Wednesday, March 2, 2016

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 hereBoth photos are courtesy of KY Solar Co.

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