A Commentary on President Tsai’s Inauguration Regarding Energy Policy

Written by Manuel Zehr.

Image credit: Taichung, Taiwan by Andy Enero/Flickr, license CC BY-NC-ND 2.0

During her speech, President Tsai repeated and underlined her policy from four years ago. The Democratic Progressive Party’s (DPP) ultimate goal was always to win over voters by shutting down nuclear power plants in Taiwan.

Besides keeping this former political promise, renewable energy has the positive side effect of reducing energy imports, which is currently at 97.8%. This is important as China could cut off economic and life support lines at any time.

To achieve this goal the administration proposed to develop an energy mix of 20% of renewable energy and, most importantly, switching from coal fire plant power to Liquefied Natural Gas (=LNG) power with 50%, all by 2025. This is a plan proposed by ITRI and the Bureau of Energy. This is despite argumentation by academics of the island being able to reach 100% due to its unique and resourceful environment.

Let us review the last four years to get a trajectory on possibilities for this new term. 50% LNG gas power sounds highly ambitious, and, ultimately, it is. The basic idea is to imitate the US model to transform energy sources into LNG, which has much less emission than coal power. However, Taiwan has a deficit of gas fields and has, therefore, to import its energy needs. Gas, in order to stay in a liquid state, has to be permanently cooled to a temperature of minus −161 to −164 °C, requiring a solid infrastructure with LNG terminals and a pipe system to deliver it to the gas power plant, which still has to be built by Taipower Inc. An undertaking that has been postponed many times due to public procurement, with tenders from:

  1. Siemens Gas Power Inc.
  2. GE + Alstom
  3. HEC (Japanese construction firm)

With less than five years left, Taipower has failed to come up with a solid plan or decision to address the problem.

Besides all these technical details, gas power is still certainly considered a strength, even if dependent on the US. In the past, Taipower purchased gas turbines by GE, which is an apparent political gesture, because compared to their German competitor Siemens Gas, they were not more efficient or cheaper, but created a short-term profit for the US economy. If the Taiwanese administration wants all 3 EPC firms, it will get a tender. However, if they want just one, they should choose wisely and make sure this decision is not politically driven because 33 GW is a lot of energy supply.

The proposition of creating up to 20% renewable energy is vast, but Taiwan’s landmass is very limited and, therefore, solar and onshore wind would be very arduous to implement. Taiwan’s administration, initially, had high hopes for offshore wind to reach 5.5 GW by 2025. However,  at the same time, it did not want to invest in the necessary infrastructure, law framework and international standards. Yet, in light of this, one has to ask if the Bureau of Energy trying to flip back to solar by adding another 10 GW, which, technically speaking, is not even possible?

In her speech, she mentioned that Taiwan would be a hotspot of renewable energy in the Asia-Pacific region, which is true if you consider the environmental conditions of Taiwan. Still, renewable energy is a decentralised and community-based business. Hence, inviting a group of developers will not solve the industrial building problem if their respected EPCIs — Equipment Procurement Construction Installation — firms do not have any local supply.

Formosa One Phase 1 and 2 are demonstration projects initiated by the former KMT Ma administration, which is now completed. Yet, the experiences from the developers are not well inherited in the new industrial system. The incumbent administration is now solely focusing on offshore wind development because the former German energy firm Infrawest — which has been merged into WPD — implemented a survey in the Taiwan Strait and discovered that 16 of the 20 world’s top wind corridors are located in the strait. This is thanks to the interaction of the North Pole’s cold waters with the equator, which ultimately delivers the optimal combination of streams.

Taiwan is also in proximity to the Kuroshio current, which flows from the gulf stream near Mexico, one of the world’s most stable currents. Taiwanese waters also have a significant wave height. Thus, both have perfect conditions for wave and tidal power. Still, the administration does not want to invest money and resources to investigate further opportunities and leaves to such operations to the private sector — as it did with Infrawest.

Offshore renewables would be optimal for Taiwan, but the government’s notable lack of support makes such an undertaking extremely difficult. Lack of human resources — the Taiwan government requires a 2/3 crew — and vessels entering Taiwan require a ROC flag along with a local CR class, which has to be approved by associations. This results in endless political battles from parties with conflicting interests.

Another even more significant issue is the unwillingness of local Taiwanese banks and insurances firms to support the renewable energy sector. Particularly when it comes to anything related to offshore matters, they seem to be unwilling to provide any financial support, despite government persuasion.

Thus, instead of developing a future trend with various oriented industries, the island’s economy seems much more focused on either China or South-East Asia, as a low-cost manufacturing bench was, for a long-time, considered a robust business model.

Despite all these obstacles, neither the administration nor society should strive for less than 100% renewables and aiming to become a 100% self-sustaining island. Not just for the sake of being an industrial leader, but also to show proof of being heavily industrialised. The goal of becoming energy import independent and leading the future path for generations — not just in Taiwan, but also Japan, Korea, the Philippines and many other countries — is more ecologically critical than ever.

Let us not forget that the Senkaku Islands and the South China Sea are waters of dispute for fossil energies. Taiwan’s success is essential to prevent a war, and this time humanity will not survive a nuclear winter with climate change at such a dangerous level. Scotland reached 100% renewables; the EU’s administration latest goal is 100%, Denmark, Sweden, Portugal, etc. For Europe, the goals range from reducing dependency on Russian gas to mitigating the Ukraine conflict. It also wishes to maintain a 2% GDP spending on NATO.

For Asia, Taiwan has more or less the role of Switzerland since its military poses no threat to anyone outside its borders. Still, a renewable energy success story could spread to other island nations, leading to more cooperation and interaction.

This could be a chance for a new generation of highly skilled, qualified workers.

Manuel Zehr was born in Bremen, Germany. After his studies at the University of Applied Science Bremen, where he majored in Japanese Management, he discovered an internship in Taiwan. After learning about, and understanding the value of, Taiwan for Japan’s Kairetsu supply chain, he studied for his Bachelor of Business Administration. After collecting various experiences, and industrial know-how, he founded Formosan Business Support Co.Ltd., which solely serves the purpose of developing an offshore renewable industry in Taiwan.

This article is part of special issue on the President Tsai’s inauguration speech.

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