The Bureau of Energy on Friday unveiled its preliminary feed-in tariff (FIT) rates for renewable energy sources, including solar, wind, biomass, biodegradable waste, geothermal and hydropower, which are to take effect next year. The rates are fixed prices paid to firms or individuals that generate electricity from renewable sources during a certain period, and the government has used the FIT scheme since 2010 along with other incentives to encourage green energy development in Taiwan.
The agency has proposed rates of between NT$3.9408 and NT$5.7788 per kilowatt-hour (kWh) for electricity from solar power systems, which is down by between 0.34 percent and 2.44 percent from this year’s levels and much less than the more than 10 percent reduction this year. In contrast, the FIT rates for wind power projects next year are to be 7 to 8 percent lower than this year, when levels decreased 5 percent. Rates for electricity generated from biomass, biodegradable waste and small hydro projects would be hiked by 1 to 4 percent to promote green energy diversification, according to the agency.
It is scheduled to hold hearings in Taipei, Taichung and Tainan beginning this week to gauge public opinion about the preliminary rates before a final proposal by the end of this month, but the solar photovoltaic (PV) and wind power industries have already given mixed responses.
According to reports by the Chinese-language Liberty Times (the Taipei Times’ sister newspaper), PV companies welcome the proposal, but wind power developers said they could not accept the planned rates, as the cost of wind turbines has not fallen sharply in the past two years. Wind power developers have called on the agency to recalculate the rates in a more realistic manner.
The rates are reviewed by the energy bureau annually, which allows it to consider market trends and potential changes in energy developers’ capital expenditures and the price of electricity. The agency usually holds talks with trade associations in advance and conducts public hearings to fine-tune its proposals, with the hope of setting rates that are within acceptable ranges. However, the calculation formula is complex and takes time to complete, as it factors in installation costs, capital recovery rates, annual maintenance and operation expenses, annual sale of electricity and purchase periods.
It is reasonable to see different opinions from energy segments on the rates, as Taiwan’s calculation formula has not yet matured compared with systems in the US, Germany, Japan and Australia. Therefore, establishing the appropriate rates remains a major challenge to the optimization and effective implementation of the FIT scheme.
Still, important lessons could be learned in the process of setting tariffs every year amid patient negotiations between the public and private sectors.
However, the scheme should involve more citizens and small businesses in the generation of renewable energy. In the past two years, Taiwan has seen so-called “citizen-run power plants,” which are run by four cooperatives. These operations often use rooftop solar systems with PV capacity below 100kW and occupying less than about 300 ping (991.7m2), and they are the kind of power plants that need more incentives from the government and better returns on investment aided by appropriate rates to attract more people to participate in renewable energy generation.
The current environment still does not appreciate citizen participation and there is still room for the FIT policy to improve.
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