Taiwan - Amendment Of The Renewable Energy Development Act.
Legal News & Analysis - Asia Pacific - Taiwan - Energy & Project Finance
3 August, 2019
The renewable energy industry is emerging in Taiwan. Other than the onshore windfarm and rooftop solar project which have been developed for years, the offshoare windfarm, land solar project, and floating solar project have become famous in the recent years. To reach the proposed development goal of the government and to respond to the demand from the industry, the Executive Yuan submitted the draft amendment to the Renewable Energy Development Act (“RED Act”) to the Legislative Yuan in January of 2018. After discussion for about a year, the Legislative Yuan approved the amendment of the RED Act in April of 2019. The amendment has been effective on May 1, 2019. This is the first amendment to the RED Act since the initial enactment of the Act (around 10 years).
23 articles are subject to the amendment. We summary the amendment as follows.
Simplify the establishment process of small scale renewable energy facility
Under the old RED Act, the electricity business license (“EB License”) under the Electricity Business Act (“EB Act”)is required for the commencement of operation of the renewable energy generation facilities over 500kW but below 2000kW. Under the new RED Act, such facilities is no longer subject to the EB Act, and is only required to obtain the registration of facilities pursuant to the Regulation Governing the Establishment of Renewable Energy Facilities before commencement of opearation. However, whether a project intentinally divided into few projects having capacity below 2000kW is required to obtain the EB License is still unclear under the new RED Act.
Increase the goal of amount of capcity generated thorough renewable energy
Increase the goal of amount of capcity generated thorough renewable energy from 6.5 million~ 10 million to more than 2.7 million, which reflects the government’s policy of promoting renewable energy.
RED Fund is no longer subsidise the FiT(effective date to be promulgated)
Under old RED Act, the Renewable Energy Development Fund paid by enterprises selling non-renewable energy or generators of non-renewable enrgy for own use was used to subsidise the Feed-in Tariff (FiT). Under the new RED Act, the purpose is removed. The cost occurred from payment of FiT by Taipower may reflect on the price of electricity sold to the end-users.
Clarification of the connection obligation, and the allocation of cost of feed in tarrif
Clarify the obligation borned to Taipower to dispatch with the renewable energy facilities, and expressively provide that the cost used to improve the grids may be allocated to Taipower and the renewable energy generator. In addition, if the renewable energy generator directly selling electricity to the end-user intends to sell the remaining electricity to the Taipower or terminate the supply to the end user and sell all generated electricity to the Taipower, the generator may be qualified for the Renewable Energy FiT rate of the year the generator commenced the selling of electricity.
Obligation imposed on big scale users on for purchasing the renewable energy
The big scale user whose agreed capacity in the electricity agreement exceed the threshold (to be determined by MOEA), shall establish renewable energy facility or retainer of energy, purchase certain capacity (to be determined by MOEA) of renewable energy or certificate with such capacity, or pay the the compensation to the MOEA. MOEA is discussing the relevant regulations in this regards.
Resolving the inconsistency between the term of leased national lands and which of the Electricity Business License.
The term of leasing public owned lands to be used for renewable energy facilities and cables was shoreter than the term of the Electricity Business License (20 years) has been an issue in practice. The new RED Act expressively provides that term of the lease entered with the nationality for renewable energy facilities and relevant cables therewith may not be shorter than the term of the EB License. The above issue is expected to be resolved.
This amendment have positive meaning for the development of renewable energy in Taiwan and shows the government’s mind to push the development of renewable energy. However there are detailed matters to be determined by the MOEA by promulgating relevant regulations, such as when the RED Fund would no longer subsidise the FiT rate, whether the enterprise having executed the PPA may exsit from the PPA and sell the electricity directly, and the criteria of the users required use/purchase renewable energy. These issues should be followed up.
For further information, please contact:
Janice Lin, Partner, Tsar & Tsai Law Firm