Rooftop Power Plants, Part 3 (Taiwan Review)

Among the major companies eyeing these opportunities is AU Optronics Corp. (AUO). Like several other Taiwanese firms active in the solar energy sector, much of AUO’s experience was gained overseas. “We’ve successfully cooperated with numerous partners to build solar power plants in Europe, the U.S., Asia and Africa. Now, we’re applying this experience to our business in Taiwan, where we fully support the government’s policy to help Taiwan gradually achieve energy self-sufficiency and sustainability,” says James C.P. Chen, general manager of AUO’s Solar Business Group.

“Being environmentally-friendly lies in the core of everything we do. Our ”Green DNA” campaign aims to raise green awareness and reduce environmental impact among our 45,000-plus employees worldwide. Beyond spreading green consciousness, AUO has been working hard on energy efficiency and making its business environmentally sustainable. Several of our manufacturing facilities have attained LEED certification, with AUO's G8.5 fab in Houli being the world's first LEED Platinum certified TFT-LCD plant.”

Chen thinks the Greenhouse Gas Emission Reduction and Management Act – passed by the Legislative Yuan in June 2015, and committing Taiwan to cut its carbon emissions to half of the level recorded in 2005 – means “there’s great potential for rooftop utility-scale solar projects, as they utilize existing buildings, and there’s no need to acquire land.”

“We've already helped corporate customers in several countries build solar power plants and generate green energy. We offer a one-stop service, all the way from project development, engineering, procurement, and turnkey construction to 20-year operation and maintenance,” he says.  

AUO has used its own rooftops in Taichung City's Xitun and Houli districts to set up Sungen Solar Power Plant, which has 72,124 modules spread over 184,618 m2. 

With the completion of its fourth and final phase at the end of 2015, the plant’s capacity reached 21 mW. This is roughly equivalent to the output of ten wind turbines, and substantially more than the total capacity of all 16 solar power stations directly operated by Taipower. All of Sungen’s output - an estimated 27.5 gWh per year, enough to keep approximately 7,600 households supplied with electricity - is sold to Taipower. 

In technical terms, building a large-scale solar power plant is far more complex than installing a small array on the roof of a house or farm building, explains Chen. “It requires meticulous planning and execution,” he says. “Sungen is Taiwan's largest rooftop solar project to date, and also the first utility-scale project built on LCD fabs. The challenges such a project poses are much more difficult than ordinary residential projects, in that any vibration on the rooftop during construction could be hazardous to the LCD production line inside the building.” 

“All the modules and concrete bases had to be prepared before being hauled up onto the roof and moved precisely to their designated places. Also, aviation safety issues had to be addressed,” he adds. But resolving these issues has given the company valuable experience, and “established its proprietary know-how to maintain a competitive edge in the large-scale solar power plant business.”

AUO helped establish Star River Energy Corporation in April 2014. “The corporation operates an investment platform for solar power plants. We hope it'll bring stable and long-term returns for those keen to invest in renewable energy,” says Chen. “It’s also hoped this investment platform will bring AUO green-business opportunities and contribute to Taiwan’s green energy development.”

Initial paid-in capital totals NT$540 million (US$16.2 million) with AUO owning a 35 percent stake. Star River's first action was to take over Sungen Solar Power Plant.

Companies like Star River which invest in and share income generated by renewable-energy projects are known as yieldcos. In May 2015, Neo Solar Power Corporation, Taiwan's no. 1 manufacturer of solar cells and modules, announced plans to invest US$50 million in a yieldco that will be listed on the Hong Kong Stock Exchange.

If yieldcos and other private-sector mechanisms fail to achieve the results desired by policy makers, Taiwan’s government could use legislation to compel the installation of PV arrays on private property. 

In March 2013, Lancaster in Los Angeles County, California, became the first city in North America to require the installation of PV systems in all new homes. The city’s building code now mandates at least 1 kW of solar generating capacity on each residential rooftop. In March 2015, the French parliament passed a law ordering all new buildings in commercial zones to have either PV arrays or rooftop gardens. The latter do not produce any power, yet benefit the environment in more than one way. At the beginning of 2015, the government of the Indian state of Haryana mandated at least 1 kW of PV capacity on each building with a footprint of 500 square yards (418 m2) or more. Property owners had to comply by September 2015 or face fines. 

In December 2015, National Taiwan University's Risk Society and Policy Research Center released survey results which suggest ROC citizens are willing to accept the economic costs of reducing carbon-dioxide emissions, which in Taiwan's case are currently around 11 tonnes per person per year. The poll found that 85.1 percent of respondents are willing to pay higher electricity prices to support the development of renewable energy, while 68 percent expressed support for energy and environmental taxes.

Many houses built in Taiwan since the 1960s have flat roofs suitable for PV arrays, and the sun is sure to keep shining. Technological breakthroughs could make other electricity-generating options more attractive, but until that happens Taiwan’s solar-energy boom looks set to continue. Within a generation, rooftop PV systems may well be as common a feature of local homes as stainless steel water tanks and air-conditioning units. 

Part 1 of this article is here; Part 2 is here.

Rooftop Power Plants, Part 2 (Taiwan Review)

Like some of its competitors, KY Solar offers two financing options. The first requires no capital investment on the part of the property owner. KY Solar pays all equipment and installation costs, and handles all the paperwork. In return, the building’s owner receives a fixed share—typically between 6 and 8 percent—of the revenue generated by selling electricity to Taipower for a period of 20 years, which is the standard duration for a contract between the energy firm and private suppliers. According to Cheng, an 8 kW array is likely to bring the owner of the roof space around NT$4,200 (US$130) per year. KY Solar retains ownership of the array for the 20 years of the contract and beyond. The contracts also bind future owners of the property. For KY Solar, the break-even point is between seven and nine years into the deal.

The second option is outright purchase. For around NT$600,000 (US$18,460), KY Solar will install and connect to the grid an 8 kW system. Once it is up and running, the owner keeps every dollar paid out by Taipower. Some KY Solar customers have been able to get a bank loan for up to 80 percent of the cost, Cheng adds. If clients ask what happens when the original 20-year deal expires, he tells them the utility may well seek a second contract, because no one expects demand for clean energy to fall in the long term. 

Alternatively, the owners can use the electricity themselves. An 8 kW system sited near Cheng’s office in Tainan City’s Rende District should, according to GeoModel Solar, produce an annual average of 11.1 mWh. Even allowing for a deterioration in efficiency as the cells get older, well beyond 2036 the array will still be producing almost three times what the Bureau of Energy considers sufficient for a normal household. With a battery storage system - these are becoming cheaper and cheaper - living without a grid connection is feasible.

If a landowner decides to go ahead, the company then visits the local Land Registration Office to ensure the building’s actual dimensions match those listed in official records. This is when many projects founder, as Taipower will not enter into a contract if the array is sited on an illegal structure. “In some cases, the homeowner himself doesn’t know his top floor is an illegal extension, because it was there when he bought the house,” Cheng explains. 

Typhoons sometimes tear awnings and water tanks from rooftops, so Cheng must convince potential customers that PV arrays can survive gales. Between 2011 and the middle of 2015, his company installed several thousand individual modules on 300-plus buildings around Taiwan; just seven modules broke loose during last summer’s Typhoon Souledor, despite gusts of up to 230 km/h, he says.

Because installation costs are steadily declining, the BOE has cut the FITs offered to new suppliers of solar energy each year since 2010. “The drop is why there’s always a big rush to finish projects before the end of the year, before the tariff falls again,” Cheng says. 

FITs for rooftop PV systems completed in 2016 range from NT$4.6679 to NT$6.4813 (US$0.14 to US$0.20) per kWh, with smaller systems attracting more generous subsidies. “If the tariff for ordinary homes goes below NT$6 [US$0.18] per kWh, it’ll be hard to find new customers,” he predicts.

Despite the dual advantages of favorable weather and domestic solar cell production, PV is still the most expensive power-generation technology in Taiwan, with the exception of onshore wind power. However, generation costs are just one of the factors determining retail prices; transmission and distribution costs typically account for 40 percent.

In some US cities, solar energy has already achieved grid parity, meaning the unsubsidized cost of power from sunshine is no higher than the retail price of electricity. Taiwan, where households were charged an average of NT$2.91 (US$0.09) per kWh in 2015, is some distance from any such tipping point.

“Over the past 10 years, the market price for a rooftop PV system has declined from around NT$300,000 [US$9,230] per kW to NT$60,000-70,000 [US$1,845-2,155]. Because PV systems are getting cheaper, we expect grid parity for large-scale PV arrays in Taiwan by 2020, but this depends on future fossil fuel prices,” says the BOE’s Chen. “Despite the cost, the MOEA is striving to harness renewable energy, to increase our indigenous energy capabilities, diversify our energy sources, reduce carbon dioxide emissions, improve the environment and facilitate the growth of the domestic renewable energy industry,” she adds.

The original targets for solar- and wind-power set in 2009 by the Renewable Energy Development Act have been revised upwards more than once, and in September 2015, the BOE lifted its target for countrywide PV capacity from 6,200 mW by 2030 to 8,700 mW. This far outstrips the total capacity of Taiwan’s three operational nuclear power stations (4,927 mW), yet when judged from another angle it seems unambitious. By 2030, Taiwan’s PV capacity per capita will be approximately 370 W, something Germany achieved back in 2012.

However, the 2015 target may be raised even further, since the Executive Yuan's recent approval of the construction of solar power plants on 2,519 hectares of land in the sun-drenched counties of Changhua, Yunlin and Chiayi. About half of the land is no longer suitable for farming due to land subsidence. Other plots are adjacent to the nation’s high-speed railway line. If fully exploited, these “agricultural PV zones” should add well over 1,000 mW to Taiwan’s solar capacity.

In a November 2015 op-ed for the Chinese-language newspaper Economic Daily News, Taiwan Institute for Sustainable Energy Chairman Eugene Chien argued that accelerating the development of renewable energy would stimulate the economy and create jobs. Noting Taiwan’s excellent wind and sun resources, Chien, a former foreign minister, described the government’s 2030 target as a “trillion New Taiwan dollar [US$30.8 billion] business opportunity.” But he added, “Behind these huge opportunities, there are issues that must be addressed, such as reforming the tariff structure, raising the vast sums needed for investment, and the need to cultivate industries that can solve the problem of intermittency.”

This is the second of three parts; Part 1 is here, while Part 3 is here. Both photos are courtesy of KY Solar Co.

Rooftop Power Plants, Part 1 (Taiwan Review)

Nearly two years ago, farmer Xie Rong-hua made one of the biggest investments of his life, spending well over NT$1 million (over US$31,000) on the photovoltaic (PV) equipment that now sits atop the building in Tainan City’s Guiren District in southern Taiwan where he raises goats for milk and meat. 

The setup includes 81 modules, each of which is 193 centimeters long, 99 cm wide and capable of converting sunshine into 230 watts of clean electricity. But Xie admits he embraced solar energy for financial rather than environmental reasons. As soon as the PV array was complete, he signed a contract with Taiwan Power Co. (Taipower) that commits the state-owned utility to buying all the electricity produced on his farm at an attractive feed-in tariff (FIT) premium. FITs are designed to boost investment in renewable energy by offering guaranteed pricing and a reasonable rate of return.

The Renewable Energy Development Act, promulgated in July 2009, requires Taipower to offer such incentives. FITs have led to a surge of private-sector interest in renewables in Taiwan, with solar electricity generation growing 75-fold in just over six years.

“The accumulated installed capacity of PV systems was 9.5 mW at the end of 2009, and 728.5 mW by October 2015. Solar is thus the fastest-growing source of energy in Taiwan. Our promotion of PV systems is bearing fruit,” says Linda L.H. Chen, deputy director and spokeswoman of the Bureau of Energy (BOE) under the Ministry of Economic Affairs (MOEA). According to the bureau, all but 2.3 percent of Taiwan’s PV systems benefit from some kind of subsidy.

Taiwan has abundant sunshine and is a leading manufacturer of PV equipment, but prior to the Renewable Energy Development Act, few PV systems were generating electricity in the country. Those traveling around the country were just as likely to come across a small solar rig powering lights in a remote hikers’ shelter, as they were to see a multi-module array on top of a factory, home, or school. 

Between 2007 and 2011, Taiwan rose from the world’s no. 5 to no. 2 producer of panels that convert sunshine into power. Since then, the country has trailed only mainland China. Taiwanese companies make both mono- and polycrystalline silicon material - substances used in the manufacture of PV cells and electronics - as well as the cells themselves, modules and solar trackers, which rotate and tilt PV arrays to maximize their efficiency.

In June 2015, Solar Progress, the official magazine of the Australian Solar Council, ran an article titled Island of Irony. “Despite the global reach and reputation of Taiwan's PV industry, local solar energy production represents a minimal amount of the island's energy mix, which instead relies heavily on fossil fuel imports,” it pointed out. 

Data compiled by GeoModel Solar, a Slovakia-based company that offers data, software and consultancy services for solar-energy forecasting and planning throughout the world, illustrates Taiwan’s suitability for solar electricity generation [see map above which shows global horizontal irradiation in terms of kWh per m2]. The western plain between the Dajia River near central Taiwan’s Taichung City and Kenting National Park in the far south is the country’s “sunbelt.” Much of this area receives more than 1,700 kilowatt hours per square meter of irradiation in an average year. The only landmass within 1,500 kilometers that receives more is the Philippine island of Luzon.

Allen Cheng is trying to bolster the popularity of PV technology in this region. “About half the people I meet who want to add solar cells to their buildings are interested in the money they can make. The other half do it to help the environment,” says Cheng, a supervisor at the Tainan branch of KY Solar Co.

KY Solar, which is based in northern Taiwan’s Hsinchu County and specializes in installing small-scale PV arrays, has six sales offices around the island. The Tainan branch was established in October 2014, and now employs 15 salespeople, some part-time. In their first 13 months, the sales team signed 18 contracts with property owners. The largest was for a 320 kW array on top of a yet-to-be-completed factory in Kaohsiung City’s Luzhu District in southern Taiwan. A typical project consists of 32 modules producing up to 8 kW, Cheng says.

Cheng and his colleagues spend much of their time searching for promising sites. When one is found, they seek out the landowner, or put a leaflet in the letterbox. A common reaction, he says, is skepticism: “Most people know that PV systems can generate electricity, but many don’t believe Taipower will sign a 20-year contract to buy their electricity.”  

Some worry that fixing a PV array to their roof will causes cracking and leaks, so Cheng has to explain that a sealant is applied as part of the installation process. 

Since 2012, as part of its “Million Rooftop PVs” project, the BOE has been promoting solar energy through consultancy services, seminars, digital media coverage, exhibitions, websites, technological conferences and lectures. Yet Cheng feels the bureau’s efforts are insufficient. He has met people who do not know the government is pushing solar energy, and says: “We really hope they can promote this policy on TV.”

Part 2 of the article is here; to jump to Part 3, click here.

When researching this topic, I gathered far too much information, and far too many useful quotes, to squash inside the magazine's 1,900 word-limit.  What I'm posting here - in three parts - is a longer, more comprehensive version of the article which appeared in the March issue of Taiwan Review. The official print version can be read online.