08 Nov 2019 Taiwan Legal Update: Taiwan’s Competitive Renewable Energy Markets Attracts U.K. Investment
Taiwan’s Competitive Renewable Energy Markets Attracts U.K. Investment
Hot Topic: Taiwan is fast becoming the new battleground for the world’s top offshore wind developers seeking a stronger footing in Asia. Its success in Europe has contributed to a desire for expansion.
Taiwan’s geography makes it an ideal hub for green energy. For European developers, this is one of the main reasons Taiwan is the key to Asian markets in Japan and South Kora.
The U.K Export Finance (UKEF) approved NT$9.2 billion in support of a large-scale wind farm off the coast of Taiwan, the Formosa 2. Forty-seven turbines are to be constructed, generating 367 megawatts of green energy.
Led by lead sponsor Macquarie’s Green Investment Group and the Swancor Renewable Energy, Formosa 2 aims to reduce Taiwan’s reliance on fossil fuel energy, in line with government targets to generate 20% from renewable sources by 2025.
UKEF will invest in Taiwan dollars, one of over 60 currencies in which UKEF can offer. The British Office indicates that this decision was made to protect the buyer from market fluctuations. Furthermore, it would make sourcing from the U.K. « more attractive ».
The U.K. is one of the world’s largest generators of offshore wind energy and is home to the largest offshore wind farm in the world which provides over 44 per cent of Europe’s offshore wind energy. As new opportunities emerge in markets such as Japan, South Korea and Vietnam, this could enhance international cooperation in green energy.
According to the British Office, Taiwan is currently developing 5.5GW of offshore wind energy up to 2025 and plans a further 5GW up to 2030.
Currently, offshore wind power only accounts for 3.5% of the global wind energy capacity and is slightly more expensive than other sources of renewable energy such as solar power and onshore projects.
The 2011 Fukushima disaster highlighted the risks associated with using nuclear energy in a region prone to earthquakes. The government considered these risks when they committed to aggressive renewable energy targets. Generally, in recent years, the Government has adopted a policy of deregulation to increase the transparency of laws related to foreign investment.
Current Legal and Regulatory Framework
Taiwan’s renewable energy sector is governed by the following regulations:
- The Electricity Act (“EA”) EA covers the establishment of power plants and the transmission and distribution of electricity.
- The Renewable Energy Development Act (“REDA” covers the power purchase agreement and government subsidies in connection with the renewable energy sector.
- In addition to the EA and the REDA, there are various other legislative instruments that govern the implementation of offshore wind farm projects such as, Electricity Enterprise Registration Rules and Environmental Impact Assessment Act.
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