Despite being the world's second-largest solar panel producer, Taiwan generates almost none of its own electricity from solar power, a microscopic 0.01%.
Its other domestic renewable energy sectors, from wind to geothermal, also have lagged behind their full potential, according to analysts and industry observers, despite passage in 2009 of the Renewable Energy Development Act.
Prospects for change in the renewables industry are unlikely, even with the presidential and legislative elections just around the corner in January, analysts said, as an entrenched monopolistic state-owned electric utility, a manufacturing sector that relies on affordable energy and government policies that keep electricity prices low will continue to pose roadblocks to domestic renewable-energy development, no matter who wins.
In the presidential contest, incumbent President Ma Ying-Jeou of the Kuomingtang party faces a strong challenge from Democratic Progressive Party challenger Tsai Ing-Wen, with most polls indicating a tight race. "I don't think there will be much change in Taiwan's clean energy policy, even if there is a change in government," said Gloria Hsu, former chairwoman of the Taiwan Environmental Protection Union and a professor in National Taiwan University's Department of Atmospheric Sciences. "Ms. Tsai's energy policy definitely looks better than President Ma's for promoting green energy. However, she also lacks details, such as goals, schedules or possible measures."
Tsai, a former vice premier, has called for Taiwan to phase out its nuclear reactors by 2025 in the wake of Japan's Fukushima disaster, but so far has not outlined concretely how the country would make up for the loss of power, as nuclear energy accounts for 17% of Taiwan's electricity generation.
Ma, though he has given some support behind renewables, has maintained that nuclear power is vital to the Taiwan's energy mix, given the island's lack of fossil fuels and the still-developing wind, solar and geothermal industries. Taiwan currently has three nuclear power plants with a fourth under construction.
Tseng Weiwei, senior project manager of Taiwan Generations Corp, an offshore wind developer, said neither candidate has convincingly made the case that their administrations would do much to boost investments in domestic renewable-energy projects.
"No matter if it's the aggressive plan proposed by Ms. Tsai to phase out Taiwan's nuclear power plants, or it's the incremental change of energy portfolio proposed by the incumbent Mr. Ma to shift the focus from nuclear power plants to [liquefied natural gas] plants and renewable energies, none of the candidates has rolled out their implementation plans and pinned down the goal to be achieved," he said. "The real question is, how determined are the candidates to enforce and execute his or her energy policy?"
Taiwan currently imports more than 99% of its energy, costing the island of 23 million people 11.7% of its GDP, according to figures from Taiwan's Bureau of Energy. Oil accounts for 49% of energy consumption, followed by coal with 32.1%, natural gas with 10.2% and nuclear with 8.3%. Renewable energy accounts for a miniscule 0.4% of energy consumption.
In terms of power production, renewable energy generated just 4.7% of Taiwan's electricity in 2010, with hydroelectricity, wind, solar, biomass and waste combustion totaling about 5.8 GW in installed capacity.
The 2009 Renewable Energy Development Act aimed to raise renewables' share of the energy mix in order to bolster the island's energy security and protect it from price shocks precipitated by global dynamics. It set a goal of adding 6.5-10 GW of renewable energy generation by 2030 and provided 30 Billion NT$ (about US$1.03 billion) for construction projects and subsidies.
But its six-year stall in the Legislative Yuan before its passage in 2009 foreshadowed the political and administrative difficulties in getting the act fully implemented over the past two years. Political wrangling has kept feed-in tariffs for wind and solar too low to encourage much investment, and bureaucratic delays in project approvals and burdensome permitting processes have also stifled development, industry observers said.
As a result, Taiwan added just 82 MW of new wind capacity and 8 MW of new solar installations in 2010, according to figures from the Bureau of Energy. "Taiwan's solar installations increased 22% [year-over-year] 2009 and 105% YoY in 2010, which is similar to global growth," said Li Min, an analyst with Taiwanese brokerage Yuanta Financial Holdings. "As such, the act did not help much, in our view, based on installation numbers."
Much of the blame for the slow growth in renewables has been placed on Taipower, the state-owned electric utility, which has largely operated as a monopoly despite laws that allow independent power producers to generate up to 20% of Taiwan's electricity.
With most of its portfolio dominated by coal-fired and nuclear power plants, Taipower has been slow to embrace renewable energy, observers said. Further, government policies have kept electricity prices low in order to boost Taiwan's export-driven manufacturing sector, making it difficult for renewable energy to reach grid parity.
"We're glad to see the passage of the [Renewable Energy Development] Act, but we believe the government can improve its performance by taking more actions," Tseng said. "None of the targets [on installed renewable capacity] set in 2010 were achieved, and there's been no target announced for 2011 or even longer term. The absence of a national goal slows the development of renewable projects."
Political observers said Ma's ruling KMT party has been reluctant to challenge Taipower's virtual monopoly status. The KMT, which fled to the island in 1949 during the civil war with the Chinese Communist Party, ruled Taiwan as a one-party state until allowing free elections in 1996.
Caitlin Pollock, head of Asia wind energy market research for US-based consulting firm IHS-EER, said if Ma is re-elected, the government would be expected to continue "largely status quo policies toward renewable energy." Pollock noted his lukewarm support for renewable energy to date, "his somewhat non-committal stance on phasing out nuclear, and his default endorsement of existing energy sector dynamics."
If Tsai wins the election, Taiwan might develop a more conducive environment for renewable energy investment, given her stated plan to liberalize Taiwan's electricity market, Pollock added. "On a basic level, she promises an alternative to status quo policy conditions," she said. "Despite her lack of a delineated roadmap to achieving most of these goals, her level of reform ambition presents a striking contrast to that of Ma."
But Liao Hui-chu, an economics professor at Tamkang University who studies energy issues, said Tsai's lofty aims could be tempered by the reality of Taiwan's energy-intensive manufacturing sector. He said the island is unlikely to completely shed its reliance on nuclear power and coal, given its baseload needs, though he characterized both Tsai and Ma as supporters of renewable energy.
"No matter how hard it develops renewable energy, Taiwan will still need nuclear power in this decade," Liao said. "While Tsai insists on the phasing out of Taiwan's nuclear industry due to the principles of her party, my observation is that she will yield to the energy reality in Taiwan, since Taiwan's economic development heavily relies on energy use."
Strong PV export sector
Despite the lackluster growth in domestic renewable energy development, Taiwan's export sector remains robust. It is particularly strong in solar manufacturing, maintaining its status as the No. 2 solar cell producer in the world behind China and supplying about 15% of the global market. The total output of Taiwan's photovoltaic industry, currently US$3.2 billion, is expected to reach nearly US$10 billion by 2013, according to the Photonics Industry and Technology Development Association.
Sabrina Kor, a trade consultant with the government- affiliated Taiwan Trade Center in San Francisco, California, said Ma, if re-elected, would continue Taiwan's export-friendly policies to benefit renewable energy manufacturers. She pointed to the recently signed Economic Cooperation Framework Agreement between Taiwan and China that she said would enable Taiwan to become more attractive for China's photovoltaic manufacturers looking to build facilities on the island.
Domestically, Kor touted the 2009 Renewable Energy Development Act and also highlighted the Ma administration's emphasis on clean-energy projects, including an 8-MW offshore wind demonstration project off the Penghu Islands, as well as development of smart grid technologies and an initiative to integrate business companies in the PV industry to promote more R&D. "President Ma hopes to make Taiwan become the most important green-energy exporting country in the world," Kor said. "In the meantime, Taiwan is gradually increasing domestic markets for renewable energy to build a green society in Taiwan, hoping to reduce the reliance on nuclear energy in the long run."
But Lee Yujung, an associate policy researcher for Tsai's Democratic Progressive Party, said the Ma administration has failed to do enough to promote domestic renewable energy.
Under Tsai's plan to phase out Taiwan's nuclear industry by 2025, Lee said Taiwan would implement energy efficiency measures and increase renewable energy power generation by 1% annually to offset the loss in nuclear generation. More robust subsidies and incentives for renewable energy would be established to spur development, along with energy taxes on fossil fuels, Lee added
"Even though Taiwan is a relatively small market, it can well support manufacturers and energy service providers for their innovation in technology and business models. Therefore, government has to create an environment for the infrastructure to happen for the development of the renewable energy industry," Lee said.
Whatever Ma's and Tsai's policy differences on energy, political observers said the January election is unlikely to hinge on energy policy. Most voters will be more concerned with the candidates' stances on engagement with China -- always the elephant in the room with Taiwan, as well as economic development, experts said.
"It's hard to judge how the candidates' renewable energy policies will affect the election, since most people will likely be swayed more by macro political and economic issues," Yuanta's Li said. Hsu added: "I don't see renewable energy being mentioned in either the presidential election or legislative races."
- The awesome Marcus Clinch reviews and summarizes the Casino situation in Taiwan at the moment.
- US mulling new arms sales. One observer noted the other day that Taiwan may have gotten more advanced weapons as a result of Chinese opposition.
- Lee Teng-hui trial begins Oct 21. What a travesty!
- Aborigines declare a headhunt against the ROC 100 anniversary. Way cool.
- Taipei rejects weird charges it paid $20 million to overthrow the government of Cambodia.
[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.