Taiwan PV Industry Pursues Transition with the Development of Clean Power Generation Market

In the past two years, Taiwan's solar industry has been thrown into a low-spirited and excruciating period amidst the changes in both PV manufacturing capacity and competition setting, particularly for cells. Model companies once providing the world with high-quality cells have been stressed with losses and are enduring reshuffle. Taiwan’s accomplishments in wafers and ingots were progressively out shadowed by central PV companies.

Taiwan's wafer and cell shipments have dropped with most enterprises being jettisoned, phased out or transformed. The PV industry is filled with hindrance.

In order to aid a stable shift for the struggling PV industry, Taiwan government has released a sequence of renewal policies such as The Electricity Act, Energy Development Guideline, Renewable Energy Development Act and so on, with the hope of enhancing Taiwan PV industry by way of raising the percentage of renewable energy use and developing local application markets.

One of the key solutions that the Taiwan government intends is the push for green energy policy which has the chief goal of transporting technology and innovation into development. It will increase the proportion of renewable energy by 20% from the present 5% by including the policy to free Taiwan from nuclear energy by 2025.

Not just for generating energy security but the government also targets to support environmental conservation by the Greenhouse Gas Reduction and Management Act (GHG Act) that will decrease carbon dioxide emissions by 2025, 2030 and 2050 to 10%, 20% and 50% respectively. 

On April 12, 2019, the revised Renewable Energy Development Act approved by Taiwan authorities set the goal of over 20GW renewables by 2025. Power sources will be disseminated among gas (50%), thermal power (30%) and renewable energy (20%).

These new policies have enhanced Taiwan's solar market environment to a certain extent, specifically in the power plant end market, where the variations in installation can be evidently comprehended. By May 2019, the total installed PV capacity in Taiwan has reached around 3.3GW.

The new progress has encouraged many renewables enterprises and PV companies in Taiwan to pledge strategic transformation and setting.

Taiwan's cell production ranks among the top in the world, but its module capacity is small. Many solar companies began to transfer to module manufacturing as these policies have created domestic needs.

TSEC Corporation states, it boasts the largest PV module capacity in Taiwan, standing at 800MW presently, which it plans to increase to 2GW by 2020. Although two years ago, the company's main business was cells. In 2018, its cell capacity reached 2GW.

Most of TSEC's clienteles are mainland China companies in the past. After the strategic alteration, TSEC is determined to avoid being unremittingly impacted by mainland China.

Chiang believed, "At present, we found our main business opportunities in Taiwan. Taiwan's solar companies in the past two years were having a hard time. We are making adjustments and the local government has also contributed some positive ideas to support PV industry development in Taiwan, this is an opportunity for us."

Apart from cell and module manufacturing, TSEC’s management team is also very engrossed in and has contributed in terminal power plant businesses such as EPC service. Presently, the project reserved has reached 300MW.

In contrast to the independent stand of TSEC, the United Renewable Energy Cooperation (URE) cooperatively established by Solar tech, Gintech and NEO presented the attitude of Taiwan PV players and regional governments towards the industry trough.

URE accomplished the merger nine months ago and its main business segments are divided into three sections: cell(2.47GW/year), module (850MW/year, including 400MW in Vietnam) and PV power plant system. In May this year, the company released 144-cell 1500V PEACH 400W high-efficiency solar module series, setting up efficiency cell standards in Taiwan.

The system section has also progressively established its fundamental competitiveness. Up till now, cumulative projects connected to grid have surpassed 569MW and reserved projects almost reached 1GW.

Andy Shen, President, URE Module Business held, "Compared to the goal of cumulative installed capacity of 20GW by 2025, Taiwan's installed PV capacity is still small at present. We expect many rooftop and ground mount plants to enter construction this year. The industry will also speed up in the next few years."

According to the performance data of URE, in May 2019, the company's revenue reached NT$2.29 billion, an 12.9% increase over previous month and an 136.6% year-on-year increase, suggesting a positive development trend. The company also set up a new business unit this year to develop energy storage solutions.

When speaking about future development, Shen believed, “We are a company rooted in Taiwan but we are expanding into the world market.”

Resonating his remarks, Sascha Rossmann, Vice president of WINAICO's solar division believed, "If companies in Taiwan are to have more room to endure and flourish, they need to tap the local market and open up international markets.”

WINAICO’s PV business primarily comprises module and system integration. In addition to pursuing cooperation with local players, the company is also determined to develop European and Australian markets.

These moves show that Taiwan's solar manufacturing industry is transferring from mid-stream to downstream businesses, with these players transforming from commercial cell manufacturers to module sellers and flexible integrated plant developers.

Power Grants Dropped by 60% in a Decade, Novel Trends in Power Market

In the past decade, PV FiT in Taiwan is a sharp deteriorating curve, tumbling by more than 60% (see chart below). FiT for some PV systems is by now lower than that for utilities, which would be extremely competitive if transacted on a free market.

The declining FiT curve over a decade in Taiwan. Image source: Sinogreenergy

The Renewable Energy Development Act will drive Taiwan to phase out feed-in-tariff subsidy to present liberalized power transactions in the renewable market.

As per this Act, major users of more than 800KW must have 10% of their power supplies from renewable sources, which means the requirements of major users are projected to reach 16TWh, necessitating about 12GW PV power projects.

Esther M.S. Lin, Marketing Director, Nan Ya Photonics INC(NYPI) believed, “The 10% requirement on big electricity users has created a rigid demand for renewable energy certification (T-REC, Taiwan Renewable Energy Certification).”

NYPI is mainly involved in solar EPC business. It has by now accomplished 3.74MW PV EPC projects. Lin said that in future the company will also take on more EPC projects. We deliberate that PV needs will be driven up first in areas with higher industrial power price, such as Hsinchu, Taoyuan, Taichung and Kaohsiung, among others.

T-REC are said to be the evidence of the use of green power. Upon certification of Taiwan regional inspection bureau, every thousand degrees of green electricity used is likely to get one renewable energy vouch.

Existing Short Supply in the Market

KH Chen, Managing Director, Sinogreenergy, was keenly aware of the policy adjustments and subtle changes in the market. As a team leader, he made a resolution to add electricity sales business.

As a front-runner in Taiwan PV power industry, Sinogreenergy is primarily engaged in power plant development, operation and EPC service. At present, its power plant by now connected to grid reached 149.4MW with 40MW under construction and 109.8 MW projects reserved.

KH Chen believed: "The 2017 Electric Act proposes to allow private renewable power suppliers and retailers to sell power and T-REC directly to consumers. Amendments to the 2019 Renewable Energy Development Act have made it clear that power suppliers can sold electricity back to Taiwan Power Company at a fixed rate for 20 years. A new electricity market business model will be built, which is a new career and business opportunity for us."

On the other hand, Power Master Group, which is also profoundly rooted in power plant and EPC service business, has made numerous endeavors in exploring power plant business model and application model. In the past two years, they have been dynamically endorsing the construction of Arrivistic plants.

Tsai Tsung-Jung, Chairman, Power Master Group thought: "Over the past few years, we have completed more than 1000 plants on government buildings, factories, farms, ground mount plants and agrivoltaic rooftop plants. The total installed capacity reached 336.80MW, of which 140(51MW) are agrivoltaic projects and this segment will continue to grow in future."

In view of the optimistic attitude of government and enterprises in Taiwan, it can be anticipated that in the near future, the market for relaxed solar power transaction in Taiwan will grow up fast and PV power generation will become a direct recipient of the rise of this market.

The growth in PV installations will also help Taiwan's cell and module manufacturing industry to break through the quandary.

Energy Taiwan 2019 event organize by the Taiwan External Trade Development Council (TAITRA) and SEMI will be held between 16-18 October 2019. Through exhibitions and dialogues, the country aims to attract more than 10,000 people, both at home and abroad, thus facilitating innovation and development for the Taiwanese RE Sector in the upcoming time

| Article published on 01/11/2019 by Moulin

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