Taiwan needs an efficient energy market if it is to reach net zero emissions by 2050, Taiwan Power Co (Taipower, 台電) chairman Tseng Wen-sheng (曾文生) said at a climate change summit on Wednesday.
The development of renewable energy requires new technologies and investment, “decisions about which are multifaceted,” Tseng said, adding that the government has many factors to consider, which can make decision-making slow and inefficient.
If renewable energy-related industries can develop according to market logic, decisions can be made more efficiently, “but it all comes down to [renewable energy] being able to be traded on an [efficient] energy market,” he said.
Photo: CNA
The Electricity Act (電業法) was amended in 2017, as a first step to liberalize the green energy market, allowing power generated by renewable energy facilities to be sold directly to consumers.
Major Taiwanese enterprises in need of large amounts of green electricity, such as members of RE100 — a global initiative calling for businesses to commit to 100 percent renewable electricity — have mostly opted to enter into corporate power purchase agreements (CPPA) that last up to 20 years with renewable energy generators such as offshore wind developers.
Renewable energy generators nevertheless have concerns about weaker buyers’ ability to stick to long-term contractual obligations and are thus less willing to sign CPPAs with them, a concern that has spurred the Ministry of Economic Affairs to introduce a government-backed renewable power credit guarantee scheme.
The scheme is to help mitigate the default risk of corporate consumers that would discourage renewable energy developers from signing agreements with them.
Twenty-year “one company, one generator” agreements can be “painful for any purchasing manager,” as it is possible green power would get cheaper in the future and there is no way to trade purchased green power in those 20 years, Tseng said.
He said an “intermediary mechanism” should be established to “equalize the risk of uncertainties” the company could experience in the years covered by the agreement.
The intermediate mechanism requires collaboration between two sides, Tseng said.
“One is on the supply side, such as the financial institutions, who can help re-mix different batches of energy products into a product that has a relatively stable price,” he said.
“The other is the demand side,” Tseng said. “As buyers might need different amounts of green electricity in different years, efficiency can only be achieved if they can transfer their purchased power to others freely.”
Only with such an energy market can a balance between supply and demand be achieved, Tseng said.
Tseng said he expects Taipower, as a renewable energy generator, to first work with major state-owned enterprises to stimulate the further development of the green energy market.
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