Taiwan’s green energy development entered a new phase this year, as local businesses and energy producers can now trade locally produced renewable energy, a major step toward liberalizing the local energy market. Businesses no longer have to rely entirely on state-owned monopoly Taiwan Power Co (Taipower) for green energy.
Until now, Taipower had been the sole buyer of electricity from renewable sources, mostly solar and wind power, by paying fixed rates or through feed-in tariffs. The utility has allocated part of its green energy capacity for free trading.
With the opening of the local energy market, manufacturers will likely rush to buy green energy not only to reduce their carbon emissions, but also to comply with the demands of customers such as Apple Inc and Google. The global tech giants have committed to becoming 100 percent carbon neutral across their entire businesses and manufacturing supply chains. Every Apple device sold would have a net zero climate impact by 2030, the company said last month.
Taiwan plays an important part in Apple’s supply chain and faces mounting pressure to meet the zero carbon emission requirement to stay on the iPhone maker’s supplier list.
Taiwan Semiconductor Manufacturing Co (TSMC), which counts Apple as its largest customer, last month signed a corporate power purchase agreement with Orsted Taiwan Ltd to purchase the entire output of Orsted’s 920 megawatt (MW) offshore wind farm, in the world’s biggest contract of its kind.
The 20-year fixed-price contract is to start once the wind farm begins commercial operations in 2025 and 2026, subject to grid availability and Orsted’s final investment decision.
TSMC is to pay a price above the feed-in tariffs that Orsted secured through the nation’s first offshore wind auction in June 2018, the Danish company said.
TSMC is not the only manufacturer that faces the challenge of boosting green energy usage. As the government pursues an energy transformation policy to increase the share of renewable power in the nation’s energy mix by 2025, local manufacturers have to abide by new electricity regulations that took effect earlier this year.
Heavy users that consume at least 5MW per year are required to install green energy generation equipment to supply 10 percent of their annual consumption within the next five years. They can offset that requirement by buying green energy certifications or purchasing green energy from power producers.
As Taiwan has about 500 heavy power users — including petrochemical companies, steel makers, semiconductor companies, flat-panel makers and electronics manufacturers — that must abide by the new rule, green energy demand is sure to soar.
However, supply apparently cannot keep up with the expected surge in demand. Local businesses need more than 3 billion kilowatt-hours of green energy this year, tripling from last year’s 1 billion, according to a calculation by the Ministry of Economic Affairs.
Renewable energy supply is to double to 5 billion kilowatt-hours this year from last year, still surpassing demand, the ministry said.
However, the forecast assumes that local manufacturers will get only 10 percent of the energy they need from renewable sources. The nation could face a green energy shortage if local businesses were to set a more ambitious green energy usage target, say 20 percent of their overall consumption. TSMC aims to reach its goal of supplying 25 percent of its total energy need from renewable sources by 2030.
To prevent such a problem, the government should boost green energy generation by offering more incentives and relaxing the rules. Meanwhile, Taipower should consider allocating a bigger share of the green energy it purchases for free trading.
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