, nuclear, pumped storage, and renewables such as solar, hydropower, offshore wind, onshore wind, waste-to-energy, biomass, and geothermal energy sources.
With all these sources available, it is intriguing why Taiwan cannot reach its 2025 target. It is possible to believe some of the issues relate to the rates of decommissioning, particularly nuclear power, but the answer is not that simple. It should also be understood that even though nuclear plants are being decommissioned, that does not mean they are gone. It is possible to recommission these plants and this may indeed be necessary in the future, even if it remains a controversial topic for many Taiwanese.
Examining some of the current sources of energy may help us understand the issues that are limiting either their current use or future capacities.
The solar market remains the most mature market in terms of new installations. The FiT, or feed-in tariff, a policy mechanism designed to accelerate investment in renewable energy, remains attractive in Taiwan’s market, but new projects face high development and lease costs, in terms of available sites. Taipower, the state-owned electric power industry providing electricity to Taiwan, seems to be moving at a snail’s pace in approved projects versus applications, limiting the future growth of solar, even with the recent announcement that all new buildings will be required to install solar panels.
Taipower’s existing infrastructure is also a cause of common concern. Taiwan is likely to experience more blackouts, not less. Action is required now, not in 2025 or 2027.
In terms of offshore wind, Taiwan remains the most active market outside of the Asia Pacific region in terms of viable projects. Whilst there have been successes and completed projects, there are also signs of increasing turbulence, with several well-known international firms either declining to enter into further rounds of bidding or announcing their withdrawal from Taiwan’s market. Even firms that have successfully completed installation projects are looking to either sell their entire stake in the project or, at the very least, reduce the percentage of their investment.
While it is possible to blame COVID for some issues, the same could be applied across all industries. Some of the issues that impact offshore wind lie with government and bureaucratic policies. The local content requirement varies depending on the project start date, with 20% for projects beginning by the end of 2024 and increasing to 35%, 45%, and 55% for projects starting by the end of 2025, 2026, and 2027, respectively. This results in developers competing for already scarce resources and quite alarmingly puts Taiwan at real risk of violating the World Trade Organization's (WTO) national treatment principle.
The national treatment principle requires treating foreigners and locals equally. Imported and locally-produced goods should be treated equally, at least after the foreign goods have entered the market. As a new member of the WTO, since 2022, a breach of the WTO’s principle would possibly tarnish Taiwan's international image.
The offshore wind also faces issues with Taiwan’s limited weather-related development season and there has been talk in the market of financing constraints. The financing to date has been typically provided by non-Taiwanese financiers. Taiwanese banks continue to be reluctant to step up, incredibly arguing that they are not able to assess the risks of such financing.
Offshore wind also faces the issues of small ports, and this results in the stacking of projects, first in-first out, with the unfortunate consequence of projects having to ‘sit and wait’ or, if possible, align with other projects.
That does not mean that the offshore wind market lacks players, but it reflects poorly on the government, which knows the issues but acts as if time is on its side. It is not and the government would do well to appreciate that markets such as Japan, South Korea, Vietnam, and Australia are all adopting aggressive offshore wind policies and will perhaps offer preferential options to international developers.
Both onshore wind and geothermal energy sources have real potential for Taiwan, but there is not a political framework to support both of these technologies.
Onshore wind has, according to some commentators, been ‘flatlining’ since 2013. There has been no significant addition to onshore wind since 2020. Taiwan’s west coast is particularly suited to onshore wind and onshore wind is particularly favorable for smaller developers, but with a refusal to open up possible sites for development, onshore wind faces no chance at present.
Geothermal faces similar problems with permit conflicts and yet, it is an extremely viable technology for Taiwan. Even with lowered government targets for 2025, it is another case of a missed opportunity due to government inaction and a confused bureaucratic environment.
It is time for the government to refresh its outlook, listen to and act expeditiously upon best practice advice, both domestic and international, get Taiwan’s financiers to ‘earn their keep,' and get Taiwan’s energy targets back on track.
