The government's 20 GW PV power installation target calls for staggering investments to the tune of NT$1 trillion, which will bring about huge business opportunities fostering the development of indigenous PV power device industry, as vast majority of the procurements will be made locally.
Up to now, the completion rate for the PV power capacity target reaches only 12.5%, leaving some NT$900 billion in investments, including over NT$200 billion for procurements of PV modules, of which 85-90% will be made with local suppliers.
Outlook of the local PV power market has been improved significantly in recent years, thanks to continuous drop in PV power cost, as a result of which PV power rate for sale to state enterprise Taiwan Power Company has plunged by 65% from NT$12.93 kWh in 2010. In some sunny areas, PV power rate has equaled that of mains rate.
In addition to sacrifice of profits as suppliers claim, drop in PV power cost is credited to cut on prices of modules and frames. Cost for site development, however, remains high, due to high municipal givebacks and environmental-protection cost, which need extra effort in communications with local communities.
For the time being, policy support is still indispensable for PV power, as at the existing wholesale rate, the internal rate of return (IRR) reaches only 8%, which will drop to 5-6%, should the wholesale rate be cut further. The interests in PV power investments will be further dampened, if interest rates increase, as 70-80% of investors depend on banking loans.
Developers point out that further cut on wholesale rate will hamper the development of PV power in Taiwan. At present, total construction cost for a 1 MW ground-mounted PV power station reaches around NT$50 million. A 12.5% cut on wholesale rate will force developer to reduce the construction cost to NT$40 million, as a result of which they will not have wherewithal to help Taipower with the installation of grids or power cables, impeding the development of ground stations.
Although rooftop PV power systems have been installed on most large public buildings in Taiwan over the past two years, there are still 100,000 square kilometers of space available for installation of rooftop systems, totaling 100 MW in capacities. Owners of the space, however, are mostly major power consumers (such as enterprises), which are unwilling to install PV power systems, either by themselves or by leasers, due to low returns.
(First photo courtesy of Pixabay)