A comparison of renewable energy laws: Taiwan

Greater energy self-sufficiency and environmental sustainability are high priorities for Taiwan, which relies on imports for its energy supply. In line with these priorities, the government has set an ambitious target of reducing greenhouse gas emissions by 50% by 2050 while gradually phasing out nuclear power and moving towards greener energy. In the shorter term, it projects that 27GW of renewable energy will be generated per year by 2025.

These policies and targets have led the Taiwanese government to restructure the island’s energy structure by changing the regulatory environment. In particular, the Electricity Act and the Renewable Energy Development Act were amended in 2017 and 2019.

The most important recent regulatory development is that renewable energy generators are now allowed to sell their power in any form (e.g., corporate power purchase agreement) and are no longer limited to selling power solely to the government-run Taiwan Power Company. The government is also working to attract private companies to invest in wind and solar energy. Taiwan’s advantageous geographical location means that ventures in these types of renewable energy should prove to be quite lucrative.

The Taiwan Strait is recognised worldwide as a high-quality wind power generation site and is rich in development potential. In addition, tropical central and southern regions of Taiwan are ideal for solar energy due to long hours of sunlight.

OFFSHORE WIND POWER

Offshore wind power has become a key area of development in Taiwan as the western coast is regarded as the best wind field in the world. However, offshore wind power development is technologically and financially challenging due to the lack of experience and funds in Taiwan. This has meant that Taiwan has had to rely heavily on foreign capital for development.

According to the latest statistics, the amount of foreign capital invested in Taiwan from January to September of 2022 increased by 178% compared to the previous year primarily due to foreign investment in offshore wind power.

Taiwan is currently moving from phase 2 to phase 3 of its offshore wind power development. In phase 2, potential wind fields or projects were announced by the government and contractors can then apply for the rights to develop that land whereas phase 3 allows contractors to decide on locations and apply for the rights to develop them.

In phase 2, the government announced 36 potential wind sites from which contractors selected sites and applied for development rights. Currently, 18 projects are on track to meet the target of completing the construction of 5.5GW by 2025.

While the Ministry of Economic Affairs heads up phase 2, phase 3 is controlled by potential contractors who will decide on the location and apply for the development rights. With regard to the qualifications, the applicant’s own funds must account for at least 5% of the total investment in the proposed application. There are restrictions regarding the locations of potential wind farms and the competent authority has published a map of red zones where installation is prohibited.

To ensure the effective use of offshore wind farm sites, it was stipulated that a distance of 1.2 kilometres must be maintained from other wind farms. The competent authority may enlist agencies to form a review board for air or sea transport, radar, military control, building restrictions, ship safety, aquatic animal and plant breeding reserves, fishing rights and mining rights when reviewing new wind farm application proposals.

In addition to the criteria listed above, an application for a new wind farm also requires the submission of the Review Conclusion of Conditional Consent from the Initial Environmental Impact Assessment and the Interconnection Review Opinion from the Taiwan Power Company, the need for proper distance from other wind farms, and limiting the maximum applied capacity to 0.5GW. The authority will also evaluate whether Taiwanese equipment or technology is incorporated in the farms at certain minimum levels in order to achieve the goal of utilising more Taiwan-made resources.

The power industry does not restrict foreign investment and the legal challenges in the relevant administrative application procedures for foreign investment (e.g., foreign investment permits) are minimal. However, given that offshore wind power in Taiwan is still in its infancy, the government is concerned about developmental stability and subsidising Taiwanese industries so as to not appear driven by foreign capital in order to achieve certain results.

Foreign investors may run into potential roadblocks such as possible restrictions on equity transfer and issues with intergovernmental administrative contracts. Optimisation and rationalisation of administrative contracts are expected to continue as the government gains more experience in reviewing projects.

SOLAR-AQUACULTURE COLOCATION

One challenge for Taiwan’s onshore renewable energy industry is limited available land. In response, the government is promoting an innovative type of renewable energy known as solar-aquaculture colocation. These projects deploy solar panel systems above ponds used to raise fish and aquaculture. Based on the government’s 2025 20GW Solar Plan, it is estimated that 4.4GW of electricity will be generated using this method. While this is a relatively small share of Taiwan’s power production, the government has ramped up efforts to expand this industry by enlisting larger power plants to complete groundwork. This innovative method of power generation has even attracted foreign investors.

Solar-aquaculture colocation projects are divided into rooftop aquaculture and ground-based aquaculture. The government is aware of potential problems with whether or not aquaculture ponds nationwide are suitable for this method of generating power. It is also looking into developing aquaculture ponds in many areas known as “leading districts” and “priority zones” meaning these areas are ideal as they have no ecological or environmental conflicts. Other areas known as “low-profile areas” are also being considered.

As the authorities have determined that there are relatively few environmental and ecological problems in the leading districts and priority zones, developers will only be required to fill in a self-assessment form for environmentally and socially friendly measures in leading districts when applying for solar-aquaculture colocation projects in these areas.

Solar-aquaculture colocation projects can also be developed in low-profile areas, but the developer must present specific environmental and social measures in response to each issue raised by the government during the application process for projects in these areas. Issues related to the Coastal Management Act and Applying for the Approval of Use of Agricultural Land as Agricultural Facilities will also affect the application process.

Many of the planned sites are located on the coastline and could previously only be used after an application for a special use zone had been made and permission granted. To simplify administrative procedures, the authorities have already voluntarily assessed the potential for use and drawn up a special use zone suitable for solar-aquaculture colocation projects. This means that developers no longer have to submit applications for development.

The basic premise for solar-aquaculture colocation is that aquaculture is the primary activity and green energy is a value-added activity. As the use of agricultural land and aquaculture ponds and the facilities built on them in Taiwan are subject to legal restrictions and the consent of the landowner and aquaculture fishermen must be obtained at the stage of developing the solar-aquaculture colocation, the relevant provisions of the Review Regulations on Permitted Agricultural Facility Use on Agricultural Land and green energy facility allowances must be obtained.

Foreign investors wishing to invest in this solar-aquaculture colocation project will need to negotiate directly with the landowner as opposed to applying through the government. From the perspective of foreign capital, fishery and electricity co-existence sites are not obtained from the state by application but rather from landlords through negotiations to obtain their consent. Unlike investments in offshore wind, foreign-invested companies cannot directly operate solar-aquaculture colocation projects. Instead, the foreign company and the local operator must develop a solar-aquaculture colocation together. Foreign investment in the aquaculture industry is restricted, and because of this, the application process can be protracted and marked by uncertainty. In addition, the government has repeatedly emphasised that solar-aquaculture colocation projects should create a win-win outcome for developers, landowners and farmers.

AMENDING THE ACT

The government is currently discussing amendments to the Renewable Energy Development Act. The revision has four main goals: (1) Reviewing the definition of offshore wind power (expanding the scope of construction); (2) Optimising geothermal development procedures (establishing detailed procedures for geothermal development); (3) Relaxing restrictions on bioenergy installations (removing the restriction that installations can only be located in industrial zones); and (4) Mandating compulsory installation of solar power equipment in new buildings.

These amendments should enhance the comprehensiveness of Taiwan’s laws and regulations for various sources of renewable energy. It is also expected that transparency and predictability of government procedures will continue to improve, making it even easier for foreign capital to invest in Taiwan renewable energy projects.

FORMOSA TRANSNATIONAL
13/F, 136 Jen Ai Road, Sec. 3, Taipei
Tel: +886 2 2755 7366
Email: ftlaw@taiwanlaw.com

www.taiwanlaw.com