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A YieldCo vehicle for renewable energy can be a method to collect capitals. Nonetheless, lack of related regulations, this type of companies still cannot be listed in Taiwan. Taiwan authority expressed that they will study and plan to set up regulations of reviewing YieldCo companies for allowing them to be listed. The earliest time that Taiwna’s first YieldCo vehicle to be listed would be in 2018.
YieldCo vehicle takes solar and wind power plants as assets that can create stable revenues, mainly via long-term PPAs or subsidies. After being listed publicly and selling its “financial products,” the YieldCo company will share dividends with its shareholders. The capital it receives from shareholders through public transactions can be used to develop or purchase more power-generating assets. In other words, such power plant assets' capital are created by selling electricity generated from the assets.
Taiwan's goal of 20GW has spurred IPP and YieldCo to be set up
President Tsai Ing-wen and her administration proclaimed a goal of 20GW solar energy by 2025. This policy has stimulated several IPP and power operators who plan to adopt the YieldCo model.
Apart from General Energy Solutions, a subsidiary of Neo Solar Power Corp. (NSP), NSP and Sino-American Silicon Products Inc. (SAS) both announced their individual joint venture with Cathay Life Insurance Co., Ltd. in 2016 to create a power plant company, respectively. Moreover, SAS owns another solar power plant company, SAS Sunrise Inc.
Solartech Energy Corp.'s subsidiary, which focuses on developing PV projects, has recently earned the development right of 18.75MW floating PV systems over six ponds in the Taoyuan-Hsinchu area. This factor highlighted a milestone that this subsidiary company reached a higher scale of PV portfolio.
Some Taiwanese local companies such as J&V Energy or Sinogreenergy have their individual solar power plant business to develop, manage and operate. J&V Energy clearly defined itself as a YieldCo company. Motech whose PV cell capacity is among the top 3 in Taiwan finally announced that it will participate the solar power plant market.
Rigid regulations will be loosened by government
YieldCo is a method for a company to get capital and share power-generation revenues with investors. However, the current regulations that qualify a business to be a technology stock in Taiwan do not even include this.
In order to solve this issue, Director General Dr. Chuan-Neng Lin of Bureau of Energy, Ministry of Economic Affairs (Taiwan) expressed on March 14, he has considered to add reviewing topic of YieldCo vehicles as technology companies to be listed. If everything goes well, the earliest time that reviewing regulations will be finished might be this April, and the first YieldCo company to be listed might start to trade in 2018 in Taiwan.
Meanwhile, any YieldCo company that is listed in Taiwan will be required to own a certain portion of power generation assets in Taiwan, in order to encourage these businesses to set up solar power generation systems domestically.
In Taiwan, each 100MW solar power plant investment project needs about TW$5 billion. So as to achieve the target of 20GW by 2025, each year's average solar installation should be roughly 600~700MW. That will require a capital of TW$1.7 trillion per year. From this aspect, loosening YieldCo's requirement to be listed will help these businesses to gather capital from the stock market. This is another option for them, apart from financing from banks.
(Reported by Rhea Tsao, chief editor of EnergyTrend; translated by Janet Chen, translator at TrendForce Corp.)