A year of catching up?

After missing the government’s renewable energy targets again in 2022, 2023 could be a year of catching up, but the level of progress could still be hampered by a lack of regulatory reforms

By Raoul Kubitschek, Jason Wang, and James McCatherin



Taiwan again missed its renewable targets in 2022, marking the third consecutive year of unmet energy goals. As such, in an effort to lower expectations, Taiwan’s central government has already significantly reduced its target of getting 20% of energy from renewables by 2025 to 15% and is expecting build-out to only be met in 2026 or 2027. In particular, 2025 targets for onshore wind and geothermal, compared to the goals put forward in 2016, have been reduced very significantly. Last year Taiwan announced its net zero 2050 roadmap, which has now been enshrined into law. But the challenges faced will mean that the plan would already need to be adjusted or sped up to reach the near-term 2030 goals.

Although the Ministry of Economic Affairs (MOEA) remains bullish that Taiwan will reach an accumulated 20GW of photovoltaic and 5.6GW of offshore wind capacity by 2025, the realistic feasibility of meeting both targets appears less and less likely. In order for Taiwan to achieve this goal, solar would need further regulatory reforms to reach annual installation numbers above 3GW. Offshore wind is unlikely to reach its targets, due to knock on effects, bottlenecks, and delays caused by a combination of factors, including those from the coronavirus pandemic and delays in the readiness of local supply chains. The current 15% target for 2025 is still calculated based on reaching 27GW of renewable installations, a goal which may not be achieved. By November 2022 accumulated installations had reached 13.58GW. In addition, Taiwan is currently facing a strong rise in energy usage, of an anticipated 2.6% each year, and demand, mainly driven by investments in manufacturing by the ICT sector as well as Taiwanese companies shifting parts of their supply chains to Taiwan. Concurrently, Taiwan's nuclear energy capacity will be entirely phased out by 2025, leaving renewables as the only zero emissions energy source. Consequently, electricity users’ CO2 footprint will likely miss 2025 targets while Taiwan remains heavily reliant on coal and gas, making up more than 80% of the energy mix. Taiwan is also getting caught in massive upwards price pressure in gas prices brought on by the Russian war on Ukraine.

With the possibility of a global recession looming, it is likely that Taiwan’s massive energy demand may decrease. While this would at least allow the CO2 intensity of Taiwan’s grid to decrease slightly, the lacklustre build out of renewables might also pose a challenge for companies operating in Taiwan who are involved in competitive global supply chain markets, as they may struggle to fulfil demands for renewable or clean energy use from clients in adhering to their own sustainability goals, as well as regulations in the EU and US. This will have an adverse effect on Taiwan as an investment location, as Taiwan also remains firmly within the top 10 CO2 emitters per capita globally.

To make matters worse, the state-owned utility, Taiwan Power Company, (TPC) ended its financial year with a massive deficit (it had already reached NT$220 as of November 2022, roughly US$7.2 billion) or equivalent to more than half of Taiwan’s reported surplus tax income in 2022. This is largely attributable to TPC picking up the tab for massively increased gas prices on the international market. This was done in order to protect consumers (especially industrial users) from possible price increase of nearly 40%, taking TPCs official generations cost into account. By essentially socializing the losses, TPC protected both consumers and industrial users from inflation, but going forward, this will only make it more challenging for TPC to make necessary grid and new power plant investments. It also remains to be seen how long TPC can act as a shield against high international gas prices that have been driven up by Russia’s war against Ukraine. It is very likely that gas prices will remain high this year – piling more pressure on the balance sheet.

Solar sector
As of November 2022, the total installed solar capacity had reached 9.251GW, with approximately 2GW scheduled to be installed between January 2022 and December 2022 according to media reports. This would translate to 6% growth compared to 2021, marking the fourth consecutive year of 1.5GW+ annual installation, maintaining Taiwan’s place as an attractive market. Nevertheless, 2022 installations will likely fall short by at least 500MW for the year, and due to misses over the previous year as well the original accumulated installation goal of 11.5GW in 2022 may only reach 9.75GW. To stabilize the installation market in 2023, feed-in-tariffs will remain at 2022 levels in an effort to support the sector. To catch-up to the 20GW goal by 2025, Taiwan would need to average an additional 3.4GW of solar installation per year, a challenging and highly ambitious goal, in light of land rezoning challenges, grid considerations and other challenges. Over the past two years, Taiwan’s central government has focused on the development of aqua-culture solar, which are basically ground mounted or floating systems built over aquaculture ponds. This application allows for utility scale projects and has the potential to quickly add to new installation capacity. Government owned Taisugar, one of Taiwan largest landowners, has also made more land available as a way to increase capacity.

Offshore wind
The offshore wind sector in recent years has been roiled by the coronavirus pandemic, supply bottlenecks, and an ongoing heated discussion regarding Taiwan’s localisation policy and implementation. Although 2022 was a year of catch-up in construction, the sector is still significantly trailing original targets. The original goal set during the 2018 auctions for 2.4GW by the end of 2022 has not been met. As of November 2022, only 672MW of installed capacity have been officially documented by the Bureau of Energy and it is expected that by the end of 2022 this will have reached 1GW. This discrepancy between goal and reality is due primarily to significant delays to a number of projects as well as the disqualification of the Liwei Project in Taoyuan (350MW) by the authorities. The 2023 construction season will likely see the completion of Ørsted’s ongoing projects as well as the Formosa 2 project owned by JERA and Synera. CIP’s Changfang Xidao is also making good progress to catch up to its timeline goals this year. The Yunlin project has seen significant delays and a finish in 2023 is not likely in the cards. The remaining projects will likely see timelines delayed by a year or more.