Market framework

Definition of ‘renewable energy’

Is there any legal definition of what constitutes ‘renewable energy’ or ‘clean power’ (or their equivalents) in your jurisdiction?

The definition of ‘renewable energy’ is stipulated in the Renewable Energy Development Act as the direct use or processing of energy such as solar energy, biomass, geothermal energy, ocean energy, wind power, non-pumped storage hydroelectricity, energy from domestic general waste and general industrial waste or other sources of energy that is determined by the central authority to be sustainable. Biomass energy refers to energy generated by the direct use or processing of agricultural and forestry plants, biogas and domestic organic waste, while geothermal energy refers to energy derived from the soil, rocks, steam or hot springs that are contained below the surface.

Framework

What is the legal and regulatory framework applicable to developing, financing, operating and selling power and ‘environmental attributes’ from renewable energy projects?

In Taiwan, the legal basis for the development of and environmental attributes from renewable energy projects is primarily found in the Electricity Act, the Renewable Energy Development Act and the Implementation Regulation Governing Voluntary Renewable Energy Certificates, along with other related rules and regulations.

To promote the development of renewable energy, the Renewable Energy Development Act and related regulations all encourage the establishment of enterprises engaging in renewable energy-based power generation and sales enterprises through a variety of incentives. After the amendment of the Electricity Act in 2017, renewable energy power may be directly sold to end users, detailed rules of which are regulated by the new Regulations on Renewable Energy-Based Power Generation Enterprises Applying for Direct Supply, covering matters such as qualifications and principles of review. For power to be wheeled out through TPC’s grid, the Regulations for Favourable Power Dispatching and Wheeling Expenses cover how wheeling fees are to be calculated.

In addition, TPC, as the sole entity authorised to operate the electricity grid, is obliged to apply feed-in tariffs to all electricity generated from eligible renewable energy-based generator facilities. See question 6 for more details.

For environmental attributes, the National Renewable Energy Certification Centre was established in 2017 to formulate and implement regulations in relation to the Taiwan Renewable Energy Certificate (T-REC) mechanism, verification standards and tracking system. After the renewable energy generation equipment and production amount have been verified, the T-REC is the proof for renewable energy usage and environmental benefits. See question 5 for more details.

Government incentives

Does the government offer incentives to promote the development of renewable energy projects? In addition, has the government established policies that also promote renewable energy?

The Taiwan government currently provides the following incentives for renewable energy development.

Feed-in tariffs

The law requires that TPC is obliged to enter into power purchase offtake agreements with entities operating renewable energy-based generators. In principle, the feed-in tariff (FIT) as announced by the MOEA according to the Formula for Calculating Feed-In Tariffs of Renewable Energy Power is applied to electricity generated from eligible renewable energy-based generator facilities except for circumstances prescribed by the law. As examples, for installers of offshore wind turbines, who chose the option of a fixed 20-year tariff, the rate for 2018 is NT$5.84/kWh; for solar PV installers, the rate may vary depending on the type of solar PV and capacity size. Except for circumstances prescribed by the law, these power purchase offtake agreements have a term of 20 years.

Demonstration awards and subsidies

The government provides cash incentives or subsidies for the establishment of specific types of renewable energy-based power generation facilities. For example, the Regulations on the Promotion of Offshore Wind Power System Demonstration in 2012 were implemented by the MOEA, which provided incentives to the demonstration of offshore wind turbine generators for up to 50 per cent of the total installed cost of the turbines. In addition, the MOEA is currently implementing the Regulations on the Promotion of Building-Integrated Solar PV Power Generation Demonstration, and for those who meet the relevant criteria, an award of up to NT$50,000 per kWp can be offered for the purchase of a solar power generator facility.

Tax incentives

The government currently provides tax incentives to entities in the power generation business. For example, when retaining a foreign advisor in providing planning and design services prior to the establishment of the generator facilities, the power generation entity may apply to the BOE for special approval to exempt the foreign advisor from paying income tax on the remuneration received. In addition, regarding the importation of a power generation facility, if the imported equipment is not manufactured in Taiwan, it may be exempt from customs tariffs, subject to verification and certification by the MOEA; even if Taiwan does manufacture such equipment, the customs tariff may be paid in instalments, subject to verification and certification by the MOEA.

Green Finance Action Plan

The government has implemented several measures encouraging financial institutions to extend credit and invest in the green energy industry. For example, the FSC has lifted the restriction on the annual revenue of the customer to which a Taiwan branch of a foreign bank is extending credit, when such credit is extended for the installation of renewable energy facilities. Also, the FSC allows the Taiwan branches of foreign banks to issue NTD financial bonds to raise funds for financing the green energy industry. In addition, the insurance industry has been able to invest in the renewable energy industry since 2017, subject to special approval from the FSC.

Are renewable energy policies and incentives generally established at the national level, or are they established by states or other political subdivisions?

Renewable energy policies and incentives in Taiwan are mainly driven by the national government. In terms of implementation methods, the Executive Yuan sets the overall direction of the policy, which is then implemented by the administrative agencies at various levels under the Executive Yuan. For example, after the Executive Yuan launched the Green Energy Technology Industry Promotion Plan in 2016, the administrative agencies discussed the policy and launched specific promotional plans for solar power and wind power in October 2016 and August 2017 respectively.

The national government provides subsidies to local authorities to incentivise the promotion of renewable energy. For example, the BOE has promulgated the Guidelines for Subsidies in Promoting Renewable Energy at Municipality/City/County Levels, by which local authorities may receive subsidies to investigate the regional feasibility of renewable energy and promote the relevant works. This has led to a clear increase in the number of renewable energy power generator installations.

Legislative proposals

Describe any notable pending or anticipated legislative proposals regarding renewable energy in your jurisdiction.

The Renewable Energy Development Act was just amended and promulgated in May 2019 to incorporate the following new developments:

  • a goal of 27GW total renewable energy generation capacity by 2025;
  • the simplification of the application procedure for renewable energy power generation facilities with a capacity of less than 2MW;
  • the addition of a mechanism allowing for renewable energy-based generation enterprises to choose whether to sell their electricity via direct supply, wheeling or wholesale to TPC; and
  • the requirement for heavy electricity users to build a certain capacity of renewable energy-based generator or storage facilities, or alternatively, to purchase a certain amount of T-REC or pay a substitute amount dedicated to renewable energy development.

Currently, the goal of 27GW includes 20GW of solar power, 5.5 GW of wind power, 2.08GW of hydroelectricity and biogas. And the government will stipulate implementation plans and review the same every two years.

Besides, the draft amendment of the Regulations on Renewable Energy Power Generation Facility Installation was announced by the MOEA in December 2018. The key points include:

  • the establishment of the recycle mechanism of the PV modules;
  • the simplification of the parallel connection review process in specific situation; and
  • the special regulation for the installers who install the generation facility only for self-use.
Disputes framework

Describe the legal framework applicable to disputes between renewable power market participants, related to pricing or otherwise.

There is no specific statutorily mandated forum for dispute resolution between renewable energy market participants. However, for disputes between renewable generator operators and the electricity industry (ie, other generator operators or TPC with respect to power dispatch and sales), there is a compulsory mediation session at the MOEA before the parties may engage in arbitration or litigation. The MOEA mediation session is private, and the MOEA will invite a panel of academics and professionals to participate in the session, depending on the nature of the case.