The development of renewable energy projects in Taiwan is being hindered by the nation's electricity prices, which are among the lowest in the world, environmental experts say.
Although the legislature passed the Renewable Energy Act (再生能源發展條例) last June to encourage the private sector to play a larger part in generating clean energy, weak electricity procurement rates have deterred investors from initiating large projects.
Analysts say the low price that state-run Taiwan Power Co (Taipower) pays for renewable energy makes it difficult if not impossible to make new wind and solar farms profitable.
"Many parts of Taiwan hold large potential for solar power and other renewable energy," said Wang To-far (王塗發), a former legislator who now teaches economics at National Taipei University. "It's essential that we raise prices to support [this] industry."
A lack of government support means Taiwan's renewable energy sector lags far behind those in other industrialized countries, he said.
Data from Taipower shows that it pays an average of NT$2.38 per kilowatt hour (kWh) for wind-〝generated electricity, far below the NT$3.23 that wind energy operators say they need to break even.
The rate is also below what other countries pay to purchase 〝wind-〝generated electricity. Germany pays an average of NT$4.1 per kWh, Spain NT$3.14 per kWh and Ontario, Canada, NT$4.04 per kWh.
Unhappy with the lack of government support for the industry, groups led by InfraVest Wind Power chairman Karl-Eugen Feifel protested outside the Executive Yuan last month. During the protest, Feifel said he was disappointed because the government's energy policy showed that the country "had said 'No' to renewable energy."
Speaking to a group of legislators in Taipei last Saturday, Volker Oschmann, acting head of the German government's International Energy Division, said that Taiwan's electricity procurement rates were "not enough."
"There seems to be quite a big difference between Taiwan and the rest of the world," Oschmann said. "From the figures, it doesn't seem that Taiwan is paying enough."
He said that legislators should focus on the sector because renewable energy quickly recouped costs via "reductions in energy reliance, imports and because it holds the potential to create thousands of jobs."
Judging from Germany's experience, he said that costs for wind and solar energy generation would also fall over time because of larger production scales.
The Environmental 〝Protection Administration (EPA), under pressure from President Ma Ying-jeou (馬英九) to fulfill a pledge to reduce 2020 emissions to 2005 levels, has been studying solutions to the problem for a number of months. EPA Minister Stephen Shen (沈世宏) has said on numerous occasions that he is an admirer of Germany's goal of having renewable energy contribute 80 percent of total production by 2050.
However, many EPA officials privately reveal that because of differences between government jurisdictions, the agency is unable to initiate the sweeping changes needed to follow the "German experience."
In the case of power prices, household electricity rates and electricity procurement rates are set by Taipower, which is under the Ministry of Economic Affairs, not the EPA.
Responding to questions raised by legislators over the low rates at a recent legislative meeting, Vice Minister of Economic Affairs Hwang Jung-chiou (黃重球) said that the ministry had faced mounting political pressure and resistance to higher electricity prices.
"Electricity prices are a political issue and many people simply cannot accept any increases in price," Hwang said. "There are many different opinions about economics and the environment."
He said that because of these factors, government ministries faced many problems in raising prices and were limited in the measures they could take without provoking public ire.
However, there are signs that this could be changing. A poll last year conducted by Shih Hsin University showed that 89 percent of respondents said they supported the development of renewable energy sources despite higher costs. Eighty percent agreed that electricity prices should increase based on usage and that heavy electricity users should pay more per kWh. This signals that many people could be persuaded to accept an increase in price from the current NT$2.6 per kWh, one of the lowest among industrialized nations.
If the government can pass these hurdles, Taiwan's high-tech based economy gives it distinct advantages in the renewable energy sector, lawmakers said.
Some of the world's largest solar cell makers are located in Taiwan. Former premier Liu Chao-shiuan (劉兆玄) previously said that production in Taiwan's solar industry could reach NT$500 billion (US$15.6 billion) by 2012.
"Taiwan has the necessary technology and manufacturing capabilities, there has just been a lack of political [will]," Chinese Nationalist Party (KMT) Legislator Cheng Li-wun (鄭麗文) said.
She said the government's inaction had to be resolved.
"After all, [renewable energy] is a road that has to be walked, sooner or later," Cheng said.
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