Monday, September 02, 2013

Electricity price woes continue

In case you forgot what lovely blue skies looked like...

One of the many ways state subsidies shape Taiwan is the island's low prices for electricity, in the news at the end of August.... (China Post):
Economics Minister Chang Chia-juch yesterday said Taiwan has the highest average electricity consumption per person in Asia and electricity prices are among the cheapest in the world.

Household electricity prices are the second lowest in the world, while industrial electricity is the second cheapest in Asia and fourth in the world, Chang said.

Such a price structure is hindering the government's efforts to reduce energy consumption and carbon emissions, but at the same time encouraging waste, he said during a radio interview, as he defended the economics ministry's decision to raise electricity prices in October.
The Minister is half-right. The low price of electricity certainly encourages waste. It also helps make possible the incredibly stupid housing in Taiwan, the uninsulated concrete boxes that the construction industry puts up all over the island driven by subsidized concrete, subsidized labor, and land subsidy/quota systems that encourage overbuilding and illegal construction. The entire system is one vast Amazonian-style delta of short-sighted planning, short-term profit, and private plunder of the public treasury. Taipower's finances are both a casualty and a cause of the mess. The article notes that rising fuel costs are hurting the company:
A breakdown of the fuel cost shows that over the past 10 years, oil costs have soared 29 percent, coal 168 percent and natural gas 100 percent, Chang said.
The smart and obvious thing to do would be to vastly expand wind power and to solarize every roof like Germany, along with requiring that future construction be environmentally sound, and implementing conservation programs. But with the legislature being an appendage of the construction-industrial state, that is hardly likely. Moreover, there is another problem with solarizing/upgrading housing infrastructure. Consider this panorama of Puli city in Nantou I took this summer:

Recall that the height of buildings is determined not by the value of the land and the land-owner's desires, but rather, by bureaucratic fiat. This means that in Taiwan, houses are smaller than they would otherwise be, since the bureaucracy is tightly linked to the construction-industrial state. The land thus has, essentially, a quota on the number of floors that can be built on it, and on the size of the building. Hence, the construction companies make profits larger than they otherwise would, even before consideration of all the corner cutting and misrepresenting ("but you told us there would be eight outlets in the living room").

Because of the buildings are too small, everyone has houses that are too small, and so building owners build them out (illegally expanded balconies) and up illegally. See all those metal roofs? They represent additional floors added by building owners. I would bet money that each and every one is illegal.* Now imagine if the government came through and tried to solarize this town. What would happen to all those rooftop apartments that are being rented out? What would happen to all those top floor altars? Top floor storage areas? Many of these top floors also have illegal electricity and water connections as well. Solarizing would mean formalizing all that informality and illegality, something many, many building owners would rather avoid. This is not a problem created by the selfishness or lawlessness of Taiwanese; Taiwanese are rational decision-makers, attempting to create desperately needed space denied them by a government policy that appears to exist solely to subsidize the concrete and construction industries. Such construction should really be seen as subversive, in its way...

If you want a view of how the opinion leaders think about this, check out this United Daily News editorial that the KMT news organ passed around. Clearly somebody must have thought it was good. To its credit, it kinda sorta realizes that Taipower is subsidizing industry, though it focuses on small businesses.....
Taipower finds itself trapped and immobilized. The Nuclear Power Plant No. 4 remains a hot potato. The liberalization of the energy industry and the promotion of green energy have fiascoes, like the proverbial blind men struggling to discern the shape of an elephant. Taiwan's political and business environment is deformed. Well-intentioned policies invariably attract unscrupulous politicians. State-owned enterprises have long transformed benefits into exclusive slush funds. As a result, Taipower losses have skyrocketed. Realistic constraints are vital. The cure must fit the disease. Rate hikes are better than nothing, but that is about all they are.
If you read it carefully, it focuses on the revenue issue. How high do rate hikes have to go? It rightly recognizes that rate hikes aren't the answer. But the piece is still shot through with developmentalist-state mentality: not a word about conservation. This means that readers don't read about conservation, and don't think about it as a valid form of public policy.

*reflect on this whenever you hear bureaucrats piously intoning how the government obeys the law. Indeed, whenever I hear officials say they are acting in accordance with the law, it is almost always the case that someone is getting the shaft.
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!


Mike Fagan said...

"The smart and obvious thing to do would be to vastly expand wind power and to solarize every roof..."

... and either burn wood (or bureaucrats) when the power goes out, or keep the coal-burning plants running a spinning reserve entirely at taxpayer's expense.

At least until relatively cheap ultra-capacitors come on the market, though we could be waiting a long time for that.

StefanMuc said...

Any price increase would help drive conservation, so that would be a step in the right direction regardless of other issues.

PV in Germany is largely private - the panels are typically owned by the same people whose houses they are on. The main thing the government does is mandate a minimum price at which electricity can be sold back to the power company.

I think the same principle could be made to work in Taiwan - politicians could officially keep looking the other way regarding where those panels are sited, just as they now do with the roof-top apartments.

The lynchpin is the electricity price - if it's not high enough, it can't be profitable to install solar panels, and it would be hard to offer subsidies through a guaranteed purchase price for generated electricity.

Steven Crook said...

Re "uninsulated concrete boxes"
Over the years I've interviewed several academics and architects involved in sustainable/green architecture and none of them has said Taiwan's buildings would benefit from insulation. Rather, they stress the need for better ventilation (solar chimneys being a good method) as the most energy-efficient way of reducing temperatures inside.

Anonymous said...

Read this piece. It says that by 2016 Taiwan might be unable to have enough fund for the budget. In fact, Ma Government is selling shares to raise fund for 2014 deficit, and still short of NT$2,099 billion.

So can Taiwan keep this kind of cheap electricity policy? Tax system? How long before Ma had to declare bankrupt?

Anonymous said...

I think the system in Taiwan works well. Electricity prices are fine...Finish the forth power plant and start on a fifth. Keep the price low to encourage business and create jobs. Coal is dirty and expensive. I think everyone should use less electricity so I can use a little more..