Taiwan, like many nations, faces a rough journey to reaching zero carbon emissions. In addition to disputes over expanding the country’s nuclear power capacity, the availability of electricity from renewable sources took center stage after Taiwan Semiconductor Manufacturing Co (TSMC) last week urged the government to step up efforts to encourage green energy production. A lack of renewable power would harm local businesses’ global competitiveness, the chipmaker said.
Local companies, mostly in the manufacturing sector, have been calling on the government to increase the supply of cost-effective green energy to help them address mounting pressure from environmentally conscious customers and clients to reduce greenhouse gas emissions in their supply chains.
Some have even urged the government to restart an old nuclear power reactor to mitigate clean power supply constraints.
The Ministry of Economic Affairs disagreed, saying that the supply of green energy has soared 80 percent from 12.7 terawatt-hours (tWh) in 2016 to 23.8 tWh last year. To encourage the utilization of green energy, the government liberalized the renewable power market in 2020, allowing businesses to trade green power freely. Last year, about 120 companies purchased 2.55 tWh of renewable energy through a platform created by the ministry, which allows businesses to negotiate directly with energy developers, it said.
However, a large portion of last year’s renewable energy generation went unsold, prompting state-run Taiwan Power Co (Taipower) to purchase the unsold power through feed-in tariffs. However, the utility could release some of the power if those renewable energy developers reach new deals with buyers.
The ministry made the remarks is response to TSMC’s statement that Taipower only released 10 percent of the total green power for private subscription and the ministry attributed the higher costs of renewable energy to lower utilization. Taipower offers solar power developers as much as NT$5.89 per kilowatt-hour (kWh) and NT$7.41 for land wind power developers, the latest feed-in tariff data showed. Offshore wind power developers can receive up to NT$4.51. The ministry tends to reduce the tariffs each year as improved technology reduces costs.
Green energy is more expensive than the rate of NT$4.68 per kWh that Taipower charges industrial users for high-voltage power during the summer, and NT$4.39 during the rest of the year. The ministry said it expects the prices of green energy to match those of fossil-fuel energy.
In the meantime, businesses should prepare to pay more, at least in the initial stage of the energy transition. Moving beyond fossil fuels comes at a cost. Green energy is pricier due to its higher generation costs. There are also deployment costs for the transmission grid. To reach remote areas, grid deployment costs would rise even further.
Higher costs are a challenge for local businesses and there is no easy fix. As using green energy to reduce carbon emissions is a trend, company executives have to factor the expense of renewable energy into their operating costs. At this stage, it is unlikely any company would be able to buy green energy for the same rate as “gray power.”
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